...INSTITUTO TECNOLÓGICO Y DE ESTUDIOS SUPERIORES DE MONTERREY SEMINARIO INTEGRADOR DE FINANZAS Caso “The Wm. Wrigley Jr. Company: Capital structure, Valuation, and Cost of Capital” Profesor Titular: Dr. Roberto Joaquín Santillán Salgado Profesor tutor: Mtra. Karla Macías Yanin Guerrero Enríquez A01180790 29/Mayo/2014 Introducción Blanca Dobrynin, administradora asociada de Aurora Borealis LLC, propuso a Susan Chandler, una asociada, a iniciar la búsqueda de una inversión potencial en Wrigley. Aurora Borealis tenía un fondo de cobertura de 3 billones bajo administración y una estrategia de inversión que se enfocaba en empresas con dificultades, arbitraje de fusiones, transacciones de cambio de control y recapitalizaciones. El típico modelo de operación de Blanca Dobrynin consistía en identificar oportunidades para una corporación para reestructurarla, invirtiendo significativamente en el capital de la empresa objetivo, y encargarse del proceso de persuadir al administrador y directores de reestructurar. Chandler notó que el valor de mercado del capital común de Wrigley era de 13.1 billones. Dobrynin y Chandler discutieron de las condiciones del mercado de capital actual y decidieron enfocarse en el supuesto de que Wrigley podía pedir prestados 3 billones en una clasificación crediticia entre BB y B, con un rendimiento del 13%. La compañía Wrigley era el fabricante y distribuidor de goma de mascar más grande del mundo. La industria era intensamente...
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...Calaveras Vineyard GUSTAVO OCATVIO HERRERA OCAMPO A00313848 FZ 4007 – Finanzas corporativas avanzadas Calaveras Vineyard Antecedentes • NationsBank´s investment-banking group invita a Goldengate Capital a participar en un préstamo para la adquisición de Calaveras Vineyards. • El préstamo asciende a $4.5M; $2M a largo plazo, $2.5 línea de crédito revolvente. • Calaveras Vineyard es una empresa fundada en 1883 con una exitosa gestión de la marca a través del tiempo. Cuenta con 220 acres de los cuales 175 son viñedos. • Calaveras cuenta con 5 categorías de producto: 2 en el segmento super-premium (64.3% de las ventas). • Alta concentración de la distribución en el canal de mayoreo (67%). • Disminución de la demanda de bebidas alcohólicas excepto para la categoría de vinos. • 50% de los requerimientos de uva son obtenidos con mediante 2 contratos de largo plazo, una porción limitada del proceso de fermentación y el almacenaje de producto terminado estaba arrendada a un vecino • Evolución positiva de la rentabilidad gracias al aumento del precio promedio. • Proyecciones financieras ambiciosas (optimistas) • Valor de mercado de los activos se estima entre $5 y $7 M. • Actual gerente general y gerente operativo potenciales compradores (con participación de 85% y 15% respectivamente) FZ 4007 – Finanzas corporativas avanzadas Calaveras Vineyard Análisis cualitativo Fortalezas: • Empresa con abolengo. • Expertos en producción y comercialización de vinos (Saberhacer)...
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...asertivo usar una tasa de descuento apropiada para utilizar el método VPN o utilizar la tasa interna minima con el método TIR. Esta duda lleva a que no se esta logrando lo deseado. Identificar objetivos Uno de los objetivos principales es la valoración de estos proyectos. Chem- Cal Corporation debe volver a calcular el VPN de cada proyecto. Lograr una tasa de capital es decir la mejor opción es el Wacc y ver las fuentes para conseguir los recursos. Análisis de opciones para conseguir más capital - Elevar Ratios de deuda (30% cerca de la media del sector) - Vender bonos de 5 millones de dólares (un poco mas de 10.5%) - Fondo de amortizaciónDiagnostico Encontrar una fuente de financiamiento que no sea superior o igual al 11% y esa tasa seria un 10% para ajustar al wacc ya que los cálculos de valor presente neto VPN no entrega una representación adecuada de los proyecto. Además la compañía debería mantener algún sistema para considerar las inversiones propuestas. Plan de acción La compañía debe utilizar el valor presente neto VPN con una tasa de descuento del Wacc ya existen restricciones de capital, el VPN es una herramienta mas útil ya que considera al...
