are required to form a group of THREE TO FOUR (3-4) members and register their grouping with their respective class representative (CR) by Week 2. Lecturer’s approval must be obtained if there is any change in the number of students due to withdrawal from the course. The deadline for written assignment submission is set in Week 11 on the 17 November 2013 during the class hour. CASE STUDY: Integrative Case 1: Eco Plastics Company Since its inception‚ Eco Plastics Company has been revolutionizing
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Equity Costs: Some Conventions on Using the CAPM1 One of the starkest contrasts in finance is found in comparing the elegance of capital-asset pricing theory with the coarseness of its application. Although the capital-asset pricing model (CAPM) is well understood‚ the theory says nothing about which risk-free rates‚ market premia‚ and betas to use in the model. Possibilities abound‚ and any sampling of academicians and practitioners will summon up many combinations and permutations of methods
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to the company is 50%. Compute the cost of debt capital. b) Y Ltd. issues Rs.50‚000 8% debentures at a premium of 10%. The tax rate applicable to the company is 60%. Compute cost of debt capital. c) A Ltd. issues Rs.50‚000 8% debentures at a discount of 5%. The tax rate is 50%‚ Compute the cost of debt capital. d) B Ltd. issues Rs.1‚00‚000 9% debentures at a premium of 10%. The costs of floatation are 2%. The tax rate applicable is 60%. Compute cost of debt-capital. -D 2. A company
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Manufacting is 50% common stock‚ 15% preferred stock‚ and 35% debt. If the cost of common equity for the firm is 19.6%‚ the cost of preferred stock is 12.9% and the before tax cost of debt is 9.5% what is the weighted average cost of capital? The firm’s tax rate is 35%. Answer: WACC = (50% x 19.6%) + (15% x 12.9%) + ( 35% x 9.5% x 65% = Q2: The following are the information of a company: |Type of capital |Book value (Tk) |Market value (Tk) |Specific cost (%) | |
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Stock out cost Economic consequences of not being able to meet an internal or external demand from the current inventory. Such costs consist of internal costs (delays‚ labor time wastage‚ lost production‚ etc.) and external costs (loss of profit from lost sales‚ and loss of future profit due to loss of goodwill). Also called shortages costs. The cost associated with being unable to draw on a stock of raw material‚ work-in-progress or finished goods inventory (loss of sales‚ profits and goodwill
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THE COST OF CAPITAL (Difficulty: E = Easy‚ M = Medium‚ and T = Tough) Multiple Choice: Problems Easy: Cost of common stock Answer: d Diff: E [i]. Bouchard Company ’s stock sells for $20 per share‚ its last dividend (D0) was $1.00‚ and its growth rate is a constant 6 percent. What is its cost of common stock‚ rs? a. 5.0% b. 5.3% c. 11.0% d. 11.3% e. 11.6% Cost of common stock Answer: b Diff: E [ii]. Your company ’s stock sells for
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common models used for estimating the rate of return for a given company; dividend growth‚ Capital Asset Pricing Model (CAPM) and Arbitrage Pricing Theory (APT). The board of directors for Apple Computer Corporation will receive this report‚ and based on the findings and analysis included‚ Apple will be given a recommendation as to the cost equity model they should implement to estimate their future rate of returns. This report will discuss the accuracy and ease of use of these three models. The
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The Comparison and Contrast of DCF and CAPM. The definition of Discount Cash Flow is uses of future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value‚ which is used to evaluate the potential for investment. If the value arrived at through DCF analysis is higher than the current cost of the investment‚ the opportunity may be a good one. The Discount Cash Flow shows that changes in long-term growth rates have
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Using the Cost of Poor Quality to Drive Process Improvement March ‚ 2006 Presented by: Dan Olivier‚ Certified Software Solutions‚ Inc. (dolivier@certifiedsoftware.com) Javad Seyedzadeh‚ Bayer Healthcare Diagnostic Division (javad.seyedzadeh.b@bayer.com) Page - 1 Objectives: To Understand COPQ 1. What is COPQ 2. Elements of the model 3. Calculating COPQ 3. Real World Applications 4. Implementing Improvement actions Page - 2 1. COPQ Introduction 1. COPQ Introduction Page
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Intrinsic Stock Valuation - Emerson Electric Intrinsic Stock Valuation - Emerson Electric In this cyber-problem‚ you will value the stock for Emerson Electric‚ a scientific and technical instrument company. While stock valuation is obviously important to investors‚ it is also vital to companies engaging in a merger or acquisition. Here‚ the process of stock valuation can often be quite subjective. Frequently‚ the opposing sides of a merger or acquisition will have vastly different opinions
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