Boeing 7E7 Case Study Solution BACKGROUND As the world’s largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security system, Boeing puts a lot of efforts and innovations in its products and services. These include commercial and military aircraft, satellites, weapons, electronic information and communication systems, and performance-based logistics and training. Due to customers’ needs and requests, Boeing has expanded its product
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1. Mercury is properiate for AGI as long as AGI could acquire by a price not much higher than Mercury’s true intrinsic value. According to Liedtke’s analysis, this acquisition will almost double AGI’s size, which would give it some competitive advantages in both operating and financing. Additionally, according to table 2 and Ex1, AGI and Mercury have an exactly same operating metrics, including RONA, ROE, and Asset Turnover during the past three years, which also makes Mercury a proper target. Except
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6 so.. B(a) = B(e) / (1 + (1-tax) D/E) = 1.11 / (1+.56(2499/3596)) = .80 B = .8 * (1+.56(5394/3596)) = 1.47 Equity risk Prem = 7.43% (arithmetic average between 1926-1987) Cost of Equity = Rf + B(Risk Prem) = .0872 + 1.47(.0743) = 19.64% WACC = .4(.1964) + .6(.1125)(1-.44) = 11.64% i)What risk free rate and risk premium did you use to estimate the cost of equity? We used the risk free rate of a 10 year government bond (8.72%) to estimate the total risk free rate. We found the risk premium
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WACC ANALYSIS Apple Inc. (NasdaqGS:AAPL) (USD in millions) ASSUMPTIONS BETA CALCULATION Tax Rate (5 Year Average) Risk-Free Rate of Return (Rf)(1) S&P 500 Index Market Return (Rm) - Yearly for Last 10 Years Size Premium AAPL D/(D+P+E) AAPL D/E AAPL P/E AAPL Cost of Debt (Rd) - Average of Last 5 Issued Bonds AAPL Cost of Preferred (Rp) AAPL Tax Rate Risk free rate Choose Then 25.4% 1.34% 7.2% 0.0% 7.9% 8.6% 0.0% 2.5% 0.0% 26.4% Levered Beta 1.560 1.547 1.489
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INTRODUCTION: ............................................................................... 5. FINANCIAL ANALYSIS: ......................................................................................... 8. WEIGHTED AVERAGE COST OF CAPTIAL (WACC): ........................................ 11. FUTURE CASH FLOWS: ...................................................................................... 16. HISTORICAL STOCK PRICE: ............................................................
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1.0 Introduction Capital markets are a major source of finance for large companies engaging in investment projects. Successful investment projects can bring tremendous returns to shareholders in the form of dividend payment and increased share value. However, the source of finance affects a company’s overall cost of capital and by extension its dividends to shareholders. This report addresses the importance of the capital market and the efficient market hypothesis theories. The various source of
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FI515 midterms 1. | Question : | (TCO A) Which of the following statements is correct? | | | | | One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership. | | | Question 2. | Question : | (TCO G) Which of the following statements is correct? | | | | | In the statement of cash flows, a decrease in accounts payable is reported as a use of cash. | | | Question 3. | Question : | (TCO G) Beranek
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conclusion, I may say that, in short prospective Lease is option is optimal, however in long term build option may seems to be more profitable in long term (+5 years). The final decision should be undertaken after the Hotel will secure a fixed rate of WACC, because there are different options are available (see Sensitivity analysis) 5. Rank the projects using various measures of investment attractiveness. Do all the measure rank the project identically? Why or why not? Which criterion is the
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While a company of the WACC decreased, the market value will increase. The performance of the optimal capital structure is when the WACC is at minimum value. It was because as the value of WACC is decreased, the company or shareholder’s wealth will increase (Optimal Capital 2009). Therefore, when a company would like to have an optimal capital structure, the
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ROE=UNF/PATRIMONIO Contr f= roe-roa EVA=UODI-(WACC*aon) WACC=CD*D/D+P+KE*(P/D+P) INDICE DUPONT ROE ANALIS DUPINT EMPRESAA | ((V/aon)*(AON/PATRI)*(UO/VENTAS) | | | *APALNACAMINETO*ROT ACT*MARGEN OP | | | | | ABALISI DUPONT ACTI | (UO/VENTAS)*(VENTAS/ACTIVOS) | | | MARGEN OP* ROT ACT | Deuda corto plazo%=deuda cp/deuda total Deuda plazo%=deuda lp/dt (dcp%*cdcp)+(dlp*cdlp)=COSTO DE LA DEUDA WACC=CD(1-TX)*(D/D+P))+(KE*(P/D+P) EVA=NOPAT-(WACC*AON) Pkt=ktno/ventas TIC = (RENT NETA
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