capital (WACC). Because we calculate the WACC using the effective after-tax interest rate as the cost of debt‚ therefore this method incorporates the tax benefit of debt implicitly through the cost of capital. 2. ADJUSTED PRESENT VALUE METHOD (APV); first value a projects free cash flows without leverage by discounting them using the unlevered cost of capital. Then separately estimate and add the present value of the ITS from debt. This method we add the value of the ITS to the projects unlevered
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FINANCE 6301 AMME Individual Assignment #2 FORMAT: You can use a Word document‚ an Excel spreadsheet or both. If you use Excel‚ submit the Excel file rather than embedding Excel into a Word document. Please use single-space‚ 11 pt. or 12 pt. font. Multiple Choice: Select the best response (3 points each). You may add comments to explain your reasons. 1. If the correlation coefficient is 0‚ A) You can completely eliminate risk by short selling the riskier asset and investing
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thousand dollars. Morris then merged Kraft with General Foods unit in 1989‚ creating one entity known as Kraft General Foods Inc.‚ making it the largest food company in the United States and the second largest in the world. Philip Morris then acquired Nabisco in December 2000 and immediately began to integrate it into the operations of Kraft Foods and Kraft Foods International. In 2001 Philip Morris created a new holding company for the combined operations know as Kraft Food Inc.. Kraft Food then had two
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LSE / Lent Term – 2013 FM421 – Applied Corporate Finance Case Assignments • • • • You will find an Excel file with exhibits from the case on Moodle. Assignments MUST be submitted before class on Moodle. One per group is enough Please include your candidate numbers (not names) on your assignment In class‚ you will have 10 minutes to present your solution‚ followed by a class discussion. You may want to prepare slides (max. 7) to support your presentation. “American Home Products” State clearly
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INTRODUCTION What the UniLever Is? Unilever is dedicated to meeting the everyday needs of people everywhere. Around the world Unilever foods and home & personal care brands are chosen by many millions of individual consumers every day. Earning their trust‚ anticipating their aspirations and meeting their daily needs are the tasks of Unilever local companies. They bring to the service of their consumers the best in brands and both Unilever’s international and local expertise. For more than 70 years
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EM and Presentation Guidance Questions BW/IP 1. Was Borg-Warner’s Industrial Products Group a good candidate for a leveraged buyout in 1987? Evaluate the price paid and the structure of the deal that closed in May 1987. Are you optimistic about BW/IP’s prospects? 2. Do you favor the proposed acquisition of UCP? What are the primary sources of value in such a transaction? Is the proposed price reasonable? 3. How do the various features of the BW/IP buyout affect the company’s decisions about long-horizon
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Steady cash flow (around 30 million per year). * Strong management team. * Positive NPV (about 61.5 million) The NPV of BW/IP is 61.5million(301-239.5).Thus‚ we are quite optimistic about this BW/IP’s project. Calculating the NPV. Method: APV: VL=VU+PV (ITS). We can get the interest paid schedule from the BW/IP’s projected operating performance‚ which means there is a pre-determined interest paid to debt holders. Assumption: Tax rate: 38%.From 1991 to 1993‚ the tax rate remains to be
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Corporate Financing Decision: 0 NPV transaction (not always 0 NPV‚ subsidy= pos npv‚ creating new security) Efficient Capital Markets: price reflects available info‚ investors receive fair price when interact‚ firms get fair price for securities it sells Pt= Pt-1 + Expected $ return given risk + Random price error Rt= E(Rt) + Error t (abnormal return‚ efficient mkt makes unpredictable) Rt= Rft + B(Rmt – Rft) Weak: past market info‚ weak form efficiency‚ tech analysis will fail Semi-Strong:
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Suzuki Motor Company Limited like their company profile‚ mission‚ vision and corporate values. Then I observer the some of the major products manufactured and assembled by the Pak Suzuki Motor Company limited which include SWIFT‚ LIANA‚ CULTUS‚ MEHRAN‚ APV etc… With the help of Internal and External analysis‚ I’ve sorted out some of their strengths‚ weaknesses and the opportunities and threats prevailing in the market. Also the PEST analysis was conducted to observe the external factors that may influence
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Re: Seagate Technology 1. Describe the main terms of the Seagate Technology buyout? Why is Seagate undertaking this transaction? Is it necessary to divest the Veritas shares in a separate transaction? What are other alternative ways to create value? The primary contemplated terms would be to sell Seagate’s disk drive mfg assets including $765M in cash to Suez Acquisition Company controlled by Silver Lake Partners. The purchase would be financed by equity put up by Silver Lake and also by an‚
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