Finance 5204 Managing Corporate Capital Investment and Capital Structure Case1 Cost of Capital at Ameritrade By: Elaine Huang Jonathan Hudson Christopher Lenker AMERITRADE DOES NOT HAVE A BETA ESTIMATE AS THE FIRM HAS BEEN PUBLICLY TRADED FOR ONLY A SHORT TIME PERIOD. EXHIBIT 4 PROVIDES VARIOUS CHOICES OF COMPARABLE FIRMS. WHAT COMPARABLE FIRMS DO YOU RECOMMEND AS THE APPROPRIATE BENCHMARKS FOR EVALUATING THE RISK OF AMERITRADE’S PLANNED INVESTMENTS? WHY? We recommend using the following
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ECONOMIC SCENE The Opportunity Cost of Economics Education By ROBERT H. FRANK Published: September 1‚ 2005 SHORTLY after I began teaching‚ more than 30 years ago‚ three friends in different cities independently sent me the same New Yorker cartoon depicting a woman introducing a man to a friend at a party. "Mary‚ I’d like you to meet Marty Thorndecker‚" she began. "He’s an economist‚ but he’s really very nice." Forum: The Economy Cartoons are data. That people find them amusing usually
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CHAPTER 9 MAKING CAPITAL INVESTMENT DECISIONS Solutions to Questions and Problems 1. The $7 million acquisition cost of the land six years ago is a sunk cost. The $9.8 million current aftertax value of the land is an opportunity cost if the land is used rather than sold off. The $21 million cash outlay and $850‚000 grading expenses are the initial fixed asset investments needed to get the project going. Therefore‚ the proper year zero cash flow to use in evaluating this project is
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QUESTION 1 Are the four components of Marriott´s financial strategy consistent with its growth objective? With regards to the overall strategy of primarily being a premier growth company‚ we analyze the 4 components as follows: 1. Manage rather than own hotel assets • Marriott developed the projects‚ established long term management contracts consisting of 3% of revenues and 20% of the profits. The assets were then sold to partners. Not owning hotels provided Marriot with greater liquidity
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Harvard Business School 9-298-092 Rev. December 4‚ 1998 Valuing Capital Investment Projects 1. Growth Enterprises‚ Inc. (GEI) has $40 million that it can invest in any or all of the four capital investment projects‚ which have cash flows as shown in Table 1 below. Table 1 Comparison of Project Cash Flows* ($ thousands) Year of Cash Flow Project A. B. C. D. Type of Cash Flow Year 0 Investment Revenue Operating expenses ($10‚000) Investment Revenue Operating expenses ($10‚000) Investment
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CAPITAL BUDGETING – INVESTMENT DECISIONS SUBMITTED BY : Abhisht Sinha (08305) Himangi Malik (08321) Swagata Ghoshal (08337) Tijeel Kumar Tarun (08352 I. CASE ABOUT BUILT OPERATE AND TRANSFER The case taken is about Built Operate and Transfer. It is a feasibility report which was prepared to present economic analysis carried out on the project and contain result of economic evaluation of the project so that the owner can take investment decision and the project can be properly planned and
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Any monetary costs from going skiing‚ as well as anything you lose by going skiing‚ wages or time studying. The cost of skiing instead of going to the library to study is the costs associated with skiing along with the knowledge that could of be gained by going to the library. Since the cost of going to the library cannot be measured in monetary terms‚ it will vary from person to person. A person who needs to study for a final to be taken on Monday may give up more than someone who is going to the
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Opportunity cost is often to be determined when coming across decision-making. Throughout this essay‚ the term ‘opportunity cost’ will be reviewed in the case of pregnant women staying home during their maternity leave. The essay will be divided into 3 part. Firstly‚ concept of opportunity cost will be defined and explained with daily examples. It will then go on investigating both the opportunity cost and benefits of mothers staying home during their maternal leave. Finally‚ several advices will
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The Cost of Capital 1 Background As investors desire to obtain the best/highest return on their investments in securities such as shares (Equity) and loans to companies such as debentures (Debt)‚ these returns are costs to the companies paying these Dividends (on equity) and Interest (on Debts)! It all depends on the perspective from which we chose to view the calculation (are we Earning or Paying?) Companies MUST consider the cost of financing they receive in the form of equity or debt if they
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scarce. What this means is that everything has a price‚ and nothing is free in this economic. Economics depends upon the phenomenon of scarcity because if the world didn’t have to pay for the thing that we need then the world will be very different if there wasn’t prices for everything then we will always be low on supplies. That is way we have a price for everything so that the supplies will not be low and that is why the supplies price rises every so often. 2.) Define opportunity cost. What is the
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