Consider 100% equity financed firm § Beta = 1 E/V = 1! D/V = 0! § WACC =? E D WACC = × RE + × RD × (1 − TC ) = RE V V WACC = Cost of equity from CAPM [ ] WACC = RE = R f + β × E [RM ] − R f = E [RM ] Beta =1! 2 SML and WACC SML Expected Return WACC = E[RM] Rf [ R f + β × E [RM ] − R f ] β=1 Beta 3 Accept Projects Y and/or Z? Expected Return IRRz WACC = E[RM] IRRY SML Z Y Rf β=1 Beta 4 Accept Projects Y and/or Z?
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Introduction and Background Kimi Ford is a portfolio manager at NorthPoint Group‚ a mutual-fund management firm. In July 2001‚ Ford considered buying shares of Nike‚ Inc.‚ the well-known athletic shoe manufacturer. It would be prudent of Ford to base her assessment on Nike’s financial reports for 2001. Around the same time‚ Nike held an analysts’ meeting to disclose those financial results. They also addressed ways to revitalize the company‚ since share price was beginning to decline and revenues
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required rate of return on the debt of the company and on the divisions? Should the debt cost differ across divisions? Why? c. Did you use arithmetic or geometric averages to measure average rates of returns or premia? Why? d. How did you measure the beta of each division? Of the firm? e. Should you take taxes into account? How? 5. What is the cost of capital for Marriott ’s contract services division? How can you estimate its equity costs without publicly traded comparable companies? 6. If Marriott
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this paper discusses what options should be written or bought and exercised on the qualifying stocks to maximize profits. In order to accomplish this task the stocks will be measured and compared based on their market performance in terms of returns‚ betas and volatility‚ using historical data (recorded stock prices) and regression analysis. Initially the stocks are analyzed using historical returns to derive expected returns and standard deviations‚ or deviations from the mean or average market return
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MGT 6060 Financial Management Summer 2011 Prof. Jonathan Clarke Case 3: cost of Capital at Ameritrade Group Members: Kristin Fadeley Venkata Kuppusamy Benedikt Schroeder Yogesh Vasisht Manoj Vattakkunnel Question 1: What factors should Ameritrade management consider when evaluating the proposed advertising program and technology upgrades? Why? In a nutshell‚ Ameritrade’s management should do a cost-benefit analysis‚ comparing proposed investments into technology
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insulin circulates through blood vessels and bind with particular (insulin) receptors‚ promoting interactions essential for the wellbeing of the body’s internal mechanisms. Insulin is a hormone synthesized exclusively by the pancreatic beta cells. These beta cells are located in the pancreas in clusters known as the islets of Langerhans. Insulin is a small protein produced as part of a larger protein to ensure it folds properly. In the protein assembly of insulin‚ the messenger RNA transcript
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of 39.9 years. Most of Australia’s population consists of two broadly detached coastal regions. Most of the area and population is undoubtedly in south east and east. Out of the two regions‚ the less significant is south west of the continent. (Beta‚
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Case Study on Nike Inc. What is the WACC and why is it important to estimate a firm’s cost of capital? The WACC is a firm’s overall cost of capital‚ taking into account the weighted average of its equity and debt costs of capital. A firm’s WACC is the minimum return (hurdle rate) required by its capital providers to stay invested. Therefore managers of a firm should only invest in projects that generate returns exceeding the firm’s cost of capital. For the company’s owners the WACC is the minimum
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INCORRECT | | Over the past several years‚ the volume of world trade has: | | | A) | decreased because of increased government regulation of trade through tariffs and quotas | | | B) | decreased because of the decline in incomes brought on by global recession | | | C) | increased because of increased government regulation of trade through tariffs and quotas | | | D) | increased because of improvements in communications and transportation | | | | | | Feedback: Trade has
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challenging jobs‚ Betas are not to powerful‚ Deltas being less powerful than the Betas‚ Gammas being underneath the Deltas‚ and the Epsilons receiving grunt work that is boring for higher caste members and having absolutely no control to power. Huxley argues‚ “We also predestine and condition. We decant our babies as socialized human beings‚ as Alphas or Epsilons‚ as future sewage workers or future...future Directors of Hatcheries”(Huxley 13). Huxley is stating that the Alphas and Betas are at the top
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