motors‚ would allow the company to remain in the leisure craft market and utilize its established selling network. To determine which of the two projects are financially more pleasing we need to use calculations to determine the value of the beta‚ WACC‚ NPV and IRR. Fist we want to calculate the net working capital (NWC). The NWC turnover ratio for this new operation was expected to be 6:1.( NWC turnover = Sales/ NWC = 6/ 1 = 3‚500‚000 / NWC. Thus‚ NWC = $ 583‚333.33); then we find the project
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Issuing 3 billion debt will alter the capital structure and increase it WACC. The WACC before debt is 10.11% calculated from CAPM‚ given the unlevered beta equals 0.75‚ risk free rate equals 10 year Treasury yield which is 4.86%‚ and risk premium of 7%. After taking on the debt‚ the D/E ratio calculate from debt over total equity gives almost 70%‚ and the levered beta becomes 1.07. Using the 13% cost of equity given in the case‚ the WACC after recapitalization will be roughly 9.15%. Given 232.441 million
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produce the income. • EVA = NOPAT − WACC × Capital (1) where NOPAT is net operating profit after tax‚ and WACC is the weighted average cost of capital to the firm‚ an implicit market price that reflects the risk to the supplier of finance. Competitive Strategy and Game Theory Economic Value Added (or Economic Profit) • EVA = (RONA −WACC) × Capital (2) where RONA is return on net assets i.e. capital (i.e.‚ NOPAT/Capital). • The return spread (RONA − WACC) measures the ability of the firm
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------------------------------------------------- ------------------------------------------------- KOZMINSKI UNIVERSITY ------------------------------------------------- Financial Statement Analysis ------------------------------------------------- ------------------------------------------------- Critical Review ------------------------------------------------- ------------------------------------------------- Astral Records Ltd -------------------------------------------------
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Name of the Company - Patni Computer Systems Ltd. Name of the Chairman – Narendra K. Patni Background of the Company The Patni Computer Systems Ltd. (Patni) was incorporated on 10th February 1978 under the Companies Act 1956. The company converted itself from a private limited company to a public limited company on 18th September 2003. It is now a leading IT consulting services and business solutions provider in India. The majority
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The idea of a jumbo airliner being capable of seating over 500 people almost seemed unreal. That is‚ until Airbus came along. This idea for the jumbo plane started as a joint venture with Boeing‚ but after it started Boeing backed out because of high costs and speculation of demand. Airbus pushed along and in 1999‚ they completed to rough draft of this plane. The problem with this plane that was obvious was first the overall cost of the plane. It was estimated to cost about 13 billion to launch.
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Issue In this assignment‚ we are asked to compute the WACC of Marriott Corporation and each of the company’s three divisions. Our approach is outlined in the next section. We made a series of assumptions regarding either the available data or the missing information. This has been explained below‚ in a separate section. Approach We applied the following formulae to calculate the WACC: Our assumptions are explained in the next section. The table below presents the approach for calculations
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– Accept positive NPV projects Discount Rate • As we discussed‚ the discount rate is the weighted average cost of capital (WACC). D E WACC E ( rd )(1 t ) E ( re ) DE DE where t = tax rate‚ E(rd) = expected cost of debt D = amount of debt in capitalization E(re) = expected cost of equity E = amount of equity capitalization Discount Rate • To calculate the WACC using 1989 figures under the three strategies: 5‚204 12‚790 Prebid : (.09)(1 .34) (.168) .137 5‚204 12‚790 5‚204 12
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VALUATION TECHNIQUES Vault Guide to Finance Interviews Valuation Techniques How Much is it Worth? Imagine yourself as the CEO of a publicly traded company that makes widgets. You’ve had a highly successful business so far and want to sell the company to anyone interested in buying it. How do you know how much to sell it for? Likewise‚ consider the Bank of America acquisition of Fleet. How did B of A decide how much it should pay to buy Fleet? For starters‚ you should understand that the value
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Financial Management 1. Happy Valley‚ Inc. stock is valued at $51.40 a share. The company pays a constant dividend of $3.80. What is the required return on this stock? Po = D/Rs $51.40 = $3.80/Rs Rs = 7.39% 2. The Francis Company is expected to pay a dividend of D1 = $1.25 per share at the end of the year‚ and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company’s beta is 1.15‚ the market risk premium is 5.50%
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