EPPM3644 KEWANGAN KORPORAT DAN PENSTRUKTURAN SET: 3 REPORT OF CASE STUDY: CASE 19 WORLDWIDE PAPER COMPANY PROFESSOR: DR. LIZA MARWATI BINTI MOHD YUSOFF GROUP MEMBERS: LOH CHAI LING A140178 GOH HOOI SAN A139708 KERK (KEH) YIH JEN A139574 SEMESTER 2‚ 2013/2014 INTRODUCTION In December 2006‚ Bob Prescott‚ the controller for the Blue Ridge Mill‚ was considering the addition of a new on-site longwood woodyard. Two primary benefits for this new addition include eliminating
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1) Why is Flagstar in financial distress? When possible‚ back your claims with data. Signs of financial distress • The company lost money almost every year since its leveraged buyout by Coniston Partners in 1989. The income generated was not sufficient to service the interest expenses of the company which stood at $2.62B in 1996. From Exhibit 1‚ we can say that interest coverage ratio computed as EBIT / Interest Expense was 1.31 in 1989 and has been decreasing over years and currently stands at
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WACC calculation: 1) Lodaging: For Risk free rate‚ we use the 30-year U.S. government interest rate to match the duration of lodge. rf = 8.95% For the expected return of the market portfolio‚ we use the average of S&P 500 index returns from 1926 – 87 as the proxy. rm = 12.01% Therefore‚ the Market Risk Premium‚ MRP = rm - rf = 12.01% - 8.95% = 3.06% The debt rate spread of lodging = 1.10% βD = spread of lodging / MRP = 1.1 / 3.06 = 0.3595 rD = rf + MRP * βD = 8.95% + 3.06% * 0.3595
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stub year and mid-year adjustment Terminal value using growth in perpetuity approach Terminal value using exit multiple approach Calculating net debt Shares outstanding using the treasury stock method Modeling the weighted average cost of capital (WACC) Sensitivity analysis using data tables Modeling synergies ***************************** SAMPLE PAGES FROM TUTORIAL GUIDE ***************************** DCF in theory and in practice DCF in theory • The DCF valuation approach is based upon the
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life of the project. project’s debt financing is unknown over the life of the project. Both A and B. Both B and C. 2. award: 1.00 point Calculate the Horizon Value in 2013 for XYZ Manufacturing Company if Free Cash Flows in 2013 are $678‚ WACC= 12.5%‚ and growth rate is 4%. Assume growth is expected to be constant after 2013. $12‚245.67 $3‚231.31 $8‚295.53 $375.28 $19‚231.45 3. award: 1.00 point National Electric Company (NEC) is considering a $40 million project in its power systems
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Mercury Athletic Footwear Case Assignment Questions: 1. Is Mercury a good target for AGI? Discuss strategic fit of brands‚ products‚ customers‚ and distribution. Identify specific sources of value. Discuss AGI’s strengths/weaknesses compared with other bidders. I think Mercury is a good target for AGI: The brands--the AGI brands and logos are associated with a lifestyle that was prosperous‚ active and fashion-conscious. The Mercury brands are athletic and casual footwear. The products--AGI focused
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last part essay will explain what discount rate Tesco Plc. should use when deciding on major investment projects. a) Calculate the company’s weighted average cost of capital and explain/justify your calculation. Weighted average cost of capital (WACC) is used to determine whether company should invest in a project. By comparing cost of capital on investment and expected return on capital‚ a company can decide whether investment is worthwhile. Companies use this method as a discount rate for financed
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investor relations and so on‚ while a oslo listing was simpler and within the management ‘s comfort zone. In this report‚ we conduct two valuations of emgs as an oilfield service firm and a technology company respectively. By assigning different WACC and FCFF‚ we determined that the emgs was worth $1266.85MM based on OHM information and $616.65MM using tech comparables. At last‚ we discussed the reason of the gap in value and why we thought it was more suitable to consider emgs as an oilfield service
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PRESENTATION FOR COMPANY X BY: Jae Kierstin Carreira 1 PART B1 Identify what the correct net cash flow for the second year would be if all expenses were as described but there was no depreciation costs. Here is what we know already: Year two Net Cash Flow with depreciation Expected annual sales of new product Expected annual costs of new product cash expenses depreciation expenses Income before taxes Income tax at marginal rate Net income Net annual cash flow for years shown 3‚170‚000 2‚400
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Making a sound financial decision is a vital component of the success of a business. The business must conduct market research‚ description of products‚ services and marketing strategies‚ and setting principles for the business’s success. Expenses should be noted prior to writing a financial plan. The goal of a business is to operate on a predefined budget. Ensure there are no undefined or hidden cost that could cause problems later. The business plan helps the business to make day-to-day decisions
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