MIS 6309, Prof. A. Lahiri Team Homework #2 ------------------------------------------------- 1. The answers are as follows: a) E-R diagram: M Location Positions Industry Has Located in Belongs to M 1 M Employer 1 1 M Location Positions Industry Has Located in Belongs to M 1 M Employer 1 1 b) Physical Layout (primary keys underlined, foreign keys double-underlined): Position PositionID int PositionTitle
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query that uses a GROUP BY to perform a calculation on information spanning at least two tables. * Create a query that includes a GROUP BY, but selects items from the results of the GROUP BY query and lists them in order (e.g. using our COOKIE example, list everyone who has spent over $100 in total). * Create a query that includes a nested
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Basic If Statement Syntax The structure of an if statement is as follows: ------------------------------------------------- if ( TRUE ) ------------------------------------------------- Execute the next statement ------------------------------------------------- if ( TRUE ) { ------------------------------------------------- Execute all statements inside the braces ------------------------------------------------- } Syntax: The syntax of an if
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Capital 1 Weighted Average Cost of Capital (WACC) • This lecture answers the following questions: - What is the “opportunity” cost of funds for a firm, and thus the firm’s discount rate used in NPV calculations? - What is a firm’s Asset Beta & how do we lever Asset Betas and unlever Equity Betas? - Link to previous lectures - No longer use a “given” discount rate. We will calculate the correct discount rate for our NPV calculations. WACC - 1 2 1.0 The Cost of Capital: Some Preliminaries
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(100) 1 25 2 75 3 25 – – – – Discount at weighted average cost of capital (WACC) Assumes cash flows are reinvested at WACC NPV varies inversely with WACC Decision Rule: • Accept if NPV ≥ $0 • Reject if NPV < $0 – NPV represents change in the value of operations from accepting a capital budgeting project • Thus, NPV accrues to shareholders and creditors WACC = 10% Net Present Value Year 0 Cash Flow (100) 1 25 2 75 3 25 N CFt
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FI516 A. Here are the basic Definitions that relate to capital structure: V= Value of Firm WACC=Weighted average Cost of Capital FCF= Free Cash Flow rs And rd = Costs of stock and debt wce And wd = percentages of the firm that are financed with stock and debt Impact of capital structure is based upon the value of the effect that the debt have on the Weighted Average Cost of Capital and/or the Free Cash Flow. The debt holders, compared to the stockholders, have prior claim on cash flow
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the 7E7 project under base-case and alternative forecasts. We must estimate a weighted-average cost of capital (WACC) for Boeing’s commercial-aircraft business segment in order to evaluate the IRRs. As a result of that analysis, we will identify the key value drivers and distinguish, on a qualitative basis, the key gambles that Boeing is making. The need to estimate a segment WACC draws out our abilities to critique different estimates of beta and to manipulate the levered-beta formulas. Boeing
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for the 7E7 project under base-case and alternative forecasts. We must estimate a weighted-average cost of capital (WACC) for Boeing’s commercial-aircraft business segment in order to evaluate the IRRs. As a result of that analysis, we will identify the key value drivers and distinguish, on a qualitative basis, the key gambles that Boeing is making. The need to estimate a segment WACC draws out our abilities to critique different estimates of beta and to manipulate the levered-beta formulas. Boeing
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valuations: the Weighted Average Cost of Capital WACC (and derived methods) and Adjusted Present Value (APV)1. For practical purposes, as is often the case of many larger firms in industrialized economies, whenever a target debt ratio is set up for the long term, WACC and its associated methods might be an acceptable approximation. However, the situation is different in a considerable number of instances: The weighted average cost of capital (WACC) is a common topic in the financial management
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additional value is accounted for in the WACC. However, in many cases the capital structure of the project may change over time. In other cases the tax rate faced by the firm may be expected to change over time (as firm goes from loss to profit, or special tax subsidies expire etc.). In other cases, the firm may be able to obtain subsidized financing from a government agency for the project. In all of these circumstances, these types of things mean that the WACC for the project will change, and may
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