Telus Essay

716 Words Apr 28th, 2014 3 Pages
CRAM Exclusive
Essay Sample
To: Natasha Burns From: Judith Ayala Rojas, Jason Campbell, Joshua Garcia Re: Cost of Capital for Telus Corporation. Date: February 13, 2014 Executive Summary Barb Williams and Rick Thomas, while attending an executive education course at a well-known business school, came across a case which involved calculating the cost of capital for Telus Corporation (Telus). Basic data such as the Balance Sheet, Income Statement, Data on Telus’ Common Stock, Market Index, and the Average Annual

middle of document…

Also, the issuance of preferred stock results in a higher after-tax cost compared to the cost of debt which makes them less attractive for most issuers.

Tax Rate

To calculate the company’s tax rate we simply used the numbers for Income Taxes and Earnings Before Taxes, Non-controlling Interest and Goodwill Amortizations (EBIT) which were provided in the Income Statement.

Formula:
Tax Rate = Income Taxes/EBIT
Given:
Income Taxes = $496 million
EBIT = $990 million
Solution:
Tax Rate = $496/$990
Tax Rate = 50%

Weighted Average Cost of Capital (WACC)

Now that we have the company’s cost of capital, cost of debt, and tax rate we can calculate WACC which will give us Telus’ Cost of Capital.

Formula:
WACC = (E/E+D)(rE) + (D/E+D)(rD)(1- t)
Given:
E = $6,348 million
D = $8, 361 million
E + D = $14,709 million
rE = 9.7%
rD = 15.2%
t = 50%
Solution:
WACC = (6,348/14,709)(.097) + (8,361/14,709)(.152)(1-.5)
= .042 + .043
WACC = 8.52%

Recommendations

In order for Telus Company to raise its shareholders wealth, we recommend that the company invests in projects that can provide a return of at least 8.52%. The case does not directly state how they will finance in
CRAM Exclusive
Board74092Slug

Related Documents

  • Food Choices Essay

    Market Development Strategy * Although TELUS offers the best cellular coverage in Canada, it does lack in certain areas significantly. Market development focuses on reaching new market segments, either domestic or international not currently served by the firm. The network is provided in all provinces, however throughout Ontario and Quebec it is minimal meaning many people don’t even know it exists. This strategy promotes developing and introducing the coverage in regions of the country which

    Words: 598 - Pages: 3
  • A Real Essay

    eal Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually Not A Real Essay Its Actually

    Words: 1646 - Pages: 7
  • Rim: Case Study Essay examples

    Lastly, access to distribution channels would be difficult. In most countries, cell phones are sold through cell phone providers such as Telus and Rogers. New entrants would have to be able to create partnerships with these companies which would be difficult. The only threat of entrants that seems possible would be if an already well known electronics company wanted to enter into the smart phone industry. For example, if Dell wanted to start a line of smart phones. * Threat of Substitutes-

    Words: 3238 - Pages: 13
  • Essay on You Know It

    Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I needed an essay ASAP! Sorry I

    Words: 660 - Pages: 3
  • Christian Essay example

    is a great essay and I am really enjoying writing itThis is a great essay and I am really enjoying writing itThis is a great essay and I am really enjoying writing itThis is a great essay and I am really enjoying writing itThis is a great essay and I am really enjoying writing itThis is a great essay and I am really enjoying writing itThis is a great essay and I am really enjoying writing itThis is a great essay and I am really enjoying writing itThis is a great essay and I am really enjoying writing

    Words: 4449 - Pages: 18
  • How to Write Essays

    vii Introduction ix 1 Planning Your Essay 1 What are you being asked to do? 1 Making a plan 6 2 The Opening Paragraph 11 ‘Waffle’ 12 The length of the opening paragraph 15 Useful phrases 16 More opening paragraphs 18 3 The Body of the Essay 26 Paragraphs 26 More examples of paragraphs 30 Continuity 34 The use of close references 38 More about the body of the essay 41 4 The Closing Paragraph 43 Final

    Words: 11875 - Pages: 48
  • Personal Narrative Essay Models

     Examining the structure of Personal Essays to determine how to form a working thesis. | Content: |  Personal Essay: Thesis, Body, Evidence/Support, Introduction, Conclusion, Voice, Point of View, Personal Story/narrative, making connections with the reader, life lesson, message, conversational | Goals: |  (1 hour lesson) Students have already learned how to distinguish between three types of essays. In this lesson, they will examine the structure of a personal essay and try to determine a "general"

    Words: 3265 - Pages: 14
  • How to Analyze an Expository Essay

    the expository essay, you need to figure out what type of expository essay it is. It could be division, classification, cause and effect, compare and or or contrast, process, or a definition essay. To clarify, a division essay breaks down a topic into its components, such as the ingredients for a recipe. Similar to a division essay, a classification essay break as down a topic into its distant types or kinds, like listing out the different forms of government. A cause and effect essay is associated

    Words: 1683 - Pages: 7
  • Writing and Process Essay

    here. As with all conclusions, this should bring the essay to a logical close. 5. Proofread and edit the essay. After writing the process essay, proofread to check for spelling and grammar errors. Try to read your essay as if you knew nothing about the topic. This way you can determine if your steps are detailed enough for any reader to comprehend the process without prior information. Make editing changes accordingly. A college process essay is an assignment where the student explains to his

    Words: 1190 - Pages: 5
  • Critical Argument Analysis Essay

    Rogers uses very technical terminology to write the essay. This in turn can be a problem for a person who is not familiar with such terminology. The argument that Rogers uses for the essay are lost as the only backup for the essay is claims and evidence. There is nothing in the voice of the essay that seems to belong to Rogers. Structure of the essay was well done and very well written in the sense that the sentences held up in the argument. The writing process of Rogers seemed to be uptight as if

    Words: 802 - Pages: 4