SYSTEM BACKGROUND INFORMATION 4 2. COST OF CAPITAL FOR COLEMAN SYSTEMS 5 2.1 Calculate cost of debt (rd) 5 2.2 Calculate ratio debt/capital and equity/capital in market value terms 6 2.3 Calculate Beta (β) for Coleman Systems 8 2.4 Calculate Cost of Equity 10 2.5 Calculate the weighted average cost of capital for Coleman Systems 10 3. THE WACC AND PROJECT VALUES FOR DIFFERENT DEBT – EQUITY RATIOS AND THE OPTIMAL CAPITAL STRUCTURE FOR THE PROJECT 11
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evaluate capital projects, methods used for project selection, weighted average cost to the firm and the cash flow that is anticipated for the project. We will also incorporate the risk into the calculations from two projects. In this report we explain our findings and recommendations about our methodology. Methodology First let’s look at the capital budgeting project process; we evaluate the firms investment project for the long term viability. “The Capital Budgeting Process: The capital budgeting
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US E RE VI PR EW O P ON E R LY T Y ± N OF OT C E NG FO A R GE SA LE LEA OR R N CL ING AS SR O Northern Forest Products OM Case 90 Cost of Capital Directed FO R Northern Forest Products (NFP) was established in the 1800s to log timber in the Great North Woods. In response to changing conditions, the company underwent radical changes in the way it operates and currently it is a large multidivisional corporation. The major focus of the company remains managing
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US E RE VI PR EW O P ON E R LY T Y ± N OF OT C E NG FO A R GE SA LE LEA OR R N CL ING AS SR O Northern Forest Products OM Case 90 Cost of Capital Directed FO R Northern Forest Products (NFP) was established in the 1800s to log timber in the Great North Woods. In response to changing conditions, the company underwent radical changes in the way it operates and currently it is a large multidivisional corporation. The major focus of the company remains managing
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0BAFI Business Finance Exam Solutions Semester 3 2010 Section B Q. 1 Explain in simple terms what you would need to know and how you would go about determining the interest and principal components of a loan repayment. To determine the interest and principal components of a loan repayment you would need to know the following: Present value (PV) – the amount outstanding on the loan, r – the discount or interest rate applicable to the loan, n – the number of payments to be made on the loan
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Net Operating Profit after Tax FCFF = Free Cashflow to Firm ΔWCR = Working Capital Requirement PPE=Fixed Assets (?) (PPE= Property Plant and Equipment) Investment-> Fixed Assets AT = Asset Turnover TA = Total Assets S = Sales A = Assets E=Equity FCFF=NOPAT+DA+ΔWCR-Investment WCR = AR+Investment-AP Watch out! ΔWCR = -ΔWCR(math) ROA = Return on Assets WACC = Weighted average Cost of Capital CAPEX = Capital Expenditure (further??) ???DuPont analysis: ROE = Net Margin*AT*(Asset/Equity)
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antiseptic products unit of Montagne Medical Instruments Company (Montagne). Discuss the inputs and assumptions that underlie your calculations. a) What is the cost of equity capital appropriate for evaluating the free cash flows associated with this investment? b) What is the correct capital structure and weighted average cost of capital to use in discounting the investment’s free cash flows? 2) Determine the value of the base case acquisition opportunity. Discuss the inputs and assumptions
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1996 11. ServerVault: ‘‘Reliable, Secure, and Wicked Fast’’ III. Estimating the Cost of Capital 12. ‘‘Best Practices’’ in Estimating the Cost of Capital: Survey and Synthesis 15. Teletech Corporation, 1996 IV. Capital Budgeting and Resource Allocation 19. Diamond Chemicals PLC (A): The Merseyside Project 20. Diamond Chemicals PLC (B): Merseyside and Rotterdam Projects VI. Management of the Corporate Capital Structure 29. Structuring Corporate Financial Policy 31. Polaroid Corporation
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their international social expression products net sales increased by 31%, greeting cards by 9%, and gift packaging by 7%. Aside from small gains in revenue, their weighted average cost of capital has been fairly steady the past 3 years. By using the 10-year corporate bond rate (5.8%) for a BB+ company, for the cost of debt, and a cost of equity of 11.94%, the WACC for 2009-2011 is 8.35%, 8.80%, and 8.81% respectively. Recommendation I would recommend that AG’s management reinvest the $75 million
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Fin 502 Managerial Finance Andras Fekete PNC’s Weighted Average Cost of Capital Case 5 Due: November 6th, 2006 Prepared for Dr. James Haskins Managerial finance November 5, 2006 TABLE OF CONTENTS List of Figures 3 List of Tables 4 Executive Summary 5 Introduction 6 Statement of Opportunities and Problems 7 Methodology and Analysis 8 Summary and Conclusions 24 Recommendations 25 Works Cited 27 Appendix
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