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...qué ha llegado a tal conclusión. 2.- ¿Cuál es el precio máximo que pudiera llegar a pagar Monmouth, basándose en una valuación usando análisis de flujo de efectivo descontado, cálculo de WACC, y determinación del valor terminal? Ver Notas y/o “Tips” relacionadas con esta pregunta. 3.- ¿A qué se debe que Simmons esté tan deseoso de vender su posición a Monmouth por $50 por acción? ¿Cuáles son las preocupaciones, así como las alternativas, para cada uno de los otros grupos de accionistas de Robertson? 4.- La administración de Monmouth le solicita asesoría acerca de cómo debe de diseñar, así como también el implementar, una oferta que resultara exitosa para la adquisición de Herramientas Robertson. ¿Cuál, o cómo sería su asesoría? Por favor, justifique su respuesta. NOTAS Y/O “TIPS” (1(1) El título del capítulo 9 de su libro de texto es, precisamente: “Usando análisis de flujo de efectivo descontado para hacer decisiones de inversión?, entonces usted puede aplicar lo estudiado en dicho capítulo. (2(2) Se le recomienda ampliamente estudiar la sección 13.2: “The Weighted-Average Cost fo Capital” (WACC), a partir de la página 367 del libro de texto. En particular, asegúrese de que ha interiorizado tanto la lógica, como la o las fórmulas para calcular el WACC. (3) De igual manera, ampliamente se le recomienda estudiar la sección 13.7 de su libro de texto, (a partir de la...
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...02/2012. <vbk:978-1-4562-0587-4#outline(13.11.6)>. 5. Cálculo del costo de la deuda Shanken Corp. emitió un bono a 30 años a una tasa semestral de 7% hace siete años. Hoy, el bono se vende en 108% de su valor nominal. La tasa tributaria de la compañía es de 35%. a) ¿Cuál es el costo de la deuda antes de impuestos? b) ¿Cuál es el costo de la deuda después de impuestos? (ROSS 422) ROSS, STEPHEN A.. FINANZAS CORPORATIVAS, 9th Edition. McGraw-Hill Interamericana, 02/2012. <vbk:978-1-4562-0587-4#outline(13.11.6)>. 8. Impuestos y WACC Miller Manufacturing tiene una razón de deuda a capital accionario fijada como meta de .45. El costo de su capital accionario es de 17%, y el de su deuda es de 10%. Si la tasa tributaria es de 35%, ¿cuál será el WACC de Miller? (ROSS 422) ROSS, STEPHEN A.. FINANZAS CORPORATIVAS, 9th Edition. McGraw-Hill Interamericana, 02/2012. <vbk:978-1-4562-0587-4#outline(13.11.6)>. 11. Cálculo del WACC En el problema anterior suponga que las acciones de la compañía tienen una beta de 1.2. La tasa libre de riesgo es de 5.2% y la prima de riesgo de mercado es de 7%. Suponga que el costo total de la deuda es el promedio ponderado que implican las dos emisiones de deuda en circulación. Ambos bonos hacen pagos semestrales. La tasa tributaria es de...
