Case 10 Aspeon Sparkling Water‚ Inc. Capital Structure Policy CASE INFORMATION Purpose This case‚ which in all aspects is identical to Case 9‚ illustrates the capital structure decision for a firm that starts with zero debt. Either Case 9 or Case 10‚ but not both‚ should be assigned. The primary analytical tool is valuation analysis‚ although the case briefly introduces the Modigliani and Miller (MM) with corporate taxes and Miller models. The case also illustrates financial
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ΔV is the incremental value added and T is the tax rate. It‚ thus‚ follows that the value‚ VL‚ of the levered firm becomes: V L = Vu + DT (1b) ΔV = DT 1 (1a) where Vu is the value of the unlevered firm. Simply stated‚ therefore‚ the value of the levered firm is that of its unlevered counterpart‚ plus the present value of the interest tax shield‚ which is DT. We will now implement the above to illustrate how debt and equity are coupled to each other when a firm decides to take on debt
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US Company I - BUSINESS SUMMARY Amazon.com‚ Inc. (Amazon)‚ incorporated on May 28‚ 1996‚ is an American company listed on the Nasdaq. It operates retail web sites and provides programs that enable third parties (3P) to sell products on its web sites. The Company sources and sells a range of products to its customers and also manufactures and sells Kindle devices. It operates in two segments: North America and International. In May 2012‚ Amazon acquired Kiva Systems‚ Inc. II -
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Plant 4 Sodium Chlorate Market in USA 4 Issues surrounding Collinsville opportunity 5 Valuation 5 Using NPV Rule for the project – Without Laminated Electrodes 6 Using NPV Rule for the project – With Laminated Electrodes 6 Calculations of Beta 7 Debt/Equity ratio 7 Monte Carlo Analysis 7 For the Unlaminated factory 7 Recommendations 8 Exhibits 9 Exhibit 1: Using NPV Rule for the project – Without Laminated Electrodes (Full Table) 9 Exhibit 2: Using NPV Rule for the project
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Mergers & Acquisitions: The Case of Microsoft and Nokia Luís Franco Hilário Advisor: Peter Tsvetkov Dissertation submitted in partial fulfillment of requirements for the degrees of MSc in Business Administration‚ at the Universidade Católica Portuguesa SEPTEMBER 2011 1 Abstract Due to the financial downturn and the emergence of new devices in the global handset market has led companies to change their business strategies. Indeed‚ Mergers and Acquisition are considered one of the
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Hill Country Snack Foods is a company which produce variety of snacks. Their operating strategy is a combination of good products‚ efficient and low-cost operation‚ and singular management. * Good products are not only about high quality‚ but also about to satisfy different type’s customers by producing many kinds of snacks. Customers are satisfied by companies’ quick react to their requirements or preferences and reinvent and expand its products. For example‚ the company has also tried to change
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DELUXE Corporation Teaching Note Synopsis and Objectives Suggestions for complementary cases in capital structure choice and financial flexibility: “The Wm. Wrigley‚ Jr. Company: Capital Structure‚ Valuation‚ and Cost of Capital‚” (Case 34); “Rosario Acero S.A.‚” (UVA-F-1211); “Gainesboro Machine Tools Corporation‚” (Case 26) In July 2002‚ an investment banker advising Deluxe Corporation must prepare recommendations for the company’s board of directors regarding the firm’s financial
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accuracy of your answer‚ you should perform all intermediate calculations to at least THREE decimal places. Choose FIVE questions. DO show your working. Question 1. (20 marks) Suppose that you have the following information about a company Credit rating Beta Tax expense Pre-tax income Preferred dividend rate Preferred stock par value Preferred stock price Preferred stock outstanding Common stock price Common stock par value Common stock outstanding Expected next common stock dividend Long term bond yield-to-maturity
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A company’s capital structure is a very important component of a company’s financial health and longevity. The capital structure should maximize total net profit and overall shareholder wealth. An optimal proportion of equity and debt as a company’s capital structure is an indication of a well-managed and successful company and should be a goal for most corporations. Beverly Flax and Rick Rosenfield founded California Pizza Kitchen (CPK) in 1985 in Beverly Hills‚ California. It is a casual dining
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WACC before recapitalization Wrigley’s pre recapitalization WACC is 10.9%‚ the cost of equity assumes a risk free rate of 5.65% for 20 years US treasuries in the case exhibit 7; a risk premium is assumed 7% (or 5%)‚ and uses Wrigley’s current beta of 0.75 (case Exhibit 5). 4. WACC after recapitalization The increase in leverage will affect Wrigley’s WACC in at least three ways: 1. Cost of debt: Wrigley’s debt rating will change from AAA (consistent with no debt) to a BB/B rating
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