Interco Case Abstract Interco is a target for a hostile take-over by City Capital Associates Limited Partnership. The initial offer of City Capital was $64 per common share of Interco. However, this has been raised to $70 per common share. Interco rejected the offer on the recommendations of Wasserstein Perella. According to Perella the offer of $70 per common share was inadequate, as different analysis resulted in valuation range of $68-$80 per common share. This under valuated offer was
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Nike, Inc: Cost of Capital 1. What is the WACC and why is it important to estimate a firm’s cost of capital? * WACC stands for Weighted Average Cost of Capital, it is the weighted average of the costs of debt, preferred stock, and common equity a company has. Using the weights of each of its components, and the component costs, WACC intends to find out whether an investment will be profitable to the company. It’s important to estimate the firm’s cost of capital in order to know if an investment
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production (E&P), refining and marketing (R&M), and petrochemicals. We are going to calculate the cost of the capital of this company, and answer the following three questions. What are the cost of capital for Midland debt and equity? What is the WACC for Midland? What should be the cost of capital for Midland operational divisions? Cost of Debt Assume the business is on-going for a long period of time. We use 4.98% rate as Rf from 30 years U.S. Treasury bond. Rd=Rf+Spread to Treasury
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weighted average cost of capital, WACC, is the rate of return required by investors. The WACC calculates the different risks associated with the individual components of the capital structure. The individual components within the WACC are preferred stock, common stock, and after-tax debt. The WACC is very important because it tells the investors if the return they are receiving is equal to the return they require depending on the risk associated with the investment. The WACC is the company’s overall rate
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(E&P), refining and marketing (R&M), and petrochemicals. We are going to calculate the cost of the capital of this company, and answer the following three questions. What are the cost of capital for Midland debt and equity? What is the WACC for Midland? What should be the cost of capital for Midland operational divisions? Cost of Debt Assume the business is on-going for a long period of time. We use 4.98% rate as Rf from 30 years U.S. Treasury bond. Rd=Rf+Spread to Treasury
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Introduction In this case Boeing faces a number of challenges in determiningthe viability of bringing forth the 7E7 aircraft series. Aircraft manufacturersbringing forth a new product has to take extra care since a miss in this assessment can place a company in a position to fail the result of huge cash outflows required. Boeing faced stiff competition from French based Airbus and had not brought forth a successful new product in recent years. Since the September 11th attacks travel had taken
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bond several years ago that now has 20 years to maturity. This bond has a 10% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. If the firm's tax rate is 40%, what is the component cost of debt for use in the WACC calculation? 2. Assume that Kelly Inc. hired you as a consultant to help estimate its cost of common equity. You have obtained the following data: D0 = $0.80; P0 = $27.50; and g = 7.00% (constant). Based on the DCF approach, what is the cost of
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cost of equity of 12%, and an after-tax cost of debt of 6%. The cost-saving proposal is related to the firm’s core business, so it is viewed as having the same risks as the overall firm. Under what circumstances should the firm take on the project? WACC = 7.20% PV of cash savings = $125,000,000 ? Thus, the firm should take on the project if the initial investment cost of the project is less than $125 million. 5. EOCQ 20) The Mark Models Company Ltd (MML) is contemplating a $20 million expansion
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2 a. Outstanding Shares 2 b. Book Value of Equity 2 c. Price per Share 3 d. Earnings per Share 3 e. Debt Interest Coverage Rations and Financial Flexibility 3 f. Outstanding Shares 3 Wrigley’s Current Weighted Average Cost of Capital (WACC) 3 Debt Proceeds to Pay a Dividend or Repurchase Shares 4 Wrigley’s Recapitalization 4 Should Wrigley’s directors undertake the recapitalization? 5 Appendices 6 ⦁ Objectives This report seeks to answer the following five questions about
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proceed with the project. Although significant investments are required to develop the Boeing 7E7, a competitive advantage cannot be achieved with the Company’s current product scope. Therefore, due to the IRR being higher than the commercial segment’s WACC as well as the need to achieve a competitive advantage in the market, we believe the project should be undertaken. #18 and The Force Executive Summary Due to the above quantitative analysis, it is evident that the project is beneficial to the
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