America‚ achieve operating and capital expenditure synergies and consolidate its business scale and financial strength. As part of its integration strategy‚ Repsol-YPF will begin to dispose of select assets which do not correspond to its core businesses outlined above or to its core geographic areas which include Spain‚ Latin America and North Africa. Synergies Estimate Cost savings after tax of $350 million by 2000‚ 1.6% cost savings in 1998‚ reduction in capital expenditure from $15.6 billion
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Applications of option pricing in corporate finance Option pricing is used in four major areas of corporate finance: • Real Options Suppose a company has a 1-year proprietary license to develop a software application for use in a new generation of wireless cellular telephones. Hiring programmers and marketing consultants to complete the project will cost $30 million. The good news is that if consumers love the new cell phones‚ there will be a tremendous demand for the software. The bad news
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used some debt. When you suggested this to your new boss‚ he encouraged you to pursue the idea. As a first step‚ assume that you obtained from the firm ’s investment banker the following estimated costs of debt for the firm at different capital structures: P e r c e n t F i n a n c e d w i t h D e b t ‚ w d r d 0% - 20
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Finance 725 Spring 2006 J. E. Hodder Corporation Finance Course Schedule Tuesday‚ January 17: Introduction Thursday‚ January 19: Clarkson Lumber Company Reading: Note on Financial Analysis a. How is the company ’s financial performance? (Examine appropriate financial ratios.) b. Why has Clarkson Lumber borrowed increasing amounts despite its consistent profitability? c. How has Mr. Clarkson met the financing
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Blaine’s Case 1) Do you believe Blaine’s current capital structure and payout policies are appropriate? Why or why not? 2) Should Dubinski recommend a large share repurchase to Blaine’s board? What are the primary advantages and disadvantages of such a move? 3) Consider the following share repurchase proposal: Blain will use $209 million of cash from its balance sheet and $50 million in new debt bearing interest at the rate of 6.75% to repurchase 14.0 million shares at a price of 418
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Prepared for The Journal of Applied Corporate Finance Vol. 15‚ No. 1‚ 2002 How do CFOs make capital budgeting and capital structure decisions?1 John R. Graham Associate Professor of Finance‚ Fuqua School of Business‚ Duke University‚ Durham‚ NC 27708 USA Campbell R. Harvey Professor of Finance‚ Fuqua School of Business‚ Duke University‚ Durham‚ NC 27708 USA National Bureau of Economic Research‚ Cambridge‚ MA 02912 USA March 8‚ 2002 1A longer and more detailed version of this paper is published
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choice of the dividend payment policy on the stock market changes ‚ the company ’s capital structure and corporate value will be affected‚ as well as the realization of shareholders ’ wealth. Dividend policy is closely related to the value of the company. The different branches of relevance dividend view are only from a certain angle to explain the dividend policy and stock price. However‚ in the imperfect capital market‚ there are various factors influence the company’s dividend policy and stock
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valuation using multiples 5. EMPIRE (Greg & Scott‚ Scotia Capital) Bidder price to acquire a publicly-traded company (Oshawa) DCF of stand-alone firm + synergies‚ valuation using multiples‚ bidding strategy + financing 2. WACC – CHOOSING WEIGHTS Since we are discount future FCFs‚ we want a forwardlooking WACC Hence we want to use forward-looking capital structure: 1. Use the company target capital structure – As stated by the management (case fact) – As from comparable
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Research Foundation. Mobley‚ M. E and H. Kuniansky. 1992. “Chief Financial Officers’ Views of Academics Versus Practitioners in the Field of Finance.” Financial Practice and Education‚ (Spring/Summer): 67-71. Pruitt‚ S. W. and L. J. Gitman. 1987. “Capital Budgeting Forecast Biases: Evidence from the Fortune 500.” Financial Managemat‚ (Spring): 46-51. Ramirez‚ G. G.‚ D.A. Waldman and D. J. Lasser. 1991. “Research Needs in Corporate Finance: Perspectives From Financial Managers.” Financial Management
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Petroleum Note that p.2 of the case incorrectly states that the firm’s debt policy is that debt should comprise 50% of its total capital structure‚ defined as “long-term debt plus book equity.” The correct text should state “long-term debt plus market equity.” Answer the following questions: a. Does Pioneer estimate its overall corporate weighted-average cost of capital correctly? I think they´re WACC is correctly estimated. They use 50% debt and 50% equity‚ which I think is very risky. I would prefer
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