AirThread Competitive Challenges Operating cost disadvantage Inability to bundle wireless service Recent trend toward bundled services freezing ATC out of business market Introduction 1. 2. 3. 3 Reasons for acquisition Ability to bundle service Expand Business market American Cable Communications could increase AirThread Connection’s operations ◦ Could finance with significant leverage Potential Synergies Reduction of AirThread’s backhaul costs ◦ Estimated at 20% of company’s system operating
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the expansion option‚ and in combination. Sterling must ultimately decide whether to pursue the acquisition either with or without the option‚ retract its offer‚ or renegotiate the terms. Discussion Weighted Average Cost of Capital (WACC) Calculation Cost of Equity (COE) Cost of Debt (COD) The
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The Boeing 7E7 To develop or not to develop? that is the question Executive MBA in Business & IT Class of 2014 Module 5 – Risk & Finance - Assignment Author: Luís Faria Reviewer: Prof. Dr. Christoph Kaserer The Boeing 7E7 Subject Page Module 5 – Risk & Finance - Assignment 2/15 Abstract With Airbus surpassing Boeing’s commercial aircraft market share‚ and revenues falling since the terrorist attacks on September 11‚ the key question in this assignment is whether Boeing should
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explain the process by which equilibrium will be restored. 2. A company wishes to determine its optimum capital structure. From the following information determine the optimum capital structure of the company. Situation | Debt | Equity | After tax cost of debt | Ke(%) | 1 | 400000 | 100000 | 9 | 10 | 2 | 250000 | 250000 | 6 | 11 | 3 | 100000 | 400000 | 5 | 14 | 3. Given EBIT of Rs. 200000‚ corporate tax rate of 35% and following data determine the amount of debt that should be used by the
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Board of Directors Boeing is currently operating with the majority market share of the commercial sector of aircraft manufacturing. Frank Shrontz‚ our CEO‚ has recently stated his goal to increase the company’s return on equity from its current average of 12%. The following summary will delve into the most appealing project for the future of this firm: the 777 aircraft. The purpose of this new product is to maintain our competitive advantage in commercial airline production by completing a family
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Course Syllabus Modern Finance I and II Modern Finance I Professor Adel Turki‚ Cornerstone E-mail: turki@cornerstone.com Modern Finance II Professor Gordon M. Phillips‚ University of Southern California E-mail: gordon.phillips@marshall.usc.edu Web: http://www.marshall.usc.edu/faculty/directory/gordonphillips Biography: Adel Turki is a senior vice president of Cornerstone Research in Washington D.C. He received his Ph.D. from Stanford University. Dr. Turki heads the firm’s securities practice and
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KORKMAZ DATE: NOVEMBER 4‚ 2014 CASE: PIONEER PETROLEUM CORPORATION Overview of the Company Pioneer Petroleum Corporation established in 1924 and operating in oil refining‚ pipeline transportation‚ and industrial chemical fields. Company uses weighted-average cost of capital (WACC) as a discount rate to discount future cash flows that generate from possible projects. According to net present values of these possible projects management decides to invest or not. WACC represents the minimum rate of return
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hurdle rates were to be increased the companies growth will decrease. In vice versa if Marriott institutes lower hurdle rates the growth will increase. 2. Below is how we calculated the WACC for The Marriot. BL= 1.11 Cost of Debt (rD): 8.72 + 1.30= 10.02 CapM/Cost of Equity: rf + (mkt risk prem)BL .0872 + (.1201-.0458) 1.11 = .1697 or 16.97% WACC: (1-T) rD (D/V) + rE (E/V) (1-.44) .1002(.60/1) + .1697(.40/1) = .033667 + .067880 = .101547 or 10.15%
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What is the present value of these payments? (Round to the nearest dollar.) $2‚815‚885 10. Ajax Corp. is expecting the following cash flows—$79‚000‚ $112‚000‚ $164‚000‚ $84‚000‚ and $242‚000—over the next five years. If the company’s opportunity cost is 15 percent‚ what is the present value of these cash flows? (Round to the nearest dollar.) $429‚560 11. Jayadev Athreya has started on his first job. He plans to start saving for retirement early. He will invest $5‚000 at the end of
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Importance of the theories and implications on corporate financial decisions in Malaysia As business grows wider and complex across the border‚ there is a demand for better valuation tool to evaluate the performance of the business. It is important to adopt more innovative performance metrics so that the company’s management behaviors can be closely monitored to achieve the goal of maximizing the shareholders’ benefits. It is also important to access a firm’s value for any decision making regarding
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