ESTIMATING PROJECT TIMES AND COSTS Estimating is the process of forecasting or approximating the time and cost of completing project deliverables. Cost‚ time‚ and budget estimates are the support for control. Project status reports depend on reliable estimates as the major input for measuring variances and taking corrective action. Inaccurate estimates lead to false expectations and consumer dissatisfaction. There are reasons why estimating time and cost are important. Below are the following:
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Case Questions Case #5 – Marriott Corporation: The Cost of Capital 1. Are the four components of Marriott’s financial strategy consistent with its growth objective? 2. How does Marriott use its estimate of its cost of capital? Does this make sense? 3. What is the weighted average cost of capital for Marriott Corporation? a. What risk free rate and risk premium did you use to calculate the cost of equity? b. How did you measure Marriott’s cost of debt? 4. If Marriott used a single corporate
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product lines‚ new equipment and other assets‚ managers must know the cost of obtaining funds to acquire these assets. The cost associated with different sources of funds is called the cost of capital. . If the business earns more than its cost of capital‚ the market value of the business will increase. Likewise‚ if returns on long-term investments are below the cost of capital‚ market values will decline. Therefore‚ how we manage capital is extremely important to fulfilling the basic objective of increased
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What is cost of capital? The cost of capital is the cost of obtaining funds‚ through debt or equity‚ in order to finance an investment. 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 a new project has to meet. Importance The concept of cost of capital is a major standard for comparison used in finance decisions. Acceptance or rejection of an investment project depends on the
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Nike Inc. Case Number 2 Nike Incorporated’s cost of capital is a vital element when addressing opportunities regarding top-line growth and operating performance. Weighted Average Costs of Capital (WACC) is an essential estimation that is needed in order to determine the amount of interest that will be paid for each additional dollar financed. This translates to be the minimum overall required rate of return that the firm will keep. We disagree with Johanna Cohen’s assessment of Nike due to two
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CHAPTER 11: THE COST OF CAPITAL LEARNING GOALS: 1. Understand the key assumptions‚ the basic concept and the specific sources of capital associated with the cost of capital. 2. Determine the cost of long-term debt and the cost of preferred stock. 3. Calculate the cost of common stock equity and convert it into the cost of retained earnings and the cost of new issues of common stock. 4. Calculate the weighted average cost of capital (WACC) and discuss alternative weighing schemes
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Darden’s global supply chains The supply chains play a huge part in the success of global organizations today. Darden restaurants are the most successful multi brand company based on company shares and company earned revenue‚ their strategy is focused on operations excellence. Darden’s restaurants include red lobster and the olive garden. The company operates successfully on 1900 locations worldwide selling 300 million meals annually. The management team of Darden’s company has successfully developed
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April 15‚ 2013 Executive Summary Darden is one of the world’s top preforming companies in the food services industry‚ with over 2‚000 locations and 180‚000 employees. Including many brands from luxury restaurants to quick and easy restaurants Darden has been able to develop brand names into clear strategic advantages‚ which lead to competitive advantages and keeping customers coming back for more. In this paper a team of marketing students analyze Darden’s current position in the market through
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human capital via HRM is rooted in the needs of the organisation rather than opting for an ‘off the shelf’ closed option such as ‘Best Practise’ or high performance work practices. Theorists have yet to settle on a definitive model for best practise‚ which itself suggests a certain degree of flexibility is built into the interpretation of what it could be. Here lies the first contradiction to the pro best practise argument as these rigid principals are yet to be defined. Debatably‚ best practise
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assistant‚ Joanna Cohen‚ to estimate Nike’s cost of capital‚ which‚ per Cohen’s analysis‚ came to 8.4%. Background The cost of capital is the minimum return that a company should make on an investment or the minimum return necessary for investors to cover their cost. Two main factors of the cost of capital are the cost of debt and the cost of equity. The capital used for funding a business should earn returns for the investors who risk their capital. For an investment to be worthwhile
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