Calculate the weighted average cost of capital

Assignment Help Corporate Finance
Reference no: EM131881

1.  Select two companies from the same industry

2.  Gather financial data from web sites (refer items 2, 4, and 9 of related web sites at the bottom of this handout)

3.  Discuss the economy and the industry.

a.  Briefly discuss the current economic conditions (A discussion of Leading economic indicators).
b.  Study the behavior of the industry to which your companies belong (whether the industry has some growth potential or wheth
industry is regulated?).

4.  Discuss the following matters specifically related to two companies:

a.  Corporate governance, including institutional Vs individual investors.  
b.  Any important changes in terms of:
     1.  mergers or acquisitions
     2.  leasing transactions  
     3.  any bankruptcy proceedings

4.  Corporate valuation:

i. Calculate the Weighted Average Cost of Capital for three years to study and discuss the trend.
ii. Calculate the Market Value Added (MVA) for three years and study the trend. (MVA = MV of equity - BV of equity)

5.  Collect the financials for 5 years and study

i.  growth in assets (in %)
ii. growth in Sales (in %)
iii.  study the changes in Current ratio and Debt ratio
iv.  study the changes in DSO and TATO
v. Study the changes in PM and ROA
vi.  changes in capital structure (changes in debt and equity)
vii.  the movement in the stock prices of two companies

6. What is the beta of each of the two stocks? How do you explain the risk with beta?

7. Would you invest in any of these stocks?

Reference no: EM131881

Questions Cloud

Create a base employee class : Create a base Employee class and a derived StudentEmployee class
Regression model : What is the equation for this regression model?
Cost of capital to assess its restaurant capital investments : Considering investing in Facial Laboratories. Assume that Facial is currently undergoing expansion and is not expected to modify its cash dividend while expanding for the next four years.
Design a simple game of blackjack : Prepare a simple game of blackjack using object oriented programming.
Calculate the weighted average cost of capital : Calculate the Weighted Average Cost of Capital for three years to study and discuss the trend.
Developing business information system solutions : Equip Hire is a commercial and domestic equipment hire company with 11 branches across the metropolitan Sydney, Newcastle and Wollongong.
Preparing memo on state of the company industry : Preparing memo on state of the company industry
Explain diversity through annual reports : Explain diversity through annual reports of foreign companies on the internet.
A jsp expression can contain any java expression : A JSP expression can contain any Java expression that evaluates to a

Reviews

Write a Review

 

Corporate Finance Questions & Answers

  What is the corresponding effective annual interest rate

Joshua bought a car for $5,000 and sold it two months later for $5,200. The corresponding effective annual interest rate

  Payback criterion decision

What is the payback criterion decision rule

  Average price-earnings ratio

What is the value per share of the company's stock

  International monetary fund

International Monetary Fund

  Principles and tools for financial decision-making

Principles and tools for financial decision-making. Analyse the concept of corporate capital structure and compute cost of capital.

  What is the state of the overall economy

value the common stock of a public company and issue a recommendation to investors whether to buy, sell or hold the stock.

  Net cashflows at the time of replacement

Net cashflows at the time of replacement and Incremental cashflows over the life of the new lathe

  Explain the short and the long-run effects on real output

Explain the short and the long-run effects on real output, price, and unemployment

  Principles of financial markets

The theory to the companies selected by analysing the data and the stating as to how the companies are managing their Risk, Short Term Financial Policy, Current Capital Structure and their Current Dividend Policy.

  Corporate governance

Corporate governance mechanisms

  Fixed income securities

Explain why the price of the putable bond approaches the price

  Write paper on financial analysis and business analysis

Write paper on financial analysis and business analysis

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd