Chemical Corporation‚ another typical chemical company in 1979. Dixon wants to diversify its product line buy acquiring the aforesaid plant‚ which produces sodium-chlorate to supply to paper producers in Southeastern part of the US. This plant initially cost 12 mln. USD and additional 2‚25 mln. USD needed to buy laminate technology to increase efficiency and profitability of the plant in order. Dixon has conducted thorough marketing research for the industry providing cash flow analysis on purchase of
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I. Summary: The Teletech Corporation is a U.S company that provides integrated information movement and management. It has two main business divisions‚ which are The Telecommunication Services‚ and The Products and Systems. In Telecommunication Services division‚ it primarily provided many kinds of phone service to business and residential customers. In fact‚ it performed a network for 7 million customer lines throughout Southwest and Midwest. The division archived an increasing average rate of 3%
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estimate a firm’s cost of capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not? WACC is the weighted average cost of capital. It can be calculated as: WACC = (Weight of funding source 1) x (Cost of funding source 1) + … + (Weight of funding source n) x (Cost of funding source n) Usually this will be simply: WACC = (Percentage of debt) x (Cost of debt) + (Percentage of equity) x (Cost of equity) It is important to estimate a firm’s cost of capital for the appraisal
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* ROE and ROA use Average Common Equity and Average Assets in the denominator‚ respectively * Total Debt includes the Current Portion of Long-term Debt and Long-term Debt * Total Capital includes Total Debt‚ Total Common Equity‚ and Preferred Stock. * EBITDA-CEx stands for EBITDA minus Capital Expenditures. After improving Y/Y in 1981‚ WHX financial performance severely deteriorated in the period 1982-1983. Financial metrics mostly improved in 1984‚ led by revenue growth and margin
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CAPITAL STRUCTURE DECISIONS: THE BASICS Problems 1: The Star Wood company is currently in the following situation: (1) EBIT = $ 4.7 Million; (2) Tax Rate‚ T = 40%; (3) Value of Debt‚ D = $2 Million; (4) rd (Cost of Debt) = 10%; (5) rs (Cost of Equity) = 15%; (6) Shares of stock outstanding = 600‚000 & Stock price‚ Po = $30. The firm’s market value is stable‚ and it expects no growth‚ so all earnings are paid out as dividends. The debt consists of perpetual bonds. a. What is the total
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The Cost of Capital Project: Internet Version {December 2009} By Wm R McDaniel‚ PhD Objective The assignment is to estimate the weighted average cost of capital (WACC) for an actual corporation as of the current time. Actual managers would need to know their company’s WACC as a starting datum to estimate the discount rate to use in the net present value analysis of new projects or of termination decisions. The student will later need to know the technique for application in some case
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Blaine’s Case 1) Do you believe Blaine’s current capital structure and payout policies are appropriate? Why or why not? 2) Should Dubinski recommend a large share repurchase to Blaine’s board? What are the primary advantages and disadvantages of such a move? 3) Consider the following share repurchase proposal: Blain will use $209 million of cash from its balance sheet and $50 million in new debt bearing interest at the rate of 6.75% to repurchase 14.0 million shares at a price of 418
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Introduction Cooper industry‚ H.K. Porter Company and VLN Corporation are entangled in a battle over the takeover of Nicholson File Company. Both H.K. Porter Company and VLN Corporation have already made their offers to the Nicholson File Company shareholders and now the management of Cooper Industry have to decide whether to jump into the foray for the control of Nicholson File Company or not. The major issues faced by the management of Cooper Industry are as following: 1.Is Nicholson File Company
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An Implication of the Modigliani-Miller Capital Structuring Theorems on the Relation between Equity and Debt1 Ruben D. Cohen 2‚3 Abstract We illustrate here the effects of the Modigliani-Miller theorems on capital structuring‚ emphasising especially on the relationship between equity and debt. This is carried out numerically via a simplified financial statement‚ which takes us through the methodology that leads to the ROE‚ WACC and firm’s value‚ all plotted against leverage. Introduction The
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Project Genesis | Atlantic Corporation | ACE Consulting Group | “A service we provide with excellence“ | ------------------------------------------------- Executive Summary The purpose of this report is to assess the viability of the acquisition of Royal Paper Corporation’s (Royal) Monticello mill and box plants by Atlantic Corporation (Atlantic). This will be conducted through the evaluation and analysis of whether this project is profitable
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