Case: Lex Service Plc-Cost of Capital Objective: Lex service Plc sold its various subsidiaries and other assets in between 1991 and 1993 which provides more than £340 million of funds. To reinvest this huge amount of funds it evaluates many investment options and acquisitions. To evaluate the worth of new investments‚ Lex uses discounted cash flow analysis. In order to employ DCF analysis method‚ discount rate or cost of capital required. Now the question is arises ‘what should be real cost of
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2015SP1-FIN-65151X-01 / Accounting & Finance / Professor Francois Silatchom MODULE 3 POWERLINE NETWORK CORP. Operating Leverage‚ Financial Leverage‚ and the Optimal Capital Structure TEAM D1 Laura Hamin – lhny86@nycap.rr.com Raymond Negron – ffnegron@hotmail.com Eulises Roman – ermediaus@aol.com Myeshia Wagner – mrs.wagner1982@yahoo.com Table of Contents Executive Summary 3 Introduction 3 Analysis 4 Figure 1: Risk Comparison between Plans L and H 4 Figure 2: Operating probability
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capital structure? Solution: Problem 1: a. Market Value of the firm’s Stock = $30 x 600‚000 = $18‚000‚000 b. Firms Market Value‚ V = D + S = $2‚000‚000 + 18‚000‚000 = $20‚000‚000 c. D/V = Wd = 2‚000‚000/ 20‚000‚000 = 0.10 S/V = We= 18‚000‚000/20‚000‚000= 0.90 WACC = Wd (1-T) rd + We (rs) (0.10)(1-.40)(.10) + 0.90 (.15) = 14.10% d. WACC = (0.50)(.12)(.60) + (0.5)(.185) = 12.85% Problems 2: LIC is considering a large-scale recapitalization. Currently‚ LIC financed
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Tax PBT Calculation of WACC has been shown below- WACC=We*Ke+Wd*Kd CALCULATION OF WACC | YEAR | 2006 | 2007 | 2008 | 2009 | 2010 | | BOOK VALUE | Equity | 10‚623.77 | 10‚623.77 | 10‚623.77 | 10‚623.77 | 10‚623.77 | Debt | 2‚796.81 | 3‚675.52 | 3‚083.35 | 5‚247.06 | 5‚872.01 | Total | 13‚420.58 | 14‚299.29 | 13‚707.12 | 15‚870.83 | 16‚495.78 | We | 0.7916 | 0.743 | 0.7751 | 0.6694 | 0.644 | Wd | 0.2084 | 0.257 | 0.2249 | 0.3306 | 0.356 | Ke | 0.2382 | 0.2382 | 0.2382
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Sub Micron Devices Inc. Management Accounting-II Amit Bhatia(12P068) Deependra Kumar(12P078) Nitish Gupta(12P088) Ravinder Gahlout(12P098) Srinivasan Ramesh(12P108) Vipul Garg(12P118) Amit Bhatia(12P068) Deependra Kumar(12P078) Nitish Gupta(12P088) Ravinder Gahlout(12P098) Srinivasan Ramesh(12P108) Vipul Garg(12P118) Submitted By: 2012 Table of Contents Introduction 3 ASIC Division - Cost Pools 4 Cost accounting system at ASIC: 5 Internal and external customer: 6 Situation at ASIC division
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company cost of capital and explain the calculation. 2) Evaluate Marriott’s use of company cost-of-capital rate for the individual divisions. Cost of Capital for Lodging Division can be expressed as CC = We*Ce + Wd*Cd. For the weights of debt and equity (We and Wd)‚ the 1988 target-schedule rates of debt-to-assets and debt-to-equity were used as the only measures available in the case. Cost of Equity (Ce) was calculated based on the CAPM formula. 30-year T-bond was used as a long-term
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Corporate Governance Analysis Microsoft The CEO: Steven Anthony Ballmer has been the CEO of Microsoft since January 2000. He graduated from Detroit Country Day School‚ Michigan. He later joined Harvard University‚ where he studied Math and Economics. During that time‚ he lived down the hall from Bill Gates‚ Microsoft’s founder and Chairman of the Board. Ballmer joined Microsoft on June 11‚ 1980 as the first business manager and the 30th employee. His first salary was $50‚000 including 8% of
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The Boeing 7E7 Boeing is one of the largest and one of the most well-know companies for their aerospace developments in the commercial airplane and integrated defense systems markets. At this time the company currently lost its number one position in the commercial airplane market to Airbus‚ whom has over 50% market share in units sold and in dollar value of sales received. Boeing’s company is composed 54% from their commercial segment and 46% from their defense system segment. Earlier this year
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Nike Inc Case Analysis: Nike‚ Inc.: Cost of Capital Monica Mojica FIU Finance 6800 Professor Smith Fall 2011 Table of Contents Problem Statement…………………………………………………………………………… 3 Situation Analysis……………………………………………………………………………... 3 Major Strategic Alternatives…………………………………………………………………...3 Decision Criteria……………………………………………………………………………….. 4 Analysis of Alternatives ………………………………………………………………………
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company’s current actual Beta? The current beta of .99 for Home Depot. 7. What would the Beta of this company be if it had no Long Term Debt in its capital structure? (Apply the Hamada Formula.) bU = b / [1 + (1-T) x (wd/ws)] Levered beta‚ b | | 0.99 | Current wd | | 60% | Current ws | | 40% | Tax rate | | 36% | | | | bU | |
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