Name: Alade Ademola Gbolahan Course: Managerial finance Lecturer: Laurence Degaetano Date: 5 June, 2016. Deliverable The Weighted Average Cost of Capital I choose Costco Corporation, which is an American based company that sells a variety of merchandise. The company is also a wholesale company and it supplies its products and services to various countries despite the United States of America. The company is traded on NASDAQ with ticker symbol COST. As
Words: 856 - Pages: 4
poor’s website A-. SBUX carried 549.6 M in debt. Based on 10K footnote SBUX issues maximum of $500 M. The risk premium for 10 years bonds of A- is 89 basis points and the 10 years rate is 4.59%. So I assume that the current cost of debt for 5.48% WACC=WdKd1-T+WeKe. I have Wd = 10.62% form Yahoo
Words: 418 - Pages: 2
Midland Energy Resources, Inc.: Cost of Capital Case Solution Total Words: 1930 Excel Calculations: Return on Debt, T-Bills Return, Yield Spread, Beta, Return on Equity, WACC for Midland, Exploration and Production, Refining and Marketing and Petrochemicals. Abstract: Midland Energy Resources has its operations divided amongst three separate divisions. The divisions have different functions and need separate discount rate to evaluate its projects. The cost of capital is very
Words: 414 - Pages: 2
Adjusted Present Value The adjusted present value ("APV") analysis is similar to the DCF analysis, except that the APV does not attempt to capture taxes and other financing effects in a WACC or adjusted discount rate. Recall from our discussion of DCF that the WACC used in the DCF analysis is calculated as a blend of the cost of debt and the cost of equity, thereby capturing the effects of taxes and financing. APV, on the other hand, seeks to value these effects separately. APV = base-case NPV
Words: 499 - Pages: 2
Chapter 9: For Week 5, please turn in the answers to the following questions: 1. What does it mean when people refer to a firm’s “cost of capital?” 2. What are the three components that normally make up a firm’s weighted average cost of capital (WACC)? 3. (calculating the after-tax cost of debt) Suppose your firm can borrow what it needs from a local bank at 4.5% interest. If your firm’s effective tax rate is 40%, what is its after-tax cost of debt? 4. (calculating the cost of preferred
Words: 414 - Pages: 2
ANALYSIS Effect of issuing 18.4 million stocks to raise $156 million October 2004 - Using $156 million to decrease debt Debt $ 835,000,000.00 Equity $ 24,000,000.00 Capital structure 97.206% Cash raised thru stocks $ 156,000,000.00 WACC 8.362% Effect of
Words: 2314 - Pages: 10
analysis (Exhibit 1). I then calculated the net present value (NPV) of the FCFs using a weight average cost of capital (WACC) of 9.93%. I calculated the WACC by using FMI’s target debt-to-capital ratio of 18% and an equity β of 1.20, which I determined using the average unlevered asset β of FMI’s competitors. The detailed WACC calculations are presented in Exhibit 2. Using the WACC as a discounted rate, I calculated the NPV of the project’s cash flows to be $1.8M. Therefore, I recommend implementing
Words: 585 - Pages: 3
Depreciation/Amortization #NAME? #NAME? #NAME? #NAME? #NAME? #NAME? #NAME? #NAME? 7 Sum Components Of FCF (Note: Change in Working Capital calculated in hidden tab.) Operating Income #NAME? #NAME? #NAME? #NAME? #NAME? #NAME? #NAME? #NAME? 8 Jump To WACC Sheet Taxes #NAME? #NAME? #NAME? #NAME? #NAME? 9 Find PV of CFs Tax Affected EBIT #NAME? #NAME? #NAME? #NAME? #NAME? 10 Use Terminal Multiple Against Terminal Year EBITDA To Calculate Terminal Value and its PV
Words: 451 - Pages: 2
95.0% | Upper 95.0% | Intercept | 0.0137 | 0.011 | 1.292 | 0.199 | -0.007 | 0.035 | -0.007 | 0.035 | X Variable 1 | 0.951 | 0.145 | 6.541 | 0.000 | 0.663 | 1.238 | 0.663 | 1.238 | Figure: Beta computation using trendline plot method Table: WACC Computation using CAPM method ------------------------------------------------- Average market return, Rm = 14.750% ------------------------------------------------- Risk free rate, Rf = 8.07% -------------------------------------------------
Words: 283 - Pages: 2
#3 After we calculated the weighted average costs of capital (WACC) for each project one can clearly see that the costs of capital are increasing. The increase in costs differs though from project to project. The methodology used assumes that every project has got a different business-risk specific score which then leads to different adjustments on the cost of capital. For example the project “Andres” which is located in the Dominican Republic has got, according to the score, the highest risk. Having
Words: 326 - Pages: 2