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...194.00 21,847.00 24,305.00 TOTAL PATRIMONIO 122,958.00 TOTAL PASIVO Y PATRIMONIO 244,353.00 ESTADO DE RESULTADOS 2011 Ventas Costo de ventas Utilidad bruta 333,307.00 266,475.00 66,832.00 Gastos de venta y distribución Gastos de administración Otros ingresos operativos Otros gastos operativos Utilidad operativa 41,048.00 13,851.00 2,342.00 409.00 13,866.00 Ingresos financieros Gastos financieros Diferencia de cambio Utilidad antes de impuestos 619.00 4,326.00 644.00 10,803.00 Impuestos Utilidad Neta 3,554.00 7,249.00 COSTO DE CAPITAL Beta desapalancado Beta apalancado Rf (Rm - Rf) Rp Kd t Kd neto Ke WACC 0.8 (Damodaran) 0.98 2.19% 6.00% 2.31% 6.50% 30% 4.55% 10.36% 8.74% NOPAT Activos Operativos (A.O.) ROCE (ROCE - WACC) EVA BENEFICIO ECONÓMICO SUPUESTOS Crecimiento...
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...PRODUCTOS DE HOGAR - VALORACIÓN DE BONOS Y ACCIONES En todos los libros de texto, la valoración de las acciones y bonos se limita a indicar que es el valor actual de todos los flujos de efectivo futuros esperados con seguridad. El concepto es lógico, sencillo, y engañosamente simple. La valoración de los bonos por lo general se presenta primero, hasta los relativos flujos de efectivo seguros se dividen en una anualidad y un pago del valor nominal en una fecha específica en el futuro. La valoración de las acciones preferidas deduce o sigue la valoración de bonos y el valor de las acciones preferentes se muestra como el valor actual de la anualidad perpetua. Los flujos de efectivo de los dividendos de tamaño constante es bastante seguro, y la mayoría de las acciones preferentes no tienen una fecha de vencimiento. Por último, las acciones comunes se presentan pero ni los flujos futuros de efectivo (de dividendos), ni el valor final se conoce con certeza, generalmente, los estudiantes parecen entender las técnicas de valuación de bonos y acciones preferentes, pero tienden a ser muy escépticos del modelo de valoración de las acciones comunes. El uso de los modelos de flujo de efectivo descontados en una empresa real puede ayudar a disipar algunas de las dudas, pero lo más importante, puede indicar cómo los modelos explican el comportamiento de los precios. HOME PRODUCTS, INC. Home Products, Inc, (HPI) es un fabricante líder de medicamentos de receta y éticos; especialmente...
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...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? Answer: The cost of capital refers to the maximum rate of return a firm must earn on its investment so that the market value of company's equity shares will not drop. This is a consonance with the overall firm's objective of wealth maximization. WACC is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All capital sources - common stock, preferred stock, bonds and any other long-term debt - are included in a WACC calculation. All else equal, the WACC of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk. The WACC of a firm is a very important both to the stock market for stock valuation purposes and to the company's management for capital budgeting purposes. In an analysis of a potential investment by the company, investment projects that have an expected return that is greater than the company's WACC will generate additional free cash flow and will create positive net present value for stock owners. Thus, since the WACC is the minimum rate of return required by capital providers, the managers in the company should invest in the projects which generate returns in excess of WACC. We do not agree with Joanna Cohen’s calculation regarding the WACC from 3 aspects: 1) When Joanna Cohen...
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...Case 1) Marriott Corporation is trying to determine the proper WACC it which to value it’s projects in the near future. A problem exists because the market (especially the bond market) has been quite volatile, which affects the risk free rate. The risk free rate is the foundation of CAPM, which will be needed to determine the WACC. 2) The problems arise because the four key elements of Marriott’s financial strategy are managing hotel assets rather than owning, investing in projects with the goal of increasing shareholder value, optimizing the use of debt, and repurchasing their undervalued shares. All of these elements need accurate numbers to be effective. 3) The management understands that the WACC can be inaccurate due to the recent volatile market and needs to reassess how they will determine the WACC. 4) Management is considering using a single WACC to determine if projects are a good idea or not, regardless of which division the project is in. Furthermore, they are looking to tie in the hurdle rate for incentive compensations for management. 5) This solution is not a good idea because each division is subject to different risks and costs of capital. Therefore, using a single WACC can incorrectly choose whether a project was a good idea or not. In addition, management can be over or underpaid based off how far the “Marriott WACC” is from the “Division WACC”. 6) I would determine the WACC for each individual division and select whether or not to take...
