Raising Equity Capital When a private company decides to raise outside equity capital to fund there firm‚ they can turn several potential sources‚ these include Angel Investors‚ venture capital firms‚ institutional investors and corporate investors. Angel investors are individual investors who buy equity in small private firms (often friends of relatives) and are usually the first round of outside financing typically receiving a sizeable equity share. Venture Capital Firm (VCF) is a limited partnership
Premium Venture capital Stock market Initial public offering
SOUTHEASTERN HOMECARE Cost of Capital Background Southeastern Homecare was initially a taxable partnership owned organization run by three partners‚ but later due to lack of capital and the rapid growth of the organization‚ the company was incorporated and the stocks were sold to the public. The company has two operating divisions: the Healthcare Services Division and the Information Systems Division. Both these divisions provide different services and operate individually. The Information Systems
Premium Discounted cash flow Stock Weighted average cost of capital
money they need to earn a rate of return that exceeds their cost of capital. We can estimate a company’s cost of capital in the following way: WACC = (rD)(1-T)(WD) + (rS)(WS) Go to one of the databases from Part 1 of the Course Project and look up the most recent 10-K for your company‚ paying special attention to the balance sheet and the footnotes. Although we should use market value weights when determining a firm’s cost of capital‚ this may be difficult to determine for a firm with multiple
Premium
Midland Energy Resources‚ Cost of Capital The case is about how Janet Mortensen‚ senior vice president of project finance for Midland Energy Resources‚ prepare her annual cost of capital estimates for midland and each of its three divisions for her company. Midland was a global energy company with operations in oil and gas exploration and production (E&P)‚ refining and marketing(R&M)‚ and petrochemicals. Estimates of cost of capital prepared by Mortensen were used in many analyses within
Premium Mathematics Weighted average cost of capital Investment
P8-1 a) Expected Rate of Return $ $ $ Y 55‚000 6‚800 55‚000 X Previous Market Value Cash Flow Current Market Value X 20‚000 $ 1‚500 $ 21‚000 $ Y 12.50% 12.36% X: rt = (Ct + P rt = ($1‚50 rt = 0.125 = b) Both investments are equally risky. Keel should recommend Investment X because it has a Pt - Pt-1) / (Pt-1) Y: rt = (Ct + Pt - Pt-1) / (Pt-1) 0 + $21‚000 - $20‚000) / ($20‚000) rt = ($6‚800 + $55‚000 - $55‚000) / ($55‚00 = 12.5%
Premium Weighted average cost of capital Investment Time value of money
Microeconomics Topic 6: “Be able to explain and calculate average and marginal cost to make production decisions.” Reference: Gregory Mankiw’s Principles of Microeconomics‚ 2nd edition‚ Chapter 13. Long-Run versus Short-Run In order to understand average cost and marginal cost‚ it is first necessary to understand the distinction between the “long run” and the “short run.” Short run: a period of time during which one or more of a firm’s inputs cannot be changed. Long run: a period of time during which
Premium Costs Marginal cost Variable cost
HBR.ORG Do You Know Your Cost of Capital? Probably not‚ if your company is like most by Michael T. Jacobs and Anil Shivdasani July–AuGust 2012 reprinT r1207L For arTicLe reprinTs caLL 800-988-0886 or 617-783-7500‚ or visiT hbr.org Do You Know Your Cost Of Capital? probably not‚ if your company is like most by Michael T. Jacobs and Anil Shivdasani W With trillions of dollars in cash sitting on their balance sheets‚ corporations have never had so much money. How executives
Premium Investment Net present value Finance
property both for sale through DRTV and the retail market and sourcing for low cost production costs. In addition‚ there are no obvious loopholes in their business model. They have a proven product that provides a solution to a large market of dissatisfied customers. Also‚ they are maintaining 400% margins by selling through infomercials and websites direct to customers‚ therefore avoiding marketing and packaging costs associated with retail distribution. However‚ like every start-up company‚ there
Premium Venture capital Marketing Startup company
How much does the average funeral cost? Funeral costs can be just as individual as the person they are held to celebrate. That being said‚ where does the average price for a funeral fall? A basic funeral that consists of embalming‚ viewing‚ hearse‚ burial‚ service fee‚ transfer of remains and more - costs on average about $7‚181. Funerals are a major expense. Know what to expect. Death is never convenient. You are never ready to lose a loved one. It’s one of those difficult things in life you simply
Premium
Financial Decision Analysis~Marriott Corporation Case Study Executive Summary – Q5 – Hurdle Rate Analysis Hurdle rates‚ the weighted cost of capital that projected cash flows must exceed for initiatives to be considered‚ vary within Marriott Corporations due to their unique industry risk levels and capital structures. They use this number to determine which projects to accept‚ to adjust the rate at which the firm grows and as a measure for compensation within each business area‚ and as incentive
Premium Weighted average cost of capital Finance