often takes many years to collect on a defaulted loan. ISSUE 3 A material litigation against THETA Group was issued on 4th January 2002. In relation to the proposed subscription for 666667 ordinary shares of RM/- each representing 13.33% of equity interest in MSC Trustgate.com Sdn. Bhd. Litigation arose because
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Finance 355; 7:00pm, Cutler Long Term Financing Paper | CISCO Inc. | Team Advantage: | CAPM Model & Discounted Cash Flows Capital Assets pricing and Discounting Cash flow are the widely used valuation methods for investment. ¾ of US companies using CAPM for Capital budgeting. General idea behind a CAPM is that investors need to be compensated for the risk that they are taking. Under the CAPM we are observing how much return Cisco’s investors are expecting. For the Calculation CAPM
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has lower debt component, it has no bearing on its market value. Rather, the market value of a firm is dependent on the operating profits of the company. Capital structure of a company is the way a company finances its assets. A company can finance its operations by either debt or equity or different combinations of these two sources. Capital structure of a company can have majority of debt component or majority of equity, only one of the 2 components or an equal mix of both debt and equity. Each approach
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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 equation is the cost of each capital component multiplied by its proportional weight and then summing: 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
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588728 574519 Table of ratios Financial Ratio Quick Ratio Current Ratio LT Debt to Equity Total Debt to Equity Interest Coverage Receivable Turnover Inventory Turnover Asset Turnover Dividend Yield Gross Margin Net Profit Margin Return on Assets Return on Equity formula current asset − inventory current liability current asset current liability long term debt shareholder′ s equity total liability shareholder’s equity EBIT1 interest expense (net financial cost) net sales2 average net account receivable
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costs into fixed (that doesn’t change) or variable with sales, renovation costs must also be included if necessary, and also identifying which costs are essential or optimal. 7. Equity financing will serve as a buffer that will protect creditors from loss in case of any difficulties financially. Equity financing also takes preference over claims of the common and preferred stockholders, in the event od default on a contractual obligation such as interest payment, creditors have a
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are• Re = Cost of equity or CAPM • Rd = Cost of debt • E = Market value of the firm's equity (market cap) • D = Market value of the firm's debt • E/V = Percentage of financing that is equity • D/V = Percentage of financing that is debt • Tc = Corporate tax rate The following assumptions are received from Mary Frances (CFO) of Apex to be used in the WACC calculation: * Weights of 40% debt and 60% common equity (no preferred equity) * A 35% tax rate * Cost of debt is 8% * Beta
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Financing Proposal WU Shizhi 1155068485 Company background Property Holdings Ltd is a real estate owner and developer. The group is one of the largest property developers in China. It develops and sells residential properties. It also operates in hotel and commercial properties industry. Agile has land in Hainan, Shanghai, Nanjing, Changzhou, Chengdu, Xi’an, Chongqing, Shenyang, Tianjing, Guangzhou, Foshan, Zhongshan, Huizhou and Heyuan. Ownership structure 62% stock shares of the company
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Case 5: Financing PPL Corp.’s Growth Strategy Study Questions 1. Evaluate PPL’s growth strategy and financing policies. Why is it important for PPL to seek out alternative financing strategies instead of using its own corporate balance sheet? In the early 1990’s, the anticipation of deregulation in the electricity marketplace led PPL to change its business strategy. It was essential for them to enter the market as soon as possible or they may have faced barriers to entry. In 1994, PPL established
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dominant investment-evaluation technique. • WACC is the dominant discount rate used in DCF analyses. • Weights are based on market not book value mixes of debt and equity.8 • The after-tax cost of debt is predominantly based on marginal pretax costs, and marginal or statutory tax rates. • The CAPM is the dominant model for estimating the cost of equity. Some firms mentioned other multi-factor asset-pricing models (e.g., Arbitrage Pricing Theory) but these were in the small minority. In previous classes
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