Whiz Calculator Company WHY SALES BUDGET??? Sales budget is the most important budget while making the overall budget for the organization for a particular fiscal year. It is important in the sense that how would anybody make fiscal budget for organization if he don’t know about how much to sale or what are the organization’s sale would be??? If you knew the sales volume or units of product you want to sale in a particular fiscal year then you will make production budget accordingly
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A Note on Valuation Models: CCFs vs. APV vs WACC Fabrice Bienfait Table of Content Introduction..................................................................................................................................... 2 Enterprise Valuation ....................................................................................................................... 2 The Weighted Average Cost of Capital Approach ......................................................................... 2 The
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Architecture‚ Fine Arts and Computing Sciences Gov. Pablo Borbon Campus II‚ Alangilan‚ Batangas City‚ Philippines 4200 In partial fulfillment of requirements in Software Engineering Software Requirements Specification NUMBER SYSTEMS CALCULATOR AND CONVERTER Presented by: Colico‚ Janine Erika R. Atendido‚ Mylene B. Atienza‚ Marianne C. BSIT-3201 To: Mr. Melvin Asa February‚ 2013 TABLE OF CONTENTS I. Introduction . . . . . . . . . . . . . . . . . . . . . . .
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Financial Management Agenda 1. What is the WACC and why is it important to estimate a firm’s cost of capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not? 2. If you do not agree with Cohen’s analysis‚ calculate your own WACC for Nike and justify your assumptions. 3. Calculate the costs of equity using CAPM‚ the dividend discount model‚ and the earnings capitalization ratio. What are the advantages and disadvantages of each method? 4. What should Kimi Ford recommend regarding
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WACC Weighted Average Cost of Capital Formula The WACC Weighted Average Cost of Capital formula is complex‚ and can be broken into several components. The individual component costs are provided in the following sections. WACC Weighted Average Cost of Capital Variables V=Firm Total Value (Debt + Preferred Shares + Common Equity + Retained Earnings) Md=Market Value of Debt Mp=Market Value of Preferred Shares Mc=Market Value of Common Equity Mr=Market Value of Retained Earnings K=Current
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Marriot Case Marriot use the Weighted Average Cost of Capital to estimate the cost of capital for the corporation as a whole and for each division‚ and the hurdle rate is updated annually.(WACC = (1-Tc) * (D/A) * R[D] + (E/A) * R[E]) Marriot’s Tax Bracket = 175.9/398.9 = 44% Division’s asset weight to the corporation: Lodging = 2777.4/4582.7 = 0.59 Contract = 1237.7/4582.7 = 0.28 Restaurant = 567.6/4582.7 = 0.13 Risk free rate is 30 years T-Bond = 8.95% (Lodging use long-term debt)
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0.28 0.48 0.42 Target D/D+S Target D/S Levered Beta 74% 2.85 1.62 Costs of Equity: Rf Lodging MRP 8.95% 7.43% Beta Requity 1.62 21.02% Costs of Debt: Rf Lodging 8.95% Spread Tax rate Rdebt(1-T) 1.10% 0.44 0.0563 WACCs: Lodging Target D/D+S Rdebt(1-T) S/D+S Requity WACC 74% 0.0563 26% 21.02% 9.63% Page 1 Sales Weighted Levered Beta 1.56
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Risk – Free Rate 3% + Beta Coefficient .36 Market Risk Premium 8% Cost of Equity 5.88% + Risk - Free Rate 3.% Weighted Cost of Equity 3.52% X Percentage of Total Capital Supplied by Equity 60% + Before Tax Cost of Debt 5.66% WACC 5..00% Weighted Cost of Debt 1.53% Before Tax Operating Profit in % 100% After Tax Cost of Debt 3.83% X X After Tax Operating Profit in 67.6% 40% of Total Capital Supplied by Debt 40% - Income Tax Rate 32.4% Rate of Return of
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Web Calculator Exercise 1 Descriptive Statistics 1. The table below presents data for a sample of people who completed a religious survey. |Age |Gender |Denomination |Church Attendance | |56 |1 |7 |4 | |46 |2 |6 |5 | |49 |2 |6 |5 | |49 |1 |1
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Currently‚ Whiz Calculator is estimating the budget for the coming year’s selling expenses as if it is comprised of only fixed expenses. President Riesman finds this method unsatisfactory for two major reasons: 1. It is difficult to judge how good the estimates made by the department heads really are; and 2. Selling conditions fluctuate over time and there is no way to account for these changes in the selling expenses once the budget is set for that year. Thus a new budgeting method is being researched
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