Dividend Policy and Lintner’s Analysis 16 5.5 Optimal Dividend Policy 17 6 Valuation 19 6.1 Assumptions 19 6.2 Valuation Method 20 6.2.1 Determining the Cost of Equity (rS) 20 6.2.2 Determining the Cost of Debt (rb) 22 6.2.3 Weighted Average Cost of Capital (WACC) 22 6.2.4 Estimating the Future Sales Growth Rate 23 6.2.5 Estimating Future Cash Flows 23 6.2.6 Estimating Firm value 24 6.3 Sensitivity Analysis 25 6.3.1 Share price sensitivity to changes in the Sales
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Dividend Policy and Lintner’s Analysis 16 5.5 Optimal Dividend Policy 17 6 Valuation 19 6.1 Assumptions 19 6.2 Valuation Method 20 6.2.1 Determining the Cost of Equity (rS) 20 6.2.2 Determining the Cost of Debt (rb) 22 6.2.3 Weighted Average Cost of Capital (WACC) 22 6.2.4 Estimating the Future Sales Growth Rate 23 6.2.5 Estimating Future Cash Flows 23 6.2.6 Estimating Firm value 24 6.3 Sensitivity Analysis 25 6.3.1 Share price sensitivity to changes in the Sales Growth
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Valuation Report WAL-MART STORES‚ INC. Table of Contents Legal Disclaimer i Executive Summary 1 1 Company Overview 1 2 Valuation Methods Used 1 3 Fundamental Valuation 1 4 Market Valuation 1 5 Liquidation Value 1 Appendix 1 * Legal Disclaimer This valuation is subject to the following assumptions and limiting conditions: 1. Information‚ estimates‚ and opinions contained in this report are obtained from sources considered to be reliable. However‚ we assume no liability for
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Abstract Ralph Lauren Corporation (NYSE:RL) is well known in the apparel clothing field. The corporation engages in the design‚ marketing and distribution of lifestyle product. This analysis paper will illustrate the current financial situation and forecast the future free cash flow based on the previous financial statement and financial data collected. These information and forecast are served for the potential investor to have a general understanding of RL Corporation and make the right choice
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invest in value-creating project‚ achieve an optimal capital strategy and repurchase undervalued shares. To accomplish all these goals the company has asked Janet Mortensen‚ Vice President of finance for Midland energy resources‚ to calculate the weighted average cost of capital (WACC) for the company as a whole. Formula: WACC = rd (D/V) (1-t) + re (E/V) Where‚ rd = cost of debt; re= cost of equity; D = Market value of debt; E= Market value of equity; V= Market Value of the company (D+E); t= Tax
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and accessible * As a starting point‚ he considered the 15 representative projects shown in Exhibit 7a and‚ using the financial data in Exhibit 7b * he endeavored to derive a weighted average cost of capital (WACC) for each project using a standard methodology: * he endeavored to derive a weighted average cost of capital (WACC) for each project using a standard methodology: WACC=EVre+DVrd1-τ In order to calculate each WACC‚ Venerus knew he would have to measure all of the constituent
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base-case and alternative forecasts. The students must estimate a weighted-average cost of capital (WACC) for Boeing’s commercial-aircraft business segment in order to evaluate the IRRs. As a result of that analysis‚ the students identify the key value drivers and distinguish‚ on a qualitative basis‚ the key gambles that Boeing is making. The general objective of this case is to exercise students’ skills in estimating a weighted-average cost of capital and cost of equity. The need for students to estimate
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Table of Contents 1.0 Introduction In June 2002 Blanka Dobrynin‚ a managing director of Aurora Borealis hedge fund‚ considers the possible gains from increasing the debt capitalization of The Wm. Wrigley Jr. Company. Blanka suggests Wrigley raise the amount of $3 billion in debt of the capitalization while Wrigley has been conservatively financed and remained no debt at the end of 2001. This report is aiming to analyze whether Wrigley should use $3 billion debt recapitalization
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Msc in Economics and Business Administration Master Thesis MSc in Finance Valuation of Pfizer Inc. and analysis of new drug development project using a real option approach. Author: Valdis Cvetkovs Supervisor: Peter Lochte Jorgensen April 2011 Aarhus Abstract This thesis investigates the world’s largest pharmaceutical company Pfizer Inc. from strategic and financial viewpoint in order to determine companies’ fair market value. The external analysis researches industry and global economic situation
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taxes are constant at $500 per month. Construct a single month’s cash budget with the information given. What is the average cash gain or (loss) during a typical month for the ABC Corporation? (Points : 20) Current month sales collected: 4000 x 40% x (100%-(3%) = $1552 + Prior month sales collected: 4000 x 60% = $2400 - Purchases $2000 - Other expenses $500 = $1452 average cash gain during a typical month. 5. (TCO G) Clayton Industries is planning its operations for next year‚ and Ronnie
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