values, the bottom line is the current market values provided in Table 2. b) Once all the steps described above are done, one can use this information to calculate the weighted average cost of capital (WACC). Table 3 of the appendix shows the different weights for each category. Taking into account the relevant information about the cost of each category, it is easy to multiply them with the weights. Summing up all three pre-tax values, one ends up with a pre-tax WACC of 12,54 percent. Given the information
Words: 2423 - Pages: 10
THE UNIVERSITY OF NORTH CAROLINA AT GREENSBORO Joseph M. Bryan School of Business and Economics Department of Accounting and Finance Fall 2008 I. Meeting Time and Place FIN 625.01, Corporate Strategy and the Finance Function 6:30 pm – 9:20 pm M, Bryan School (Room 204 Bryan Bldg.)[1] II. Instructor Daniel T. Winkler Office: 324 Bryan Bldg. Phone: 256-0122 E-mail: dt_winkler@uncg.edu Blackboard:
Words: 4596 - Pages: 19
Memorandum- Cost of Capital and Capital Structure Date: I. Cost of Common Stock The cost of common stock estimated varied widely between the three methods used. Under the CAPM approach, UPS had the lowest cost because it has the lowest beta coefficient, according to Value Line. Conversely, AAWW had the highest cost of common stock because its beta coefficient is almost twice that of UPS. Under the DCF approach, UPS and AAWW were swapped with regard to having a higher cost of common
Words: 2071 - Pages: 9
Analysis and recommendation on the capital structure of Hill Country Snack Foods Co. EXECUTIVE SUMMARY This report discusses the current operational and financial strategies of Hill Country Snack Foods Co. and analyses the proposed capital structure for it. Part I of the report reviews the company’s strategies and its latest financial performance. Part II illustrates a detailed valuation of the proposed capital structure. Valuation methods involved includes Dividend Discount Model and Discount
Words: 2086 - Pages: 9
box plant. This is a sound strategic move as Atlantic Corporation purchases 150,000 tons of linerboard from its competitors each year which could lead to problems such as lack of supply and increased cost prices. Construction of a new linerboard mill would be time consuming and the opportunity cost of lost revenue from this may exceed the benefits when the mill becomes operational. For Atlantic Corporation, it may face two scenarios: linerboard becoming unavailable or linerboard prices increase.
Words: 1334 - Pages: 6
Finance 725 Spring 2006 J. E. Hodder Corporation Finance Course Schedule Tuesday, January 17: Introduction Thursday, January 19: Clarkson Lumber Company Reading: Note on Financial Analysis a. How is the company's financial performance? (Examine appropriate financial ratios.) b. Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability? c. How has Mr. Clarkson met the financing needs of
Words: 2003 - Pages: 9
Estimating the Cost of Capital The Cost of Capital The purpose of this case is to present evidence on how some of the most financially sophisticated companies and financial advisers estimate capital costs. This evidence is valuable in several respects. First, it identifies the most important ambiguities in the application of cost-of-capital theory, setting the stage for productive debate and research on their resolution. Second, it helps interested companies benchmark their cost-of-capital estimation
Words: 2606 - Pages: 11
Financial Leverage And Capital Structure Policy 0 Chapter Outline The Capital Structure Question The Effect of Financial Leverage Capital Structure and the Cost of Equity Capital M&M Propositions I and II with Corporate Taxes Bankruptcy Costs Optimal Capital Structure 1 Capital Restructuring We are going to look at how changes in capital structure affect the value of the firm, all else equal Capital restructuring involves changing the amount of leverage
Words: 3441 - Pages: 14
focus will be maximizing the value of the firm and capital budgeting. Some ethical issues will be highlighted throughout the course. INTENDED LEARNING OUTCOMES Key (Assessed) Learning Outcomes: On completion of this course, students should understand and be able to do the following: 1. Estimate the cost of capital for corporate investment decisions; 2. Make corporate investment decisions using discounted cash flow method; 3. Manage working capital and corporate long-term growth. Supplemental Learning
Words: 3258 - Pages: 14
1: Accounting (100 marks) Paper 2: Law, Ethics and Communication Part I: Law (60 marks) Business Laws (30 marks) Company Law (30 marks) Part II: Business Ethics (20 marks) Part III: Business Communication (20 marks) Paper 3: Cost Accounting and Financial Management Part I: Cost Accounting (50 marks) Part II: Financial Management (50 marks) Paper 4: Taxation Part I: Income-tax (50 marks) Part II: Service Tax (25 marks) and VAT (25 marks) Group II Paper 5: Advanced Accounting (100 marks) Paper 6: Auditing
Words: 3734 - Pages: 15
