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
Premium Net present value Rate of return Internal rate of return
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
Premium Revenue Generally Accepted Accounting Principles Liability
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
Premium Net present value Rate of return
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
Premium Net present value Weighted average cost of capital
margin doesn’t provide enough cash flows for the future growth and the company also reach the bank’s lending limit. Three alternatives for additional financing are available for consideration. This report analyzes the new project based on the estimated WACC to decide if Flash memory should accept or reject this project. Furthermore‚ the report prepares three years pro-forma for 2010‚ 2011‚ 2012 to show the impact on the income statement with and without the new project so that financing requirements based
Premium Corporate finance Balance sheet Finance
Application of Capital Structure‚ Costs of Capital for Multiple Division firms Case Analysis: Pioneer Petroleum Corporation (PPC).1 Submitted by: Joseph Donato N. Pangilinan‚ FICD Date Presented: April 12‚ 2012 Introduction: This landmark case seeks to break the risk-reward trade off involved in calculating Capital Cost. The object of the solution must be to minimize project risks while maximizing project opportunities available. We want a rate and a rating system that does not unnecessarily
Premium Weighted average cost of capital Finance Rate of return
Mercury Athletic Footwear: Valuing the Opportunity Group 1 Bushra Javed Butt M. Sharjeel Shahid Mahnoor Malik Uzair Nasir MBA II – Section A Submitted To: Sir Nawazish Mirza Introduction West Coast Fashions‚ Inc. (WCF)‚ a large designer and marketer of men’s and women’s apparel decided to dispose of one of their divisions; Mercury Athletic. John Liedtke‚ head of the business development for Active Gear‚ Inc. (AGI)‚ saw a possible opportunity for his company in acquiring Mercury. The footwear
Premium Free cash flow Investment Operating cash flow
market sales and prices of stocks‚ management presented its plans to improve and perform better. • Third party sources also gave their opinions on whether the stock was a sound investment. WACC CALCULATION: Cost of Capital Calculations: Nike Inc Cohen calculated a weighted average cost of capital (WACC) of 8.3 percent by using the capital asset pricing model (CAPM) for Nike Inc. I do not agree with her figure‚ and the reasons to that are as follows: Value of equity The problem with Cohen’s
Premium Weighted average cost of capital Stock Arithmetic mean
Table of contents Introduction TARGET Corp ROIC vs. WACC Target Corp vs. Industry ROIC target Corp vs. Industry Revenue Trend Target Corp Operating Expense vs. Industry operating expense as a percent of revenue Target corp Operating Profit vs industry operating profit as a percent of revenue. target Corp Economic Moat Conclusion Works Cited Table of figures Figure 1 Target Corp ROIC vs WACC; Source: Mergent Online; Annual Studies. Figure 2 Target Corp vs. Industry
Premium Income statement Expense Operating expense
bonds) Rm= 14.81% (S&P – 1‚980) RE = Rf + β(Rm – Rf) RE = 9.5% + 2.85(14.81%-9.5%) RE = 24.64% b) Con RE y los datos t = 48%‚ RD = 11.25%‚ D/V = 66.7%‚ E/V = 33.3%‚ hallamos WACC = (1-t)* RD(D/V) + RE(E/V) WACC = 0.52*11.25(66.7%) + 24.64(33.3%) WACC = 3.92% + 8.13% WACC = 12.05% 2. Project the incremental cash flows associated with the acquisition of the Collinsville plant without the laminate technology and estimate the acquisition’s net present value. Project the
Premium Weighted average cost of capital Net present value