Weighted average cost of capital

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    Nike Case Study Summary

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    meeting held on June 28, 2001, management announced plans to grow performance. To increase revenue, Nike is developing athletic shoes in a mid-priced segment. Nike also planned to push its apparel line. On the cost sides of things, they will be more conscientious on expenses. As there are mixed feelings from analysts on these new plans, Kimi Ford is unsure what to do and had her own discounted cash flow forecast developed. As she was still unsure of her findings she had her assistant, Joanna Cohen, estimate Nike’s cost of capital. Cohen used WACC, weighted average cost of capital for the estimate of 8.3. WACC is the weighted average cost of capital. Its calculations consist of a firm’s cost of capital in which each category of…

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    WACC Case Study

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    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…

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    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 &…

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    Exxonmobil Case Study

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    products from crude oil and other segments such as fuels and lubricants (“Learn about downstream operations at ExxonMobil,” n.d.). The chemical division deals with products such as packaging materials, plastic bottles, solvents, and a countless array of goods (“Learn about ExxonMobil Chemical,” n.d.). The natural gas and power marketing division is just what it sounds like. This division promotes all ExxonMobil products worldwide and is charged with growing the company (“Learn about Natural Gas…

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    approach such as EVA and DDM can be used under certain conditions. However, the most 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…

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    Case Study Graincorp

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    building another silos by this year, so it is assumed that Graincorp will 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…

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    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,…

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    Corporate Finance and Applications Fall 2016 Professor R.A. Michelfelder, Ph.D. 52:390:310 December 14, 2016 Due: Tuesday, December 20, 2016 11:59 PM by Email FINAL EXAMINATION Please briefly respond to all of the following questions on each page. There are 6 pages of questions. This is a take-home examination. All responses are to be in your own words. This examination is due on Tuesday, 12/20/2016 at 11:59 PM and there are no exceptions. Any late submittals will result…

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    Profit rate for a hotel is its net present value divided by its cost. Company Background Marriott Corporation began in 1927 with J. Willard Marriott's root beer stand. Over the next 60 years, the business grew into one of the leading lodging and food service companies in the United States. Marriott's 1987 profits were $223 million on sales of $6.5 billion. See Exhibit 1 for a summary of Marriott's financial history. Marriott had three major lines of business: lodging, contract services, and…

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    Arvinds Case Study Arvind

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    According to industry experts, a little after July it started becoming apparent that the demand in the export market was slowing down. Says an exporter, Our sales were 30 per cent lower than expected. No sweat. Arvind with its global capacities could operate at low costs and still compete. Anyway, the domestic market was always there. A company document about the financial highlights of April-September 1997 stated: The only way of countering such forces would be by catering to more discerning…

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