Weighted Average Cost of Capital (WACC) Calculations The weighted average cost of capital (WACC) is the discount rate used in the discounted cash flow analysis. Usually‚ the WACC is the weighted average of the cost of debt (Kd) and the cost of equity (Ke)‚ since debt and equity are the most common sources of funds for the companies. In general‚ the formula for WACC is the following: As implied by the formula itself‚ if a company does not have interest-bearing debts‚ then its WACC would equal
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DELUXE Corporation Teaching Note Synopsis and Objectives Suggestions for complementary cases in capital structure choice and financial flexibility: “The Wm. Wrigley‚ Jr. Company: Capital Structure‚ Valuation‚ and Cost of Capital‚” (Case 34); “Rosario Acero S.A.‚” (UVA-F-1211); “Gainesboro Machine Tools Corporation‚” (Case 26) In July 2002‚ an investment banker advising Deluxe Corporation must prepare recommendations for the company’s board of directors regarding the firm’s financial
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decisions in a corporation‚ including investing‚ financing and working capital management decisions. COURSE CONTENTS: This course provides basic concepts of the time value of money‚ valuation and rates of return‚ cost of capital and capital budgeting. Students will learn about how capital markets function‚ about different types of securities and financing instruments that exist‚ and about how to manage cash flows. Also‚ risk‚ working capital management‚ leverage‚ forecasting‚ and the analysis of financial
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debt in exhibit 3? 2. How much potential value‚ if any‚ can AHP create for its shareholders at each of the proposed levels of debt? 3. What capital structure would you recommend as appropriate for AHP? What are the advantages and disadvantages? 4. How might AHP implement a more aggressive capital structure policy? What are the alternative methods for leveraging up? Case 2: Dividend policy at FPL Group (Week 10 – not final) 1. What
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alternative actions by management would have reduced the severity of Massey’s financial difficulties? 8) If you were Deere in 1981‚ what strategy would you pursue? 9) Summarize this case by explaining why the capital structure decision mattered so much in this industry. Capital structure case: Massey-Ferguson Ltd (1980) This case seeks to discuss the determination of a target debt policy consistent with business risk and competitive risk‚ exploring the difficulties encountered by a firm with
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traded at a discount to comparable companies‚ as its management believed‚ we can simply apply multiple which comes from the average multiple of its comparable companies. Considering fluctuation of future after-tax earnings caused by the change in capital structure‚ we prefer to use TEV/EBITDA multiple in this case. Amtelecom Group consists of two lines of business which has to been taken into consideration. We separately calculate the value of both companies and their summation. In this way‚ we get a relative
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1. Introduction Wal-Mart Wal-Mart was founded by Sam Walton on 1962 and it is the largest retailer in the world. The company has three major operations which are Wal-Mart Stores U.S.‚ Sam ’s Club‚ and Wal-Mart International. On 2007‚ Wal-Mart used this new slogan” Save Money Live Better”. However‚ there are some critics about their employee life. Wal-Mart exploits their employee’s salary for setting low price to customer. They resisted their worker to build union organization because they tried
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Ford Motor Company Valuation Business Case Stern Value Management Interview Vasishta Atmuri December 5‚ 2014 Ford Motor Co. Analysis| Stern Value Management Interview Introduction Ford Motor Co. manufactures and sells cars and is the sixth-largest car maker Stock Price in $ 20 1000000000 800000000 600000000 400000000 200000000 0 15 10 5 FINANCIAL HIGHLIGHTS Ticker F Date‚ as of 12/03/2014 Stock Price $16.01 P/E 10.47x Market Cap (mm) $61‚617 Dividend Yield Ford Motor Co. (NYSE:F)
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The Kroger Company: A Customer First Strategy Ian McClintock (i.a.mcclintock@eagle.clarion.edu) Nick Born (n.p.born@eagle.clarion.edu) Allen Walters (a.d.walters@eagle.clarion.edu) The Kroger Company 9/29/10 BASD 490 Section 01 Abstract: The Kroger Company is a leading grocery retail chain that prides itself on its customer satisfaction and conducting ethical business. Kroger operates nearly 2500 grocery retail stores in 31 states. An internal evaluation of the company’s strengths
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their finance classes in particular. Critical operating and financial decisions cover the analysis of financial statements‚ calculation of cost of capital‚ generation of optimum capital structures for public and private firms‚ analyzing asset and firm valuations‚ corporate restructuring‚ evaluating potential merger and/or acquisition partners and capital raising strategies. Prerequisites: Fin 647 or Fin 652 and 6 credits of advanced finance electives Teaching Method This course uses a case study
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