Weighted Average Cost of Capital Introduction and objectives This paper aims at describing a way to compute the Weighted Average Cost of Capital (WACC). This method is often used by company management to determine the economic feasibility of different projects and thus to compute the NPV of a specific project by discounting cash-flows. The WACC determines the return that the company should generate to satisfy its debt-holders. For the company‚ it consists in a tool for projects decision-making
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X. Weighted average cost of capital (WACC) The valuation of Abercrombie & Fitch Co. is based discounting future cash flows and economic profit‚ for that the weighted average cost of capital is needed. The WACC is the opportunity cost when investing in Abercrombie & Fitch Co. opposed to other investments with a similar risk. Investors want their return to excess the WACC before it can be considered a good investment; since people in general are risk averse‚ they want compensation for taking on risk
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Dunkin’ Donuts – the birth of a new distribution and franchising concept Ruth A. Schmidt Acting Head of Department‚ Department of Retailing and Marketing‚ the Manchester Metropolitan University‚ Manchester‚ UK Brenda M. Oldfield Research Assistant in the Department of Retailing and Marketing‚ the Manchester Metropolitan University‚ Manchester‚ UK Dunkin’ Donuts is a global retailer of coffee and bakery products. The company is 99 per cent franchised and has used the franchising system as a route
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its infancy in the early 1950s. By the late 1980s‚ however‚ business format franchising had become a major force in retailing in the United States. Meanwhile‚ Dunkin’ Donuts had experienced similar growth. As of the end of 1987 there were 1‚478 Dunkin’ Donuts units in operation in its North American region‚ of which 1‚449 were franchised. Dunkin’ Donuts licensed an additional 191units throughout the rest of the world. By early 1988‚ however‚ deteriorating sales to capital ratios‚ stiffening competition
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Dunkin Donuts SWOT Analysis STRENGTHS Dunkin’ Donuts is known for the large variety of doughnuts‚ flavors and other baked items. The strengths in inner matter of the product availability is the products of the company are available at more than 6‚590 outlets and franchises in more than 4‚815 alone in the Donuts has established a good reputation over the last five decades for brewing high quality United States of America. The Dunkin’ Donuts has expanded its operations in many countries of the world
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= 10/80 = 0.125 Common: E/V = 50/80 = 0.625 = [0.250 6% (1 – 0.35)] + [0.125 8%] + [0.625 12.0%] = 9.475% 6. Executive Fruit should use the WACC of Geothermal‚ not its own WACC‚ when evaluating an investment in geothermal power production. The risk of the project determines the discount rate‚ and in this case‚ Geothermal’s WACC is more reflective of the risk of the project in question. The proper discount rate‚ therefore‚ is not 12.3%. It is more likely to be 11.4%. 7. The flotation
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-Dunkin’ Donuts is the world’s leading baked goods and coffee chain‚ serving more than 3 million customers per day. Dunkin’ Donuts sells 52 varieties of donuts and more than a dozen coffee beverages as well as an array of bagels‚ breakfast sandwiches and other baked goods. Dunkin donuts is a hundred percent franchised. Dunkin donuts requires that you have the qualifications to be considered as a franchise candidate. If you qualify‚ the next step would be the application. You would have to develop
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through 2 website: http://finance.yahoo.com/ and http://www.finra.org/ I. ABOUT FEDEX CORPORATION: FedEx Corporation is a holding company. The Company provides a portfolio of transportation‚ e-commerce and business services under the FedEx brand‚ originally known as FDX Corporation‚ is an American global courier delivery services company headquartered in Memphis‚ Tennessee. FedEx Corporation is a Delaware corporation‚ incorporated October 2‚ 1997. FDX Corporation was founded in January 1998
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Jack in the Box decreased in re-cent years. The ratio is below one and shows a conservative attitude in operation and may slow down the growth of the company. The Calculation of WACC Table 5 Equity Debt Pref. E Weight 75.58% 24.42% 0.00% Cost 10.96% 1.84% 0.00% W x C 8.28% 0.45% 0.00% WACC 8.73% WACC=Weight of Equity * Cost of Equity+ Weight of Debt * Cost of Debt + Weight of Pre-ferred Equity* Cost of Pref. E Table 6 Cost of Debt (After-tax) 1
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RADIOGRAFIA ACTUAL DE DUNKING DONUTS DUNKIN’ DONUTS‚ LA EMPRESA: Venta y distribución de productos de bollería‚ café y bebidas. Era casi exclusivamente una empresa franquiciadora dónde no existe el equilibrio entre establecimientos en propiedad y franquiciados. Distribución cadena en el año 1997: • Establecimientos propios: 29 • Franquiciados: 1.449 PROBLEMÁTICA: La falta de estrategia a nivel empresarial ha traído como consecuencia una reducción del crecimiento de ventas y por tanto una
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