# Telus Essay

716 Words Mar 2nd, 2014 3 Pages
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 Returns in North American Capital Markets were provided. In order to calculate Telus’ cost of capital we need to calculate the company’s Cost of Equity, Cost of Debt, and Tax Rate along with their weighted cost and then apply these to the Weighted
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

## Related Documents

• ###### Telus Essay

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 Returns in North American Capital Markets were provided. In order to calculate Telus’ cost of capital…

Words: 716 - Pages: 3
• ###### Competitive Analysis Within the Human Resources Consulting Industry

will demonstrate using these macroenvironmental factors for the hr consulting industry. Demographic - Threat Competitive market with global competition. (24 hour call centre advice from India) Stiffer competition from new entrants: Ceridian, Telus (cell phone) and the merger of AON/Hewitt. More players due to low entry/exit point. Two Grey Suits is offering one year of HR on-the-phone service for below the market price at www.dealsforbiz.com. The HR Association (HRPA) is promoting HR consulting…

Words: 2701 - Pages: 11
• ###### Essay Telus: the Cost of Capital

Telus: The Cost of Capital Telus needs to calculate the cost of capital from the variety of data given. The cost of capital is determined mostly by how the funds are used rather than where they were obtained from. It relies on the risk of investments Telus involves in, therefore, depending on cost of both equity of debt as described below. Also note that, even though the preferred shares are not attractive to issuers and may not get issued again, it is still on the company’s balance sheet and affect…

Words: 1192 - Pages: 5
• ###### Essay Shaw Wind

of value, along with attractive pricing very competitive with market giant Walmart. (Misner, 2010) Prior to the acquisition of Wind, Shaw was in a predominately saturated telecommunications market. With its main competitor being Rogers, Bell and Telus in Alberta. ( Hoover's Inc, 2016) Shaw can be classified as adopting the broad differentiation strategy in trying to seek innovative services. What we know about the majority of telecommunications companies in Canada is that most- if not all attempt…

Words: 3089 - Pages: 13
• ###### Investing strategies by age Essay

afford higher risk. Such as the early career years and the establishment years. This is because the turnaround stocks are risky and even though we are confident in the rise of the price of the stock, we are not sure if the stock will rise. TELUS Corporation – TELUS is a blue-chip stock and therefore, dividends are paid out at a set time each year. This is very important because dividends are great to retain income. They are also quite low risk and because of this the best time to buy these stocks would…

Words: 1114 - Pages: 5
• ###### Food Choices Essay

Business recommendations and objectives TELUS is very successful and well respected telecommunications company. Last year alone, the corporation earned approximately twelve billion dollars in operating revenues directly behind they’re lead competitor, Rogers with an impressive twelve billion nine hundred thousand dollars. Nevertheless, as a recommendation, the company could re-evaluate their long-term financial objectives and consider focusing on short term goals to pursue in the next two years…

Words: 598 - Pages: 3
• ###### Wireless Networking Essay

I know from my own experience that wired networks will have a faster connection. My home wireless network was set up by my ISP, Telus, with my computer and modem using the latest 802.11n technology. I was noticing that while connected to the wireless network, my home computer was not getting the transmission speeds I would expect from this technology. After Telus came back to inspect my setup, it was determined that physical barriers such as the concrete walls in the apartment building may contribute…

Words: 2651 - Pages: 11
• ###### Impact of Technology on Social Interaction Essay

outdoors to hang out with friends to communicating by text, Facebook and Twitter. Communicating electronically has been made so user friendly that teens are less interested in face-to-face communication with their friends or family. According to the Telus and Technology survey done in August 2009, shows information and communication technologies are not replacing face-to-face contact but adding or enhancing it. It is giving people the ability to go their separate ways and still stay connected. Families…

Words: 606 - Pages: 3
• ###### Essay on Enterepreneur

A fancy title doesn't put you above others — it puts you in their service. TELUS, a national telecommunications company in Canada, with \$11 billion of annual revenue and more than 40,000 employees worldwide (and where I am head of learning and collaboration), has worked incredibly hard over the past five years to raise employee engagement from 53% to 80%. It did so through myriad actions including the launch of the TELUS Leadership Philosophy. The TLP is an enterprise-wide leadership framework that…

Words: 915 - Pages: 4
• ###### Etika Ke Essay

tersebut kepada subordinat atau pengikut melalui komunikasi dua hala, pelaksanaan usaha peneguhan dan juga dalam proses membuat keputusan. Mereka juga mengatakan bahawa selain daripada komponen yang disebutkan di atas, pemimpin yang beretika juga adalah telus dan terlibat dengan komunikasi terbuka di samping memberi ganjaran dan mempromosi tingkah laku beretika dalam kalangan pekerja. Dalam penulisan mengenai kepimpinan beretika, sifat yang sering dikaitkan adalah mengambil berat tentang orang lain, boleh…

Words: 3521 - Pages: 15