Corporate Finance
100 Corporate Finance 25 20 15 A 10 0.25 0.5 1.5 2 Beta Required rate of return Average cost of capital B B A 1.0 Note:Line AB ...
Estimation of Cost of Capital 101 Industry lev. Cost of equity Cost of debt Debt/capital Cost of capital Industry Beta (percen ...
102 Corporate Finance where βL = levered beta (beta at the current level of debt), and βU = unlevered beta (beta when there is ...
Estimation of Cost of Capital 103 To estimate the beta of a company, monthly total returns of the company’s stock in excess of ...
104 Corporate Finance This adjustment equation reflects the theory that, over time, company betas will tend toward their indus ...
Estimation of Cost of Capital 105 the ‘pure play’ technique. Since the beta for the division is unobservable in the marketplac ...
106 Corporate Finance Exhibit 4.11 Cost of equity estimation procedure Procedure Percentage of 177 respondents Historical divi ...
Estimation of Cost of Capital 107 stock. Armed with adequate knowledge, investors feel more confident about their estimates of ...
108 Corporate Finance Southwestern Bell is a large manufacturer of telecom equipment. The company publishes a required rate of ...
Estimation of Cost of Capital 109 of 0.8328. Envestra has a highly unusual capital structure in the sense that other companies ...
110 Corporate Finance specific to the project in question. The methodology for estimating pure play betas and making appropria ...
Estimation of Cost of Capital 111 Harris, Robert S, Thomas J O’Brien, and Doug Wakeman (1989). ‘Divisional Cost-of-Capital Est ...
112 Corporate Finance You are in the process of coming out with a public issue. So you are interested in cost of equity. This ...
Financial Statements and Firm Value 113 Chapter 5 Financial Statements and Firm Value OBJECTIVES Calculate all the significa ...
114 Corporate Finance The company diversified into chemicals and fertilizers in the 1980s. In 1993, Hindustan Lever acquired T ...
Financial Statements and Firm Value 115 (Rs crore) Balance sheet 2000 2001 Current portion of long-term Debt 11.04 3.33 Secure ...
116 Corporate Finance Operating ratios Profitability ratios Ratios Measuring a Company’s Liquidity and Indebtedness Liquidit ...
Financial Statements and Firm Value 117 interest expense taken from the income statement. It is to be noted that these ratios ...
118 Corporate Finance Sales/Receivables Computation: Net sales divided by trade receivables. This ratio measures the number of ...
Financial Statements and Firm Value 119 Sales/Working Capital Computation: Net sales divided by (current assets minus current ...
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