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...Norberto Ramos 9/7/15 Advanced Corporate Finance Professor Muhammad Chishty Case 15: Nike, Inc.: Cost of Capitol Worked with Xavier Robles As many people know, Nike is a sporting brand company with a large variety of products from clothing, shoes, to tech gear that is able to read your health when in use . But for this case at hand, on July 5th, 2001 Kimi Ford from NorthPoint Group, looked over analyst write-ups. Ford, and NorthPoint Group, invested in Fortune 500 companies with a central focus on value investing such as: General Motors and McDonalds. But at the start of the year, Nike’s share price had been declining at a rapid rate. Even while the surrounding market around NorthPoint was declining and the S&P 500 fell 10.1 percent in 2000, they earned a return of 20.7 percent, so they were doing extremely well during the hard time and in 2001, stayed positive at 6.4 percent while the S&P 500 stayed in the negatives. On June 28th, 2001, Nike held a meeting to communicate a strategy to revitalize the company. Nike had plateaued at $9 billion since the year 1997, and its net income had fallen over $200 million from $800 to $580. Its market share in athletic shoes had also fallen from 48 percent to 42 percent by 2000. This meeting introduced plans for top-line growth as well as to increase operating performance. On a revenue side, Nike decided to develop more mid level priced athletic shoes, a segment that had been overlooked. They also planned to push their...
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...rate = after-tax WACC 2. WACC = blend of rates of return expected by investors 3. Interest is tax-deductible: bank loan 8*(1-,35)=5,2% 4. Rate of return preferred share 6% 5. Target Rate of Return 16% 6. WACC = 8*(1-,35)*,2+7,75*(1-,35)*,133+6*,167+16*,5=10,7% Bernice: 1. Book = market value 2. Preferred stock book value = 100, market = 70 3. Common stock = 40, Earnings 10% = 4, Div =2, PBR=0,5 4. Growth rate = R on equity * PBR = 4/30 * ,5 = 6,7% 5. CAPM = rf + B (rm – rf) = 7+,5*7 = 10,5% Questions: 1. Cost of equity calculations 2. Other ways of Cost of equity calculations instead of CAPM 3. Errors in calculations Check Bob: 1. Discount rate = Hurdle rate = after-tax WACC ok 2. WACC = blend of rates of return expected by investors ? Weighted average cost of capital (WACC) is the average after-tax cost of a company’s various capital sources, including common stock, preferred stock, bonds and any other long-term debt. WACC = * Re + * Rd * (1 – Tc) Where: Re = cost of equity Rd = cost of debt E = market value of the firm’s equity D = market value of the firm’s debt V = E + D E/V = percentage of financing that is equity D/V = percentage of financing that is debt Tc = corporate tax rate 3. Interest is tax-deductible: bank loan 8*(1-,35)=5,2% ok 4. Rate of return preferred share 6% 5. Target Rate of Return 16% 6. WACC = 8*(1-,35)*,2+7,75*(1-,35)*,133+6*,167+16*,5=10,7% WACC=(120/670)*8*(1-0...
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...page 50 student accountant JUNe/JULY 2008 CAPM: THEORY, ADVANTAGES, AND DISADVANTAGES THE CAPITAL ASSET PRICING MODEL RELEVANT TO ACCA QUALIFICATION PAPER F9 Section F of the Study Guide for Paper F9 contains several references to the capital asset pricing model (CAPM). This article is the last in a series of three, and looks at the theory, advantages, and disadvantages of the CAPM. The first article, published in the January 2008 issue of student accountant introduced the CAPM and its components, showed how the model can be used to estimate the cost of equity, and introduced the asset beta formula. The second article, published in the April 2008 issue, looked at applying the CAPM to calculate a project-specific discount rate to use in investment appraisal. CAPM FORMULA The linear relationship between the return required on an investment (whether in stock market securities or in business operations) and its systematic risk is represented by the CAPM formula, which is given in the Paper F9 Formulae Sheet: E(ri) = Rf + βi(E(rm) - Rf) E(ri) = return required on financial asset i Rf = risk-free rate of return βi = beta value for financial asset i E(rm) = average return on the capital market The CAPM is an important area of financial management. In fact, it has even been suggested that finance only became ‘a fully-fledged, scientific discipline’ when William Sharpe published his derivation of the CAPM in 19861. CAPM ASSUMPTIONS The CAPM is often criticised as being unrealistic because...
