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
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Financing the Mozal Project Li Hongru, Ji Bian & Frantz Moudoute Analysis of an Project Finance case in Mozambique The University of Hong Kong, MBA Class of 2016 Summary Summary ........................................................................................................................................ 2 The Mozal project – Presentation ........................................................................................... 3 Project Financing – Definition ....
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Long-Term Debt Concepts A. i. Secured debt of Rite-Aid is backed by and tied to specific assets of the corporation while unsecured debt is based on their credit-worthiness to pay this debt. Distinguishing between secured/unsecured debts provides needed information to investors, credit rating agencies, and lenders. ii. Guaranteed means a promise to answer for payment of debt or performance of some obligation if the entity liable fails to perform. Rite-Aid's wholly owned subsidiaries guarantee
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flows treats interest as an operating cash flow, while the financial cash flows treat interest as a financing cash flow. The logic of the accounting statement of cash flows is that since interest appears on the income statement, which shows the operations for the period, it is an operating cash flow. In reality, interest is a financing expense, which results from the company’s choice of debt and equity. We will have more to say about this in a later chapter. When comparing the two cash flow statements
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two companies use similar debt-equity structure both but with different leverage. Several measurements and methods are used to evaluate companies’ structure and financial decision, including D/E ratio, WACC, CAPM, M&M, Pecking order theory, trade-off, and free cash flow hypothesis. D/E Ratio Debt/Equity Ratio is a debt ratio used to measure a company's financial leverage level. (Investopedia, online) The ratio for these two companies for 2012-2015 is: Debt/Equity ratio | industry | 2015 |
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leveraged. Objectives: The aim of this paper is to investigate the impact of liquidity on the capital structure of Croatian firms. Methods/Approach: Pearson correlation coefficient is applied to the test on the relationship between liquidity ratios and debt ratios, the share of retained earnings to capital and liquidity ratios and the relationship between the structure of current assets and leverage. Results: A survey has been conducted on a sample of 1058 Croatian firms. There are statistically significant
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to purchase a range of items that are very essential and necessary. Phan might use more than one source of finance when starting a new business from a number of different sources such as owners’ investments, bank overdrafts, bank loans, mortgages, debt collection, leasing and hire purchase and selling shares. However, each of these
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paying dividends. However, the company's main concern is the debt to equity ratio. The cap Gaineboro set is at 40% and anything over this percentage is “unthinkable, indicative of sloppy management, and flirting with trouble” according to co founder David Scarboro. In 2004, the company had the highest debt to equity ratio in the past 25 years at 22% which was still a discussion among senior management. Because of the company being so fixed on debt I think it is an unlikely the funds for 2005 will be used
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must have the right composition of capital structure financing. A capital structure is made of up of two types of financing, namely debt and equity. Debt comes in various forms such as bond and long term notes payable and equity can be either common stocks or preferred stock. Both methods of financing have their advantages and disadvantages. It is the responsibility of management to ensure that they choose the right mix of debt and or equity so that there is a balance between the risks and reward
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Valuation I I I I I Step 1: Establish a motive for the acquisition Step 2: Choose a target Step 3: Value the target with the acquisition motive built in. Step 4: Decide on the mode of payment - cash or stock, and if cash, arrange for financing - debt or equity. Step 5: Choose the accounting method for the merger/acquisition purchase or pooling. Aswath Damodaran 3 Step 1: Motives behind acquisitions (1) Simplest rationale is undervaluation, i.e., that firms that are undervalued by financial
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