yield is not appropriate. 30 years T bond rate seems to be the most stable rate. Therefore‚ 30-year seems to be a more appropriate time horizon for selecting t-bond yield. rf = 4.98%. b. According to table 1‚ D/V = 42.2% c. Midland’s beta =1.25 d. EMRP=5% e. In table 1‚ we find the spread to treasury of consolidated firm is 1.62%. f. Tax rate = 40%‚ since according to exhibit 1‚ from 2004 to 2006 the tax rate is around 40%.
Premium Investment Weighted average cost of capital Net present value
Report on Case analysis of California Pizza Kitchen Course (506): Cases in Financial Decision Making SUBMITTED TO: Dr. M. Sadiqul Islam Professor Department of Finance University of Dhaka SUBMITTED BY: Group 21 MBA 16th Batch Department of Finance University of Dhaka Date of Submission April 08‚ 2015 Group No: 21 Serial Name BBA ID MBA ID 1 Farhana Bondhon 16-004 16-615 2 Farha Farzana 16-006 16- 727 3 Marufa Akhter 16-132 16- 657 Letter of Transmittal April 08‚ 2015 Dr. M. Sadiqul
Premium Financial ratios Revenue Generally Accepted Accounting Principles
After evaluating Hertz‚ we recommend that Carlyle Group purchase Hertz for at least $2.3 billion. If they want to achieve a 20% return‚ they should offer $5.2 billion. A higher offer price is recommended due to the competitive nature of the dual-track process. The dual-track process has created a rather interesting environment for potential investors. Not only are investors competing with each other‚ but if the case that a deal is not worked out then Ford has made provisions for the company to be
Premium Investment Leveraged buyout Private equity
#2 Capital Structure -1 Dr. Kulbir Singh Advanced Corporate Finance (ACF) Term III 2013-14 IMT-Nagpur Capital Structure: Introduction Mix of debt and equity use to finance its business Goal of CS Decision: to determine the financial leverage or CS that maximizes the value of company by minimizing WACC. Theory of Corporate Financing MM Theory of CS Irrelevance Trade-Off Theory Agency Theory Dr. Kulbir Singh (IMT-Nagpur) ADF 2013-14 Pecking Order Theory 2 Capital Structure: Introduction……
Premium Weighted average cost of capital Corporate finance
price over the next five years. Our findings are summarized in the following report. I. WACC Calculation To determine the WACC for this project we need to know the following; the current risk free rate‚ the market risk premium‚ and an asset beta appropriate to this project. We selected the current 30-year U.S. government bond yield of 6.61% as the appropriate comparative risk free rate. U.S. government bonds are considered risk-free investments because the likelihood that the government will
Premium Net present value Cash flow Rate of return
Introduction Silicon Arts Inc. (SAI) is a manufacture of digital imaging Integrated Circuits (IC) that are used in digital cameras‚ DVD players‚ computers‚ medical and scientific instrumentation. The major sales are in North America (70%)‚ Europe (20%)‚ and South East Asia (10%). This company annual sales turnover is $180 million. SAI grew rapidly in its first years due to the semiconductor industry boom. As the industry began to slow down‚ SAI watched its revenues fall by 40%. SAI survived
Premium Net present value Investment Capital budgeting
to be 5% in my analysis. 4. Tax rate: 40%. 5. Net working capital: grow at the same rate as revenue grows. 6. Capital expenditure and Depreciation: offset each other. 7. Cost of asset (Ra). Unlever equity beta of comparables‚ and use the average unlevered beta as RightNow’s βa. The interest rate of 10-year Treasury bond was 4.01% in 2003. Assume the risk premium is 6%. The cost of asset is 14.49% as
Premium Generally Accepted Accounting Principles Inventory Revenue
Cost of equity and the WACC (see Table 1) Because US future risk premium ranges from 3% to 5%‚ the risk premium used in this case is 4%. In terms of unlevered beta of assets‚ we used average of the companies that is specialized for 21`only. Based on all above judgements‚ calculated cost of equity is 15.37%‚ and WACC is 12.01%. Calculation of NPVs Table 2 and Table 3 show the next 10 years cash flow of the Collinsville Plant without and with laminated graphite electrodes. Using the calculated
Premium Laminate Chlorine Risk
Corporate Finance Lecture Note Packet 2 Capital Structure‚ Dividend Policy and Valuation B40.2302 Aswath Damodaran Aswath Damodaran! 1! Capital Structure: The Choices and the Trade off Neither a borrower nor a lender be Someone who obviously hated this part of corporate finance Aswath Damodaran! 2! First Principles Aswath Damodaran! 3! The Choices in Financing There are only two ways in which a business can make money.
Premium Corporate finance
Bond P is a premium bond with a 12 percent coupon. Bond D is a 6 percent coupon bond currently selling at a discount. Both bonds make annual payments‚ have a YTM of 9 percent‚ and have five years to maturity. The current yield for Bonds P and D is percent and percent‚ respectively. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g.‚ 32.16)) | If interest rates remain unchanged‚ the expected capital gains yield over the next year for Bonds P and D is percent
Premium Bond Stock Dividend yield