1. Cohen calculated Nike’s weighted average cost of capital (WACC) to be 8.3%. I find error in this calculation as a result of the following points of disagreement: a) Weighting of Capital Structure: Use of book values of capital rather than the market values b) Cost of Debt Calculation: Incorrect method for calculating debt c) Tax Rate: Use of a tax rate derived from the summation of state and statutory taxes instead of the firm’s marginal tax rate 2. Revised Calculation of WACC: WACC
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FINA5010W Financial Management Case Study Report– Warren E. Buffett‚ 2005 Ankie Wong Benny Cheng Christine Wai Chris Tam Jacky Chan Veronica Chang 1155008805 1155006903 1002549534 1005140000 1155006899 1155008802 1 In this case study‚ we attempt to study an investment Guru‚ Mr. Warren E. Buffett‚ through (1) evaluating his 2 major investments - acquisition of PacifiCorp. in 2005 and the ‘Big Four’ (2) investigation and critical analysis of his 8 major investment philosophies and other
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Analysis – Porter’s 5 forces o Business Strategy Analysis Section C: Management quality and corporate governance analysis o Management quality o Corporate Governance Analysis Section D: Accrual Quality o Discretionary accrual quality o Earnings persistence Introduction Whitehaven Coal Limited® (WHC:AX) operates predominantly out of the Gunnedah basin in Eastern Central NSW – the basin being one of the largest underground coal seems in NSW. WHC began as very much a local operation
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2004-2010) 8‚01 PV(Terminal) 55‚69 PV(Total) 63‚70 Annual growth rate g is given by following relationship g ✝RE ∙✈1− d ✉ g ✝0‚12 ∙✈ 1− 0‚40✉ ✝7‚2 The terminal value is given by T ✝ FCFt☞1 kE − g T ✝ 3‚04 0‚10− 0‚072 ✝108‚53 This must be discounted to t = 2003‚ and will be the PV(Terminal) found above. PV ✈ Terminal✉ ✝ 108‚53 ✈1☞0‚10✉ 7 ✝55‚69 The 2011 After-tax profit is 12% of the start-of-the-year book equity. The depreciation is calculated as a 7‚2% growth of the 2010 year depreciation
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between $70-$90 and push their apparel line. Nike’s executives expressed that the company would still continue with a long-term revenue growth target of 8-10 percent and earnings-growth target above 15 percent. III. Statement of Situation After reading all the analysts’ reports‚ Kimi Ford decided to develop her own discounted-cash-flow forecast to achieve the investment decision for her mutual fund. The forecast showed that at a 12 percent discount rate‚ Nike’s stock price was overvalued at $4
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1. Victoria Chemicals evaluate its capital-expenditure proposals in four ways. They are average annual addition to earnings per share‚ payback period‚ net present value‚ and internal rate of return. An earnings per share method is to indicate a company’s profitability. For Victoria Chemical‚ this was calculated with the average annual earnings per share contribution of the engineering-efficiency project over its entire economic life. However‚ for the basis of the calculation‚ the project’s initiator
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http://helpyoustudy.info Chapter 01 - Introduction to Corporate Finance Chapter 01 Introduction to Corporate Finance Answer Key Multiple Choice Questions 1. Which one of the following terms is defined as the management of a firm ’s long-term investments? A. working capital management B. financial allocation C. agency cost analysis D. capital budgeting E. capital structure Refer to section 1.1 AACSB: N/A Difficulty: Basic Learning Objective: 1-1 Section: 1.1 Topic: Capital budgeting
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LITERATURE REVIEW OF INVESTMENT APPRAISAL METHODS What is meant by investment appraisal practices? The investment appraisal process includes the generation of ideas‚ assessment and authorization‚ implementation and control of the project (Dennis R. Young‚ 2007). Decision-making is increasingly more complex today because of uncertainty. Additionally‚ most capital projects involve numerous variables and possible outcomes. For instance‚ estimating cash flows associated with a project involves working
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stability of Outdoor Equipment Ltd. Methods of analysis include trend‚ horizontal and vertical analyses as well as ratios such as Debt‚ Current and Quick ratios. Other calculations include rates of return on Shareholders Equity and Total Assets and earnings per share to name a few. All calculations can be found in the appendices. Results of data analysed show that all ratios are below industry averages. In particular‚ comparative performance is poor in the areas of profit margins‚ liquidity‚ credit
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FI602 – Finance Strategy and Valuation Case Analysis Ocean Carriers March 23‚ 2011 Executive Summary Industry Overview Capesize dry bulk carriers provide shipping services worldwide. Due to their size‚ Capesize carriers must sail around Cape Horn in order to travel between the Atlantic and Pacifica Oceans – the ships are too large to utilize the Panama Canal. In January 2001‚ there were 553 capesize vessels in service throughout the world. Demand for dry bulk carriers is determined
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