H.J. Heinz: Estimating the cost of capital in uncertain times 1. What is WACC? What is its purpose? 2. What were the yields on the two representative outstanding Heinz-debt issues as of the end of April 2010? What were they one year earlier? 3. What was the WACC for Heinz at the start of fiscal year 2010? What was the WACC one year earlier? Should you consider short-term debt? How reasonable are your interest rates for the firm? For the WACC? What is the market risk premium? What is Beta? How is it typically estimated? What is a drawback of this? How is the cost of debt estimated? Should you use book or market value weights? If you want market value of debt use (BV/100) * Price Should you use marginal or average tax rates? Why? How do …show more content…
Using the scenarios in case Exhibit 9, what role does leverage play in affecting the return on equity (ROE) for CPK? What about the cost of capital? In assessing the effect of leverage on the cost of capital, you may assume that a firm’s CAPM beta can be modeled in the following manner: BL = BU[1 + (1 − T)D/E], where BU is the firm’s beta without leverage, T is the corporate income tax rate, D is the market value of debt, and E is the market value of equity. What role does the tax deductibility of interest play in encouraging debt financing at CPK? What do you recommend? eBay 1. what are the costs and benefits of going public? 2. How should Bengier prepare to negotiate an offer price with the underwriters? What is an appropriate price? Should he be concerned about the IPO pricing patterns in case Exhibit 9? 3. How does the current market condition affect eBay’s decision? Should eBay go ahead with the offering? Ben and Jerry’s Homemade 1. What is Ben and Jerry’s mission statement? How has Ben & Jerry’s performed on the dimensions of the mission statement? Be specific. 2. Who is Morgan? 3. Why is Ben & Jerry’s a takeover target? Is there evidence that investors are dissatisfied? 4. Who controls the assets of B&J? How are assets allocated in a free-market system? 5. What kinds of asset control devices are used by management and Vermont? What might be the benefits or detriments of
b. What medium would you use to reach each of these parties and what would your relative resource allocation be to each?
Sparkle Company is a Nigerian diamond mining company. Sparkle is a joint venture, 50 percent owned by Shine and 50 percent owned by Brighten. Both Shine and Brighten are U.S.-based companies with their functional currency being the American dollar. Sparkle Companies functional currency is that of Nigeria, being the Naira. During 2009, Sparkle had several transactions with its joint venture owners and outside parties. The details of Sparkle’s transactions are three loans, three expenditures, and one revenue stream. The loans the company took out were $1 million from Brighten, $1 million from Shine, and 300 million Naira from a local Nigerian bank. The expenditures
b.What are the amounts and timing of the acquisition investment’s free cash flow from 2013 through 2022?
The applicants are morally correct as long as their action promotes their long term interest. If their action produces or will produce for them a greater outcome of good, versus evil in the long hall than any other alternative, than that action is the right one to act on, and the individual should take that to be a moral act. An Assessment of Morality by Ethicsinbusiness.net
IgG – funtions in neutralizing, opsonation, compliment activation, antibody dependent cell-mediated cytocity, neonatal immunity, and feedback inhibition of B-cells and found in the blood.
As mentioned in the introduction of the mini case, Hobby Horse Company, Inc. (HH) experienced a tough year in 2011. HH opened up a number of new stores but experienced a poor Christmas season. Christmas season is the biggest sale period for retail stores. As a result, bad Christmas sales performance played a big part of HH’s loss for year 2011. As we computed the financial ratios for HH, we can see the effects from new stores openings and poor sales performance.
Read Rush Johnson Farms Inc. v. Missouri Farms Association, 555 S.W.2d 61 and post a draft case study to the discussion board. Identify the Facts, Issue, Holding, Reasoning and Disposition. Case study #1 will be due week 3. This exercise will help you work through the reading a case prior to receiving a grade. Use the LEXIS NEXIS database through the Webster library to access the case.
3. Does J. M. Smucker’s lineup of businesses and brands exhibit good strategic fit? What value-chain match-ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see?
Suppose you are the network manager for Central University, a medium-size university with 13,000 students. The university has 10 separate colleges (e.g., business, arts, journalism), 3 of which are relatively large (300 faculty and staff members, 2,000 students, and 3 buildings) and 7 of which are relatively small (200 faculty and staff, 1,000 students, and 1 building). In addition, there are another 2,000 staff members who work in various administration departments (e.g., library, maintenance, and finance) spread over another 10 buildings. There are 4 residence halls that house a total of 2,000 students. Suppose the university has the 128.100.xxx.xxx address
Although it is obvious that Ben and Jerry's must transform into an organization which is "networked", it will not be enough to make their business functional because they need to brace for viable re-establishment in the long run. Therefore it is necessary that they adopt a complete strategy, and accompany the reorganization by a clear redefinition of the missions. At this stage, we have two alternatives: Either we decide to set up a strategy of which the core mission is the financial viability of the company, or we try to preserve the core mission centered on the values of the company without compromise.
CASE QUESTIONS Cash Flows and Value. Cost of Capital Case 1: Hop-In Food Stores, Inc. 1. Determine the correct price for this particular IPO. Use several methods to do this and compare them. 2. What extra information would you try to acquire in a real life situation? Case 2: Chem-Cal Corporation 1. How do you calculate the WACC for this firm? 2. What is the cost of capital of the debt, preferred stock, and common stock (assume the equity beta is 1.22)? 3. Calculate the WACC. How can a WACC be used? 4. Which projects should be selected? (State your assumptions) 5. How should the projects be financed? Analyze all other issues in the case. Case 3: Marriot Corporation 1. What is the Weighted Average Cost of Capital for Marriott Corporation? 2.
7. Have Whole Foods’ core values contributed to the company’s success? Why or why not?
Modigliani and Miller (1958) state that if the capital market is perfect, the strategies will not affect the firm’s value. However, later they argue that the value of the firm can be increased by changing its capital structure. It is because of the tax shield advantage from debts. Thus, the firm can increase its market value by increasing in the use of debt. However, they have further elaborated that the firm is not necessarily to maximize its debt in to get the greatest tax advantage.
2. Since this is an enormous venture and nobody organization has the funds to do it courageously so there will be joint sharing. That is there will be no less than 2-3 bidders in every understanding. In this bid they will introduce their eventual fate of that specific asset range. This is known as a "consortium."