subject to corporate taxation (but is taxed as part of the proprietor’s personal income). A partnership has many many of the same advantages and disadvantages as a sole proprietorship but a partnership is more complicated with regards to liability. For example if the partnership goes bankrupt if any partner is unable to meet their pro rata liability then the remaining partners must make good on the unsatisfied claims by drawing on their personal assets. A corporations has three major advantages: unlimited
Words: 726 - Pages: 3
project is financed only from debt financing the cost of capital will be 3.9% and if it is only financed from equity the cost will be 10.33%. When there is no debt the WACC is equal to the cost of equity, as there is no tax shield available on cost of equity, therefore it is always on higher side but when the debt is introduced, the WACC started to fall down as the weightage of low cost of financing is increasing. The cost of debt financing is always on lower side due to tax shield. But if financing
Words: 776 - Pages: 4
smaller the risk of a given investment. Coefficient of variation shows the risk per unit of return. Due to very low expected rate of return our Coefficient of variation factor was quit high values. SLIDE 9 WACC is capital money needed to do the business or a project. WACC represents how much it is cost to company to get money.
Words: 649 - Pages: 3
University of Washington Graduate School of Business Finance 553 Midterm Assignment Rocky Higgins February 10, 2004 In less than five, double-spaced, typewritten pages, plus any exhibits, please answer the following questions about MW Petroleum Corp. This assignment is worth a maximum of 100 points. 1. (10 points.) Apart from any quantitative analysis, are there any reasons to anticipate that Apache Corporation’s acquisition of MW Petroleum might be a positive net present value
Words: 2979 - Pages: 12
In less than five, double-spaced, typewritten pages, plus any exhibits, please answer the following questions about MW Petroleum Corp. This assignment is worth a maximum of 100 points. 1. (10 points.) Apart from any quantitative analysis, are there any reasons to anticipate that Apache Corporation’s acquisition of MW Petroleum might be a positive net present value activity for Apache, for Amoco? Explain. This looks like an attractive deal for both parties. Amoco does many things well, but managing
Words: 2959 - Pages: 12
present value of its expected future free cash flows (FCF) discounted at its weighted average cost of capital (WACC). Business risk is the basic risk of the company's operations (EBIT), excluding debt. It raises the question how well can a company’s operating income be predicted? There are several unknown variables that can assist in answering this question. The product for example, has a cost associated with its’ creation. Then there is the uncertainty of how much to charge for it, demand, operating
Words: 1819 - Pages: 8
regression and relative valuation methods were thought to be the best indicators. Based on this, I concluded a fair value of $2.43 using various weights for the method as each method is based on certain assumptions that may result in a flawed value. For example, the regression and relative valuation, which were given the highest weights, are based on the assumption that the companies chosen for the peer group are comparable to Pacific Sunwear, despite differences in their financial performance and/or business
Words: 8041 - Pages: 33
|CASE: “If the Coat Fits, Wear It” | | | EXECUTIVE SUMMARY Andy Pratt, the founder of The Innovative Sporting Goods Company, had developed a sound technique of making baseball bats and thus the company had gained a national reputation
Words: 1278 - Pages: 6
Overview History/Growth This case concerns the John M. Case Company, which at one time was the leading producer of business calendars in the United States. The company was founded by the grandfather of John M. Case in 1920 and was inherited in 1951. The company had experienced profitable operations every year since 1932, and held approximately a 60-65% market share by 1984. Sales had been increasing annually at about a 7% compound rate, and the return on average invested capital was about
Words: 1287 - Pages: 6
is financially sound, it must be ethically sound, right? Well . . . the question of ethical appropriateness is less frequently discussed in the context of capital budgeting than that of financial appropriateness. Consider the following simple example: The American Association of Colleges and Universities estimates that 10 percent of all college students cheat at some time during their postsecondary education careers. You might pose the ethical question of whether it would be proper for a publishing
Words: 3451 - Pages: 14
