Stock Repurchase 2 a. Outstanding Shares 2 b. Book Value of Equity 2 c. Price per Share 2 d. Earnings per Share 3 e. Debt Interest Coverage Rations and Financial Flexibility 3 f. Outstanding Shares 3 Wrigley’s Current Weighted Average Cost of Capital (WACC) 4 Debt Proceeds to Pay a Dividend or Repurchase Shares 4 Wrigley’s Recapitalization 5 Appendices 5 i. Objectives This report seeks to answer the following five questions about William Wrigley Jr.: 1. In
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early 1990’s. This is the immediate issue management must address to avoid a takeover. Financial Analysis Cost of Capital: Our estimate of the pound-based weighted average cost of capital for Grand Metropolitan was 16.433862%. We used the weights from exhibit 6. The tax rate was given as 35%. We used the weighted average costs of debt and preferred stock from exhibit 7. We then discounted the flow of future dividends to find the cost of common equity. We also used the three strategic
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objective‚ the firm has to choose that financing mix/capital structure that results in maximizing the wealth of the equity shareholders. Such a capital structure is called as the optimum capital structure. At the optimum capital structure‚ the weighted average cost of capital would be the minimum. The capital structure decision influences the value of the firm through its cost of capital and can affect the share of the earnings that pertain to the equity shareholders. Introduction to Capital Structure
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What is the overall weighted average cost of capital for Marriott Corporation? (Use a corporate tax rate of 34%). What type of investments would you value using Marriott’s WACC? Cost of debt：8.95%+1.3%=10.25% Cost of equity：8.95%+1.64*7.43%=21.14% 實際beta=1.11，根據exhibit 1，長期債務為24.99億美元，權益價值為35.64億美元(30元*118.8百萬股)，可以得出D/V=24.99/35.64=41%標的資本結構D/V=60%，所以必需做出調整。 V=D+E，D/V=41%，E/V=59% Beta of asset=(E/V)*beta of equity=0.59*1.11=0.655 Beta of equity=(V/E)*beta of asset=(1/0.4)*0.655=1.64 Risk free
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paid a dividend. Its current free cash flow of $400‚000 is expected to grow at a constant rate of 5%. The weighted average cost of capital is WACC = 12%. Calculate EMC’s value o $6‚000‚000 (400000*1.05)/(.12-.05) (13-3) Horizon Value Current and projected free cash flows for Radell Global Operations are shown below. Growth is expected to be constant after 2012‚ and the weighted average cost of capital is 11%. What is the horizon (continuing) value at 2012? Actual Projected 2010
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stocks‚ management presented its plans to improve and perform better. • Third party sources also gave their opinions on whether the stock was a sound investment. WACC CALCULATION: Cost of Capital Calculations: Nike Inc Cohen calculated a weighted average cost of capital (WACC) of 8.3 percent by using the capital asset pricing model (CAPM) for Nike Inc. I do not agree with her figure‚ and the reasons to that are as follows: Value of equity The problem with Cohen’s calculations is that she
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stock 20% Common stock equity 50% Total 100% At the present time‚ Eco can raise debt by selling 20-year bonds with a $1‚000 par value and a 10.5% annual coupon interest rate. Eco’s corporate tax rate is 40%‚ and its bonds generally require an average discount of $45 per bond and floatation costs of $32 per bond when being sold. Eco’s outstanding preferred stocks a 9% dividend and has a $95-per share par value. The cost of issuing and selling additional preferred
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Over the Hurdle Executive Summary Currently‚ Teletech Corp. is using a single corporate hurdle rate to evaluate its investment decisions in its products and systems segment as well as its telecommunications segment. Using only one hurdle rate doesn’t take into account the risk that the company faces within each segment. Investors demand higher returns for riskier investments. Victor Yossarian is concerned about the low returns for the high risk in the products and systems segment‚ this
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A Study On Corporate Finance September 6‚ 2010 Report on Financial Analysis on ACC Submitted By Ankit Bhatia: 05 Pallavi Gupta: 26 Divya Sahijwani: 38 Sahil Vijay: 82 Surbhi Sharma: 75 Submitted to: Mr. Ashish Garg LBSIM New Delhi Lal Bahadur Shastri Institute of Management To September 6‚ 2010 Mr. Ashish Garg LBSIM From: Group 1 PGDM-F
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decided to consider the useful life of the project to be 5 years (n=5). 1. What is the appropriate discount rate for a government agency such as the San Diego City Schools? WACC calculation (estimation) WACC = cost of debt + cost of equity (weighted by the % of debt/equity in the capital stack) Though we do not know the precise numbers specific to SDCS at that time‚ we can make some generalizations. Cost of debt = interest rate of a school bond Typically these types of bonds are voted for
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