($5.04). Therefore, the cost of equity is to cope with the risk of share price’s changes and the dividends paid by the company. There are two techniques to obtain the cost of equity as follows: 1) Capital Asset Pricing Model (CAPM) As you know, the Capital Asset Pricing Model (CAMP) establishes a rational relationship between Non-Diversifiable risk and return of all assets due to all companies can eliminate or decrease Diversifiable risk by playing on the type and return of assets. Here
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Memorandum To: Company Management (Dr. A. Davis) From: (BUSN 300) Date: February 3rd, 2013 Subject: Application of Theories Company Researched: Apple Inc. Theory: The issue being addressed that gave rise to employing these theories The article that was published in CBS news claims that Apple has distinct culture. Apple Inc. is rapidly moving towards employee empowerment. Steve Jobs taught his company to think differently than everyone else. Apple Inc encourages their employees
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I. INTRODUCTION: Midland Energy Resources was a global corporation specialising in oil and gas exploration and production (E&P), refining and marketing (R&M), and petrochemicals. Being one of the largest energy corporations in the world with a number of divisions, it is essential for the board of directors to calculate the company’s cost of capital accurately in order to apply it into several vital analyses of the corporation. This paper aims to estimate the corporate and divisional cost
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“Analysis of AT&T’s Stock” FIN560 - Securities Analysis Index 1. The background of the company 2. AT&T’s Life Cycle Analysis 3. Analysis of Return on Equity 4. The company's projected future growth rate of earnings 5. Analysis of its required rate of return using the CAPM measurement 6. The company’s intrinsic value using the discount valuation techniques 7. Conclusions 8. References 1. AT&T Background AT&T Inc. is
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return on equity (cost of equity) b = Expected rate of return on debt (cost of debt) E = Total market value of equity D = Total debt and leases K = E+D = Total capital invested Tc = Corporate Tax Rate Capital Asset Pricing Model (CAPM) • Asset Pricing Equation: E(ri) = rrf + bi[E(rm)-rrf] , where E(ri) is the expected return on the security. rrf is the risk free rate
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brand its product lines and products. 9. Brand Licensing: A contractual arrangement between firms, whereby one firm allows another to use its brand name, logo, symbols, or characteristics in exchange for a negotiated fee. 10. AIDA model: A common model of the series of mental stages through which consumers move as a result of marketing communications: Awareness leads to Interests, which lead to Desire, which leads to Action. Noise: Any interference that stems from competing messages, a lack
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often criticized, and Midland division presidents and controllers sometimes challenged specific assumptions and inputs. The case uses comparable companies to estimate asset and beta for each individual division, and must comply the capital asset pricing model for calculating the cost of capital. Midland was conservative compared to some of its large competitors, but it has a group of trader in- house who actively managed currency. Interest rate and commodity risks within a set of guideline approved
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Top 10 Investment Banking Interview Questions | More Jan 9, 2009, 1:00 pm With the new semester beginning for most MBAs and undergraduates, we know that interviews are again at the forefront of many of your minds. Below we have selected 10 of the most common technical investment banking interview questions. For instant access to our 3 Hour Finance Interview Prep Webcast, please click here. For private interview prep, please call us at 617-314-7685. Enjoy! -------------------------------------------------
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AC 3047 CORPORATE FINANCE Lecture #1: Introduction Portfolio theory Intro to CAPM ©Professor Hans K. Hvide Do not quote without permission. Although considerable effort will be exerted to avoid errors in these notes, I do not guarantee that they are error-free. 1 Central concepts for this week • Risk-return trade-off • Covariance (between individual assets) • Efficient Frontier • Market portfolio (choice of the rational investor) ↓ • Capital Market Line • Security Market
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benefits of dynamic and fixed pricing and how the different pricing methods are perceived by consumers in the online market. It will examine consumer perceptions and behavior when purchasing various goods and services in an online environment. As well as the trends of increasing dynamic pricing methods on various websites even for goods and services sold at posted prices. 2) Introduction The pricing issue we have chosen to investigate is that of dynamic vs. fixed pricing of products and services
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