Overview This case study focuses on where financial theory ends and practical application of the weighted average cost of capital (WACC) begins. It presents evidence on how some of the most financially complex companies and financial advisors estimated capital costs and focuses on the gaps found between theory and application. The approach taken in the paper differed from their predecessors in several various respects. Prior published information was solely based on written‚ closed-end surveys sent
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author or any other interested party. Deletion requests should be forwarded to: Digital Collections‚ UWE Library Services‚ e-mail Digital.Collections@uwe.ac.uk. UNIVERSITY OF THE WEST OF ENGLAND BRISTOL BUSINESS SCHOOL FINANCIAL ANALYSIS REPORT THE CLOROX COMPANY THE PROCTER & GAMBLE COMPANY RECKITT BENCKISER GROUP PLC HENKEL AG & CO. KGAA By CHUYEN THI HONG HUYNH ID: 08025397 MSc Finance Supervised by Dr. JING CHEN JANUARY‚ 2010 i ACKNOWLEGEMENT I would like to express my sincere thanks to
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Cost of Capital Jenny Lopez-Guerrero‚ Malika Hobheidar‚ Phyllis Hebert and Sierra Harkness FIN571 February 23‚ 2015 William Stokes Cost of Capital In the Wiley plus simulation (2012)‚ we are introduced to Pfizer‚ the world ’s largest research-based pharmaceutical company‚ Pfizer develops their own pharmaceutical products. Ahmed Singh‚ a consultant accountant who works for the Pfizer Treasury Department‚ explains that his role in the company is "to think and plan
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share (P0)? b. What is Gentry’s weighted average cost of capital (WACC)? c. Gentry can increase its debt by $8 million‚ to a total of $10 million‚ using the new debt to buy back and retire some of its shares at the current price. Its interest rate on debt will be 12 percent (it will have to call and refund the old debt)‚ and its cost of equity will rise from 15 percent to 17 percent. EBIT will remain constant. Should Gentry change its capital structure? d. If Gentry did not have to refund the
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Estimating the Cost of Capital: Survey and Synthesis Case 13 Teaching Notes Introduction “Each year in the US‚ corporations undertake more than $500 billion in capital spending” (Bruner 184). This case presents a reasonably analyzed set of teaching notes describing how these financially sophisticated corporations estimate their capital costs. Understanding the estimation of capital costs helps identify the uncertainty of the cost-of-capital theory‚ sets a benchmark for cost-of-capital‚ helps
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Brochure More information from http://www.researchandmarkets.com/reports/658007/ Clorox Green Works Case Study: Launching Green Products to Encourage Growth in Stagnant Markets Description: This report on Green Works forms part of a series of case studies‚ which explore business practices across a variety of disciplines and business sectors. It looks at how Clorox has successfully entered the natural cleaning product category‚ enhancing its performance in the stagnant household products market
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Capital Structure 7 July 2013 Introduction The capital structure for a company can be very important for the success of the company. Many aspects of the business must be evaluated in order to determine the appropriate capital structure. Throughout this paper‚ three companies will be evaluated. The three companies being evaluated are eBay (NasdaqGS: EBAY)‚ The Clorox Company (NYSE: CLX)‚ and Alaska Air Group Inc. (NYSE: ALK). Company Overview eBay is a very popular company
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Audit Quality and Cost of Debt Capital for Private Firms: Evidence from Finland Jukka Karjalainen Department of Business University of Eastern Finland April 10‚ 2010 Abstract The purpose of this paper is to examine the value relevance of the perceived audit quality in terms of who audits‚ as well as the audit outcomes in terms of the auditor’s opinion and accruals quality‚ in the pricing of debt capital for privately-held firms by examining a large sample of privately-held Finnish firms. The
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along with the further clarification on the cost of capital using DCF approach. The cost of capital is a term used in the field of financial investment to refer to the cost of a company’s funds‚ both debt and equity‚ or from an investors’ point of view‚ the shareholders required return on a portfolio of a company’s existing securities. It is used to evaluate new projects of a company as it is the minimum return that investors expect for providing capital to the company‚ thus setting a benchmark that
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Services divisions. The hurdle rate is the cost of capital based on an estimate of the corporation’s WACC. 2. Please estimate the segment WACCs for Teletech (see the worksheet in case Exhibit 1). As you do this‚ carefully note the points of judgment in the calculation. Corporate Telecommunications Products & Systems MV asset weights 100% 75% 25% Bond rating A-/BBB+ A BB Pretax cost of debt 5.88% 5.74% 7.47% Tax rate 40% 40% 40% After-tax cost of debt 3.53% 3.44% 4.48% Equity beta
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