...To estimate SBUX cost of equity I used 60 months of return, 104 weeks of return, and 250 days data of return from my spreadsheets. First, I calculated SBUX monthly beta and it equals 1.2, the weekly beta equals .8, and the daily beta was 1.00. I estimated the error in the beta estimates and appear to be .4. I got this number by subtracting the monthly beta 1.2 from the weekly beta .8. I visited four different websites such as Yahoo Finance, Reuters, Nasdaq, and the Value Line beta shown in Damodaran’s company data (spreadsheet) and each one gives a different beta. Yahoo Finance gives beta of .78, Reuters has a beta of 1.21, Nasdag gives a beta of 1.11, and Value Line beta is 1.1. My preferred value for the market risk premium from the data is the Geometric Average 1.71%. The source of the risk premium is historical and I chose it because the data is most current. People are drinking much more coffee from the past and the risk premium is low which is more secure for the company. I also used historical data for my calculation and I believe that it produces the most accurate results. Based on Yahoo Finance and SBUX 10K I found that the Debt $549.6 M, Income tax expense $674.4 M, EBT $2059.1 M and D/E equals 10.62%. My Bottom-up beta is 1.12. I came up with number by multiplying Avg Beta- unlevered with (1+(1- Tax rate) * D/E mkt). My Tax rate 32.75%. I used this Ke=r+ βMRP to get my Cost of Equity. = 5.11+1.12 (1.71) My average beta was 1.00 I calculated 1.2+.8+1= 3 = 3/3...
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...different and unique in their own ways. Before listing some of the similarities or if at all, it will be best to state what the acronyms stands for. NASDAQ stands for National Association of Securities Dealers Automated Quotation while NYSE stands for New York Stock Exchange. Both of these exchanges account for major trading of equities in United States and worldwide. In March of 2006, NYSE went public after being a private and not for profit exchange for many of years. Now both stock exchanges are publicly traded companies. Besides these companies being highly sought after in the financial world, they each have their own traffic controller that helps facilitate dealings between buyers and sellers in the market. (Shaikh, 2009). NYSE and NASDAG are very different in the way they operate. NYSE has a physical address or the trading floor in New York while NASDAQ does not have a physical trading floor and trading takes place electronically through a telecommunication...
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...The Role and Function of Law According to Melvin (2011), law is a body of rules of action or conduct prescribed by controlling authority, and legal binding force. Law also provides a mechanism to resolve disputes and allows parties to enforce order and judgment in a court of law. The most important functions of the law are to protect, install order, fairness, and it also identifies and punishes violators. The United States, a democratic nation, realizes the significance of law enforcement in the daily activities of citizens and businesses within its borders. Enforcing these laws are paramount as well as levying penalties to individuals who break them. This exercise produces fairness, and enhances orderliness. In the absence of law enforcement there would be chaos, and confusion. The law can be divided into several categories for effective enforcement. These laws include: Constitutional law, Common law, Statutory law, and Administrative law, just to name a few. The Constitutional law exists both on a federal and state level; it sets the premise for other laws in the nation. The Constitutional law is the supreme law of the land, among other things, the Constitution protects United States citizens from wrongful government actions (Melvin, 2011). For example the Fourth Amendment protects individuals against unreasonable searches and confiscations of properties. The common law, this law is made by the legislature, and the courts based on fundamentals of previous cases with...
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...a. Why is corporate finance important to all managers? It is important that a manager under the basic components of running a business. Understanding things such as the return of investment and interest over time should also be concern to the manager as well. Especially since factors as such determine the company’s ability to continue to stay in business and be successful. b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. There are three forms of start-up that is incorporated into the corporate life cycle. Business has the choice to start up as proprietorship, which is non corporate business ran by one owner. There is also a partnership, which represent more than one owner to the business. This is also a non corporate business as well. Under a partnership other forms of partnerships such as: limited liability partnership (LLP) or your limited liability company (LLC). The final stage of corporate life cycle exists once the company has gained a certain amount of capital that allows them to become a corporation. List the advantages and disadvantages of each form. The advantages of proprietorship it doesn’t cost much and relative easy to start a proprietorship. Proprietorship is also bond by a few government regulations. In a proprietorship income is not tax under corporate taxation; instead it is taxed as a part of the proprietor personal income. The disadvantage of operating under a proprietorship is it is...
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