values for the business sector of JJG Co are available: Average return on capital employed Average return on shareholders’ funds Average interest coverage ratio Average debt/equity ratio (market value basis) Return predicted by the capital asset pricing model Required: (a) Evaluate the financial performance of JJG Co, and analyse and discuss the extent to which the company has achieved its stated corporate objectives of: (i) maximising the wealth of its shareholders; (ii) achieving continuous growth
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dividend of $1.64 translates to a 6% dividend yield on the company’s shares. Thus the expected return on the company’s shares is approximately 11%. We have also estimated an 11% required rate of return on the company’s shares using the Capital Asset Pricing Model (CAPM). A risk-free rate of approximately 4% can be extrapolated from the yields for 10-year and 30-year Treasury securities (approximately 3.5% and 4.4% respectively) for long-lived assets such as AT&T’s network. Based on empirical observation
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Sterling Household Products Company Acquisition of the Germicidal, Sanitation and Anitseptic Unit of Montagne Medical Instruments Company Executive Summary Sterling Household Products Company manufactured and marketed a wide variety of consumer goods products which were sold domestically as well internationally. Despite having great products and being positioned well in the industry, Sterling’s growth prospects were limited. Sterling’s decision to acquire the germicidal, sanitation and
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Answer to Essay Question #1: Idiosyncratic risk is a firm-specific risk that affects the price change of a security. It is also known as unsystematic risk. This risk is unique to the specific security and affects a single asset or small group of assets. In contrast to systematic risk, which is the market risk that affects the larger number of assets. Unsystematic risk of a portfolio can be brought down to zero through diversification whereas systematic risk cannot be diversified. This can be further
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H.J. Heinz Company Case: Cost of Capital in Times of Uncertainty Group 10 Alan Ho 20349978 Saraniya Paramanathan 20332829 Christopher Abeleda 20335744 Nathanael Cheung 20345672 Reuban Nadesan 20346511 To: Board of Directors Committee, H.J. Heinz Company From: Group 10 Consulting Date: July 7, 2011 ------------------------------------------------- Subject: Weighted Average Cost of Capital Recommendation ------------------------------------------------- Heinz has
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Midland Energy Resources, Inc. Midland Energy Resources, Inc. Is a global energy company with three major divisions, including oil and gas exploration and production (E&P), refining and marketing (R&M), and petrochemicals. Midland has been a profitable company over the past few years. In 2006, the firm, on a consolidated basis, had operating revenue and operating income of $248.5 billion and $42.2 billion respectively. Among these three divisions, E&P was Midland’s most profitable business, R&M was
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Examination Paper: Finance Management IIBM Institute of Business Management Examination Paper International Financial Management Section A: Objective Type (30 marks) This section consists of Multiple choice & Short Answer type questions. Answer all the questions. Part One questions carry 1 mark each & Part Two questions carry 5 marks each. Part One: Multiple choices: 1. Foreign exchange market in India is relatively very a. Big b. Small c. Medium d. None of the above 2. Balance of payment is
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Rubbermaid products, signaled decline of Rubbermaid * Rubbermaid bought out by Newell, a competitor * Rubbermaid auctioned off remaining items * Wal-Mart represents a cost-driven low-priced model * Opening price point is what is at the heart of the pricing strategy, and attracts all the customers * Consumers formed false perception of everything near that opening price point is being sold at the lowest price * Low-cost supplies from Asia became integral
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section of my report, I list out the main models and methods applied to estimate the cost of capital for Midland’s three divisions, general assumptions made and the corresponding justifications. In the second section, Calculations, I not only compute the cost of capital based on the general assumptions previously made, but also discuss specifics of each division and the additional adjustments or assumptions made to justify my estimates. SECTION 1: Main models and methods applied and corresponding
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Promotion Promotion involves creating awareness about the brand and informing the customers about the products and the value on offer. As any other step in the marketing mix, promotion too is of paramount importance. Jaquar has always recognized promotion as a very important and effective component of their existence. They have always been proactive and ahead of their competitors when it comes to marketing and promoting their products. Traditionally bath fittings and taps were low involvement
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