equals zero: To adjust beta in accordance with project we assume that in the long-run Dixon will maintain its target debt-to-capital ratio in proportion of 35%. Thus‚ we get the following beta asset of the project that accounts for Dixon’s capital structure: Betaproject = 0.94/(1-0.35) = 1.45 RE = Rf + Bproject*(Rm-Rf) = 9.5% + 1.45*6.45% = 18.85% Cost of debt We assume that cost of debt equals 11.25% as Dixon issue bonds at this rate for the purpose of this project financing. Marginal tax rate
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Dixon Ticonderoga Dixon Ticonderoga is one of the oldest public companies in the United States. The company’s flagship product is the ubiquitous No. 2 yellow pencil‚ introduced in 1913‚ which is known to almost anyone who went to school or took standardized tests in the United States. With annual revenue of a little more than $100 million‚ Dixon Ticonderoga is the second largest pencil manufacturer in the country. For most of its history‚ Dixon Ticonderoga has been a prosperous company‚ but
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Case Two Analysis Dixon Corporation: The Collinsville Plant Paul Candland & Lynn Chang October 1‚2013 WACC Calculation In order to calculate WACC‚ we need to first start with the beta of equity. We are given the beta of equity of 1.06 of Dixon as a firm in Exhibit 7. However‚ the beta given is not an appropriate measure of the systematic risk of the Collinsville Plant‚ because Dixon produces many other chemical products other than Sodium Chlorate. Therefore‚ in order to accurately capture
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Bus M 401 Dixon Case Estimate of WACC for Collinsville Plant The WACC for Collinsville‚ according to our estimations‚ came up to about 16.22% (Exhibit I). We took the average of the unlevered betas of comparable companies‚ 0.91‚ and relevered it according to Dixon’s target capital structure. Dixon’s 5-year historical debt ratio was 27.5%‚ but this approach would not be reliable due to its steep downturn debt ratio from 51% in 1975 to 6% in 1979. Thus‚ we thought that the best estimate of the
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annum based on the cost $.019 per KWH in 77’ to $.025 per KWH in 79’. To be conservative we will take the 12% projection made by Dixon. Based on the historical average and
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Review Paper Case IH MX 305 Jon Hansen When you see a Case IH 305 plowing in the field there is more than what meets the eye. First off most people just notice the red color and never give it a second look‚ but there are so many things that you are overlooking. The Case IH MX 305 Magnum is a powerful machine. It is the second biggest front wheel assist tractor in the Case IH line up. It has right around three hundred horsepower. It is a nice sized tractor that can do just about everything
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CASE 14-2: TRIGO EXPORT CO.‚ LTD. The pricing of products for export sale is covered here‚ with logistics practices and costs having considerable influence. Question 1: Ziola’s export packaging materials consisted of at least 40% recycled contents. Should this be mentioned in the quotation given to the potential Brazilian buyer? It would not hurt in case somebody reviewing the bid happened also to be interested in environmental protection. However‚ note that they are buying tractors to use in
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Dixon Ticonderoga 1. Why do you think that the Chinese apparently have a cost advantage in the production of pencils? a. Chinese apparently have a cost advantage due to the amount that they can sell pencils at. It may be due to the domestic competition‚ a rebate the Chinese offers for exports of pencils‚ and the lowering of duties that where imposed by the U.S. Department of Commerce. Also‚ the Chinese continued to find ways of lowering cost‚ increasing technology‚ and their know-how in making
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Strategic Management (Spring 2013) Case Analyses—Schedule‚ Format‚ and Required Items Per the syllabus‚ p. 4-5‚ you must submit three (3) written Case Analyses. Each of these case analyses (papers) is worth a maximum of 100 points. Below the cases are grouped into UNIT 1‚ UNIT 2‚ and UNIT 3 case options. You must complete one (1) case paper from EACH of these Units (3 case papers total). No late cases will be accepted for a grade. NOTE: The first case appearing on the Course Schedule (Feb
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Caso DIXON Finanzas Corportativas Integrantes • Hugo Rangel • Alvaro Rojas • Javier Rota • Javier Seminario 1. Estimate the cost of equity appropriate for the evaluation of the incremental cash flows associated with the Collinsville investment. Estimate the weighted average cost of capital appropriate for discounting the Collinsville plant’s incremental cash flows a) Usando los β de Burnswick y Southern‚ hallamos el βE desapalancado de Collinsville. Southern Chem. βA= βD(D/V)+βE(E/V)
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