1. Weighted Average Cost of Capital (WACC) is used to determine the average cost of financing a company. Companies are funded using both debt and equity and both require varying rates of return. WACC allows you to put a “weight” on the different types of financing and their differing rates to get a total cost of capital. Team 12 does not agree with Joanna Cohen’s WACC calculation because we feel she took some liberties in her numbers‚ the most notable being that of equity. Ms. Cohen used book
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Introduction The implementation of Self-service technology is rapidly increasing among industries and affects the way customer interacts with firms to enhance service outcomes. This proliferation of SST has grown in many positive ways between consumers and businesses for example almost half of all retail banking transactions are now conducted without the assistance of a bank teller (Lawrence and Karr‚ 1996). In this assignment‚ the author will introduce self-service technologies in retailing and
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with CAPM and a constant beta. The Capm is acceptable‚ but the constant beta isn’t the best option. there should be different betas for different division risks. 3) What is the Weighted Average Cost of Capital for Marriott Corporation? WACC= (1-t) x rD x D/V + rE x E/v t= tax rate (1-t) t=0.56 rD= cost of debt rD=
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1) Estimate the WACC that is appropriate for discounting the Collinsville plant’s incremental cash flows. You should estimate and present each component of the WACC separately‚ explaining briefly but clearly what assumptions you are making for each of them. In the same spirit‚ estimate the appropriate all-equity cost of capital for the APV-based valuation. WACC calculation. WACC = RD*(1-t)*D/(D+E)+RE* E/(D+E) Cost of equity We assume that risk free rate (Rf) equals rate of long-term Treasury
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and repurchase undervalued shares. Janet Mortensen‚ the senior vice president of project finance for Midland Energy Resources‚ has been involved in estimating the cost of capital of the company. She calculated the weighted average cost of capital (WACC) for the company as a whole‚ as well as each of its three divisions. The estimates are used for asset appraisals for capital budgeting and financial accounting‚ performance assessments; merger and acquisition proposals and stock repurchase decisions
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of return. 4. Using Pamela’s methodology of adjusting the firm’s hurdle rate based on the relative variable of each division’s sales in relation to that of the consolidated firm‚ calculate the divisional hurdle rates. 13.86 11.11 11.40 12.48 WACC(defence products) = 12.48% * 1.11 = 13.86 5. Comment on this methodology of estimating the divisional hurdle rates. Do you agree with it or not? Explain your
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Pontrelli Recycling Sara Doyle‚ Kevin Jackson‚ and Ali Lakhani FIN/575 Michael Plesko January 20‚ 2014 Pontrelli Recycling Pontrelli Recycling‚ Inc. has a mission to “increase the efficiency of recycling usable materials in order to create a better environment for all‚” and to “create value and a fair return on investment for shareholders” (Callahan‚ Stetz‚ and Brooks‚ 2007). A project must always be aligned with the company’s strategy and financial goals. When devising any new project‚ a
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the surface with wet chemicals each and every time. In 1888 George Eastman founded Kodak. Kodak developed the photo fil in 1889 and made it available to the masses in rolls. This led to many other advancements in photography‚ including Thomas Edison’s motion picture camera in 1891. After this‚ advancements only accelerated. The first camera available to the masses came in 1913‚ in the form of a 35 mm still camera. Kodak launched color film in1941. In 1948‚ the polaroid was brough to market‚ allowing
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Foods. Process Steps 1. Estimate the WACC for Kraft 2. Calculate historic growth rate 3. Calculate the average income tax rate and determine the relationship between sales and cost of sales‚ capital expenditures‚ depreciation‚ and net working capital 4. Determine the sales growth rate required to meet Kraft’s 2016 sales projections 5. Project 5-year cash flows starting in 2012 and ending in 2016 6. Discount cash flow projections beyond 2016 at the WACC rate to estimate the projected firm value
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steady state assumption that the firm enjoys no opportunities for abnormal growth or that expected returns equal required returns in this interval. Once a schedule of free cash flows is developed for the enterprise‚ the Weighted Average Cost of Capital (WACC) is used to discount them to determine the present value‚ which equals the estimate of company or enterprise value. This note focuses on valuing
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