Valuation models Discounted cash flow models: Dividend discount Free cash flow to the firm Residual income Multiples-based valuation: Price-earnings Value-EBITDA Value-EBIT Value-Sales Price-Book value Equity valuation In conjunction with the valuation of Coles Group‚ contained in “Excel03 Equity valuation” Real options valuation Equity markets price shares above the present value of expected future cash flows‚ due to the presence of embedded options not captured by DCF analysis Real
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percent‚ and the market risk premium is 6 percent. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The impact of capital structure on value depends on the effect that debt may have on -WACC -FCF Debt holders have a prior claim on cash flows
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USEC Case Case Analysis In response to the Energy Policy Act of 1992‚ the United States Enrichment Corporation (USEC) was created to privatize uranium enrichment for civilian use (Wikipedia). In 1998‚ USEC went public‚ and has been operating as a leading global energy supplier of enriched uranium fuel for commercial nuclear power plants. The following report details USEC’s opportunity to embark on a massive capital-expenditure project known as the American Centrifuge Project (ACP). Currently‚
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3 Bank Muscat at Glance 4 Reasons of selecting Bank Muscat 5 The Analysis 6 Beat calculation 6 Comparison between risk and return in 2007 and 2008 7 Calculating WACC 8 Calculation of WACC on book value basis 9 Calculation of WACC on Market value basis 10 Conclusion 11 Introduction In my report as requested I picked one component of MSM30 Index sample. I have chosen to talk about Bank Muscat Share (BKMB) to analyze its
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going to calculate the WACC of the project and then compare it to the stated IRR of 15.7%. While this calculation of IRR is subject to other risks such as the amount of units sold expected‚ we are going to assume 2‚500 units will be sold annually over the first 20 years. It is also assumed that over the next 20 years world economies will grow by 3.2% annually and the relationship between air travel and GDP will continue which is growing at 5.1% annually. The calculation of the WACC is determined by using
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capital strategy and repurchase undervalued shares. To accomplish all these goals the company has asked Janet Mortensen‚ Vice President of finance for Midland energy resources‚ to calculate the weighted average cost of capital (WACC) for the company as a whole. Formula: WACC = rd (D/V) (1-t) + re (E/V) Where‚ rd = cost of debt; re= cost of equity; D = Market value of debt; E= Market value of equity; V= Market Value of the company (D+E); t= Tax rate. Risk Free Rate‚ rf: Midland’s borrowing capacity
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refer to your Essentials of Business I Corporate Annual Report project for the appropriate ratios.) Comment on the financial health of the company. Please look at ratio trends and compare to industry average. (4) WEIGHTED AVERAGE COST OF CAPTIAL (WACC): Estimate the components of the cost of capital for your company using market data. a)
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Ratio ROE = Net Income/ Stockholders Equity = 2526 / 19496 = 12.95% PR = Dividends per Share / Earnings per Share = .40 / .76 = 52.6% SGM = 12.95% * (1-52.6%) = 12.95% * (.474) = 6.14% Calculating WACC: First step in calculating WACC is to use the Capital Asset Pricing Model (CAPM) CAPM = Rf + Beta (MRP) Rf = Risk Free Rate Beta = Market figure as to how stock reacts to market fluctuations MRP = Market return rate – risk free rate Rf = 7
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Buying wisely. Mechanical Engineering‚ 130(10)‚ 39-41. Retrieved from http://search.proquest.com/docview/230164943?accountid=32521 Investopedia. (2012). Procurement. Retrieved from http://www.investopedia.com/terms/p/procurement.asp#axzz26Z34kMXa Pinkerton‚ R. L.‚ & Kemp‚ D. J. (1996). The industrial buyer and the robinson-patman act. International Journal of Purchasing and Materials Management‚ 32(1)‚ 29-29. Retrieved from http://search.proquest.com/docview/235196988?accountid=32521 Rendon‚ R
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Capital assumption of John Adams. 2) WACC Estimate: John Adams used the following parameters/assumptions in his WACC calculations: Rf: 7% Market Risk Premium (“MRM”): 7% Beta Arch: 1.6 Borrowing Rate: 11% Eqity/Debt Ratio: 40% / 60% And based on these: Re= Rf+ βArch x MRP = 7% + 1.6 x 7% = 18.2 % WACC = 0.4 x Re + 0.6 x Rd and accepted tax shield from cost of debt as “0” due to the “0” tax cost of the company during the forecasted period. WACC = 0.4 x 18.2% + 0.6 x 11.0% = 13.88% =>13
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