addition‚ they did not take into consideration that as a global company with operations in countries that are hugely different from the U.S they needed a more sophisticated way to think about risk and the cost of capital around the world. besides‚‚ with AES’s international expansions‚ the model of capital budgeting was not supposed to be exported to projects overseas‚ since the same model became increasingly strained with the expansions in brazil and Argentina because hedging key exposures such as regulatory
Premium Currency United States dollar Exchange rate
Depletion of Natural Resources - Oil DEPLETION OF ENERGY RESOURCES Modern industrial society is based on a triad of hydrocarbons‚ metals‚ and electricity. The three are intricately connected; each is accessible only if the other two are present. Electricity‚ for example‚ can be generated on a global scale only with hydrocarbons. The same dependence on hydrocarbons is true of metals; in fact the better types of ore are now becoming depleted‚ while those that remain can be processed only with modern
Premium Renewable energy Wind power World energy resources and consumption
Alternative energy resources What are Alternative energy resources?? It is any energy source that is an alternative to fossil fuel. It is a form of energy derived from a natural source‚ such as the sun‚ wind‚ tides‚ or waves and are also known as “Renewable Energy” that do not use up natural resources or harm the environment. They are considered alternatives because they can be future replacements for the fossil fuels that now meet a considerable portion of our energy needs. What Energy Resources
Free Wind power Fossil fuel Renewable energy
Group Case 1: Ameritrade – Cost of Capital Executive Summary: As a deep-discount brokerage‚ Ameritrade planned to improve its competitive position by price cutting‚ technology enhancements‚ and increased advertising in mid-1997. Before initiating the plan‚ Ameritrade needed know whether the investment returned more than it cost. We were hired to estimate the cost of capital correctly. The key question is to find suitable comparable firms to estimate Ameritrade’s asset beta‚ since it was a recently-listed
Premium Rate of return Investment
Marriott cost of capital Objective: 1) Calculate the divisional and the company cost of capital and explain the calculation. 2) Evaluate Marriott’s use of company cost-of-capital rate for the individual divisions. Cost of Capital for Lodging Division can be expressed as CC = We*Ce + Wd*Cd. For the weights of debt and equity (We and Wd)‚ the 1988 target-schedule rates of debt-to-assets and debt-to-equity were used as the only measures available in the case. Cost of Equity
Premium Mathematics Capital Weighted average cost of capital
Cost of Capital at Ameritrade What factors should Ameritrade management consider when evaluating the proposed advertising program and technology upgrades? Why? Mr. Ricketts believes that his role as CEO is to maximize shareholder value by accepting any project whose expected return on investment is greater than the cost of capital. Therefore‚ the main factors that Ameritrade management should consider are the expected return on investment for the project‚ and how this compares to the project’s
Premium Investment Rate of return Finance
Case Study of Cost of Capital at Ameritrade 1-a How can the CAPM be used to estimate the cost of capital for a real business investment decision? CAPM results can be compared to the best expected rate of return that investor can possibly earn in other investments with similar risks‚ which is the cost of capital. Under the CAPM‚ the market portfolio is a well-diversified‚ efficient portfolio representing the non-diversifiable risk in the economy. Therefore‚ investments have similar risk if they
Premium Rate of return Investment Finance
CheckPoint: Energy Resource Challenges Catherine Forbes SCI/275 August 31‚ 2012 University of Phoenix CheckPoint: Energy Resource Challenges “Nonrenewable energy resources include coal‚ oil‚ and natural gas.” However‚ they are nonrenewable‚ meaning that these resources cannot be regenerated. There are alternatives‚ though‚ that can be used in their stead; some of which are wind turbines‚ solar energy‚ ethanol‚ hydropower‚ geothermal energy‚ biomass energy‚ and ocean energy. The video discussed
Premium Renewable energy Alternative energy Fossil fuel
Part 1 Introduction What is your first thought of energy resources? Is it something that got to do with electricity? First of all‚ I would say that the energy system is not very sustainable because it can either be sustainable‚ or not sustainable. The energy resources used by mankind have grown dramatically and it is affecting the environment by leaving negative impact to the environment. Not only the government sector‚ but also the private sectors that are aware of the environment are trying
Premium Renewable energy Fossil fuel Global warming
Service Plc-Cost of Capital Objective: Lex service Plc sold its various subsidiaries and other assets in between 1991 and 1993 which provides more than £340 million of funds. To reinvest this huge amount of funds it evaluates many investment options and acquisitions. To evaluate the worth of new investments‚ Lex uses discounted cash flow analysis. In order to employ DCF analysis method‚ discount rate or cost of capital required. Now the question is arises ‘what should be real cost of capital’. Case
Premium Weighted average cost of capital Investment