Average

have an increasing growth for several periods and will drop to the stable growth afterwards. Hence, the first stage of this model would be the increasing phase for 5 years and then followed by the stable growth phase. 5.2. Valuation Input Weighted Average Cost of Capital (WACC) would serve as one of the valuation input for this two-stage DCF model. WACC itself explain…

predictor”—a theory popularized by the stock analyst Robert H. Stovall, after sportswriter Leonard Koppett first discovered that the subdivisions in which the Super Bowl winners belonged to, correlated with the rise or fall of the “Dow Jones Industrial Average” the concurrent year (Fortune). Similarly, the article by The Telegraph assesses the phenomenon…

Modigliani and Miller (1958) provided a new theory of capital structure, suggesting that a firm’s choice between debt and equity has no impact on the firm’s value. This became known as irrelevance theorem. However, this theory is surrounded by a number of assumptions that can be analyzed in turn. The first assumption from Modigliani and Miller (1958) is that firms operate within a perfect capital market. The perfect capital market is defined by Fabozzi, Neave and Zhou (2012, p 87). Firstly,…

1) Calculate all of the ratios listed in the industry ratios table for East Coast Yachts. Industry Ratios Ratio Formula Values Answer Lower quartile Median Upper quartile Current ratio current assets/Current liabilities 51,123,050/50,584,750 1.01 0.86 1.51 1.97 Quick ratio current assets-Inventory/Current liabilities (51,123,050-20,149,650)/50,584,750 0.61 0.43 0.75 1.01 Total asset turnover sales/total assets 611,582,000/401,558,750 1.52 1.10 1.27 1.46 Inventory turnover cost of goods…

The weighted average cost of capital, commonly referred to as WACC, is an important and widely accepted tool for companies to use. WACC allows the company to value future projects and the company as a whole by proportionately weighing each category of capital; because of this a firm’s WACC is dependent on the capital structure of the firm. Investors also use this tool to confirm whether or not companies are worth the investment risk. The higher the WACC, the higher the investment risk of a…

measure these averages, especially given the high returns and volatility of the bond markets shown in Exhibits 4 and 5. He was concerned also about which measure of expected returns should be used. Exhibits 4 and 5 present two different measures of average annual return, the arithmetic and the geometric. The arithmetic average return is the sum of the annual returns over the time period divided by the number of years in the time interval. The geometric average return is the compound average…

attained through DCF analysis is higher than the current cost of the investment, that’s an indication of a good opportunity investment. The Weighted Average Cost of Capital is the company’s cost of capital which all of the company’s assets are respectively weighted; bonds, common and preferred stocks, and long-term debts are involved in the Weighted Average Cost of Capital calculation. The Equivalent Annual Annuity is a calculation of the annual cash flow of an annuity investment over its…

ExxonMobil products worldwide and is charged with growing the company (“Learn about Natural Gas and Power Marketing at ExxonMobil,” n.d.). Any business decision within each division affects the entire company in many areas including their weighted average cost of capital. The cost of capital has a major influence over a company’s operations and profitability (Easley & O’Hara, 2004, pg. 1553). One way that companies can influence their cost of capital is “by affecting the precision and quantity…

common valuation approach is the discounted cash flow model(DCF). It considers perspectives of all claimholders in the company. Economists define the corporate value as the present value of expected free cash flow of company discounted by its weighted average cost of capital. It is closely related to the financial decision making of the company and reflects time value, risk and sustainable development capacity of corporate. Therefore, approaches to achieving maximization…

Whether you’re seller or buyer, San Mateo MLS has listings for every neighborhood in the area, providing opportunities for sellers to increase their market exposure to buyers with preferences looking for the ideal home. Located near San Francisco and San Jose, San Mateo’s community is a diverse mix of generations enjoying a passionate lifestyle for socializing at city parks, downtown shopping areas or simply enjoying the locate eateries, culture affairs and classic entertainment. Sellers have an…