1. (45 points) Calculate the value of Carborundum (on an aggregate and per share basis) using both the Free Cash Flow to Capital (FCFcap) and Free Cash Flow to Equity (FCFeq) methods. Use the following assumptions: Note: Rf=5.6%; MRP=8.8%‚ Carborundum’s levered beta (prior to deal)=1.16 FCFeq=Net Income + Non Cash Deductions-Capital Expenditures-Change in Net Working Capital-Debt Repayment+ Debt Issuances + Miscellaneous Extras Answer: Value of Kennecott using FCFcap is: $53.8 Value of Kennecott
Premium Fundamental analysis Discounted cash flow Stock
References: P332-p333‚ Accounting: business reporting for decision making‚ 4E Study Guide by Jacqueline Birt Dividend payout ratio http://www.dividendpayoutratio.org/Good-Dividend-Payout-Ratio.html Price Earnings ratio http://www.theoptionsguide.com/price-to-earnings-ratio.aspx
Premium Generally Accepted Accounting Principles Financial ratios Balance sheet
Evaluation on Share Repurchase Proposal of Blaine Kitchenware Inc. Group 7 Contents Executive Summary 3 Overview of problems 3 Analysis on Capital Structure & Payout Policies of Blaine 3 1. Inappropriate current capital structure and payout policies 3 2. Advantages and disadvantages of large share repurchase proposal 4 a. Effects of share repurchase on assets‚ liabilities and equity on balance sheet 5 b. Effects of share repurchase on debt ratios and interest coverage ratio 5 c. Effects of
Premium Dividend yield Stock market Stock
Executive Summary The food processing industry is one of the most important sectors in India considering its linkage to agriculture and food consumption in an economy of a billion plus population. The food processing industry is also significant in terms of its socio-economic bearing on the economy. It employs 13 million people directly and about 35 million people indirectly. The worth of the Indian processed foods sector stood at US$ 157 billion in 2012 and is expected to touch USD 255 billion by
Premium Financial ratio Financial ratios Income statement
EIC Analysis Economy There are many things that may happen in the world that could affect the stock market as a whole‚ as well as individual stocks. The stock market reacts well to things such as low inflation‚ increasing Gross National Product (GNP)‚ and other positive news in the economy. The market does not react well to signs that inflation is on the rise or unemployment rising. Today¡¯s inflation rate is on the rise due to hurricane Katrina and high gas prices. ¡°Consumer prices rose
Premium P/E ratio Stock market Dividend yield
business group‚ rather than those of the individual firms. Practical implications – Business groups can reduce the agency problems that occur in group affiliation by increasing the insider ownership (after a certain tunneling point)‚ debt financing‚ and dividend payout. Originality/value – Previous studies have paid little attention to the effects of the
Premium Capital structure Principal-agent problem Financial ratios
easily found or calculated with little chance of error. Assumptions 1. Dividend growth rate is constant 2. Return on equity is constant and sustainable 3. Forecasted dividend is accurate 4. There is market stability 5. Historical data is reasonable predictor of future returns Valuation Esprit Holdings Ltd 0330.HK (Hong Kong) All data taken from Esprit’s 2007 Annual report Current share trading price = $92.15 Dividends per share = $3.18 Earnings per share = $4.22 Return on Equity = 48.9%
Premium Stock market Stock Dividend yield
equity will be 15%. Net income in 2010 is expected to be $15 million. The market-value weights of the firm’s debt and equity are 40% and 60%‚ respectively. a. Based on the five-year track record‚ what is Dempere’s EPS growth rate? What will the dividend be in 2010? b. Calculate the firm’s cost of retained earnings and the cost of new common equity. c. Calculate the break-point associated with retained earnings. d. If Dempere’s after-tax cost of debt is 8%‚ what is the WACC only with
Premium Corporate finance Finance Preferred stock
Introduction and Overview P. F. Chang’s China Bistro‚ Inc. is a full-service upscale restaurant which predominately serves Asian-inspired cuisine. There are 197 owned and operated Bistros nationwide‚ and no global locations currently exist. While the corporate office location is set in Scottsdale‚ Arizona‚ the company was originally incorporated in Delaware. Throughout this report‚ the stock symbol (PFCB) and the shortened title (P.F. Chang’s) will be used interchangeably to identify the organization
Premium The Cheesecake Factory Income statement Revenue
OBJECTIVE: To find β‚ Value of Share and Weighted Average Cost of Capital (WACC) for TATA POWER CO. LTD. REFERENCE INDEX: Reference index used for β and other calculations is NSE INDEX. I have collected weekly data from 31/08/2005 to 30/08/2010. COST OF CAPITAL Cost of capital of the company has been calculated by using Weighted Average Cost of Capital (WACC) by assigning weights to cost of equity and cost of debt. COST OF EQUITY- CAPM model has been used to calculate the cost of equity
Premium Dividend yield Weighted average cost of capital Stock market