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...Statement of Facts and Assumptions: PPC has been calculating their after tax cost of debt using the coupon rate of 12% instead of the actual interest rate which is 8%. Taking the 8% interest rate into account, PPC’s actual cost of capital would be calculated as: [.08(1-.34)]= 5.28%. PPC has simply been using 10% (their equity growth rate) as their cost, but must instead either use the CAPM model to calculate their cost of equity, or the Dividend-growth model. If they use the CAPM model, which is the most accurate, their cost of equity will be: .078+.8(.1625-.078)=14.56%. Or they can use the Dividend-growth model and their cost of equity would be: (2.7/63)+.1=14.29%. Both are acceptable but, because the Dividend-growth model is subjective, and the coupon rate (that PPC was originally using is a sunk cost, they should use the market rate). Thus using the market rate to calculate CAPM you use the Beta and market risk premium which are both based on the market rate and more accurate. Finally, their company WACC of 9% that they have calculated is incorrect and given the above calculations, their WACC using CAPM would...
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...What is the WACC and why is it important to estimate a firm’s cost of capital? What does it represent? Is the WACC set by investors or by managers? • Do you agree with Joanna Cohen’s WACC calculation? Why or why not? If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and be prepared to justify your assumptions. What mistakes did Joanna Cohen make in her analysis? Which method is best for calculating the cost of equity? • 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? • What should Kimi Ford recommend regarding an investment in Nike? 2 1 13/3/2013 Background • Kimi Ford needs to decide on investing in Nike, Inc. • To do so, Kimi Ford needs to derive fair value of Nike stock to compare with current market share price • Kimi Ford tasked Cohen to compute Nike’s Cost of Capital 3 Scope 1. Review of Cohen’s Analysis 2. Nike’s Cost of Equity 3. Valuation Methods and Selection a. Market Approach b. Income Approach 4. Choice of Valuation Method 5. Risk Assessment a. Sensitivity Analysis b. Scenario Analysis 6. Investment Recommendation 4 2 13/3/2013 Cohen’s Analysis Issues Opinion Single or Multiple Cost of Capital Appropriate to use Single Cost of Capital as business segments in Nike subject to same risk factors Methodology for Appropriate to use WACC calculating...
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...with our conclusion. The weighted average cost of capital, WACC, is the rate of return required by investors. The WACC calculates the different risks associated with the individual components of the capital structure. The individual components within the WACC are preferred stock, common stock, and after-tax debt. The WACC is very important because it tells the investors if the return they are receiving is equal to the return they require depending on the risk associated with the investment. The WACC is the company’s overall rate of return and cost of capital. After much calculations, we believe Joanna Cohen’s analysis is incorrect. The reason being, when she calculated the WACC she used the book value instead of market values for the weights of debt and equity. When calculating the long term debt, Joanna should have discounted the debt that appears on the balance sheet. When calculating the risk free rate in her capital asset pricing model, Joanna used the 20 year U.S. treasury yield of 5.74% and a geometric mean of 5.90%. We chose to use the one-year U.S. treasury yield 3.59% and the arithmetic mean of 7.50%. As discussed in class, you should always try to use the current yield under a year. Cohen averaged all of the betas from 1996 until 2000 and used 0.80 as her beta. In our calculations we used the most current beta available, 0.83. Our results varied by almost 1% since we used a different beta. Cohen showed a WACC of 8.3% and we calculated a...
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