WACC Essay

REVENUE AND GROWTH According to historical data, Michael Kors had a constant growth in revenue since 2013 at a rate around 30% to 50%. Michael Kors has opened numbers of new stores include traditional stores located in malls and some special store in tax-free area in the airports. Also, the advertising and promotion help Michael Kors to be more popular among younger generations and white-collar office workers. Without worrying about losing consumers, those loyal customers make it possible for…

percent is simply a subjective qualitative judgement based on similar cases. Examples of intangible assets may include customer and vendor relationships, brand recognition, or even proprietary recipes, and these contribute to earnings. The final target WACC is a high figure of 56.52 percent, reflecting very significant aggregate risks and associated risk premiums. Two of the most important risk factors include the business’s small size and difficulties in converting income to cash flow (mainly…

The Roles of a Financial Manager are many but their primary goal is to warrant growth of the proprietor’s wealth and to ensure maximum profit of the company. When a financial manager achieves his or her personal goals of a company, they too will be achieved, (Moyer, et al, 2008). The decisions a financial managers makes are capital structure, working capital management and capital budgeting. A financial Manger has to decide on the type of projects that the company should undertake (Siegel &…

5.2 Unique features of the acquisition Even if not yet meeting the huge amount offered by the Chinese competitor, Starwood accepted the new bid submitted by Marriott, evidently finding it profitable enough: for sure, a critical role in the decision is played by the significant long term value that such acquisition can generate. In other words, the potential synergies with Marriott prevailed and persuaded Starwood against the new bidder, as already happened with Hyatt, who also submitted a…

Alternative B Investment costs NPV Base case -320,000 -30,130.72 Worst case -368,000 -67,661.15 Best case -272,000 7,399.71 Even in the best case situation, the NPV for Alternative B is barely positive. It will be very difficult to achieve a positive gain if the company should proceed and further analysis into the probability of the Best Case occurring could be warranted. Alternative B Changing the cash flows by ±40% and keeping the initial investment…

data for our computation which resulted to a weighted average after tax cost of debt of 2.94% while the average cost of preference shares was based on the relevant instruments issued by INRI which is taken from their annual report. In overall, the WACC is 7.835% based on the market value weighted market value of INRI’s capital structure. [Refer to Appendix…

Country Analysis: - P&G has is it’s head quarters in the United States of America hence my country analysis will be focusing on the economical factors, the trade and stock market and the government treasury of the US. 1. Economy of the country: - • The US is the world’s largest economy representing 17% of the global GDP and 22% of nominal GDP. • The United States is also one of the most stable economies in the world. • US’s GDP was recorded to be a whooping $17.701 trillion at the end of 2014…

on the ROA. This will lower the ROA as it records the full value of the assets in the accounting records. Enterprise Value Assessment Using the Free Cash Flow evaluation, we do not agree with Deutsche Bank. Free Cash Flow of 2011 is discounted by WACC (10.95%), giving enterprise value of $5,316,401. Enterprise value is then divided by shares outstanding (21,832) which results in $24/share. However, if the operating leases are capitalized in the balance sheet, the share price goes up to…

2.1 DEFINITION Coyle (2000) defined Mergers and Acquisition (M&A) occur when two or more companies joint together all or part of their operations. The differences between mergers and acquisition relate mainly to the relative size, management control and ownership of the combined business. Mergers is defined as two separate companies pooling their resources into a single entity and become common shareholders. The shareholders of pre-merger companies have a shared in the ownership of the merged…

Answer 1: a) Tax consideration: In present scenario, ICI is a subsidiary of a stable and established firm and is in a good state with sufficient revenue generation. It has current debt ratio of 40%. ICI would want to leverage the low debt ratio of Nero for further growth and expansion. This merger can also be used as a way of tax benefits for excess cash flows. Acquisition of a loss making firm can be used to save tax on the acquiring firm’s income. b) Diversification: Although diversification…