FIN550- Cost of Capital discussion

In January 2022​, United Airlines  had a market capitalization of ​$14.74 ​billion, debt of ​$36.27 ​billion, and cash of $18.06 billion. United Airlines had revenues of ​$24.46 billion. Southwest Airlines ​ had a market capitalization of $26.56 ​billion, debt of ​12.49 ​billion, cash of ​$15.73 ​billion, and revenues of ​$15.42 billion. b. Compare the enterprise​ value-to-revenue ratio for United Airlines and Southwest Airlines.c. Which of these comparisons is more​ meaningful?

The capital investment committee of Overnight Express Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows:   Distribution Center Expansion   Internet Tracking Technology Year Income fromOperations NetCash Flow   Income fromOperations NetCash Flow 1 $60,000       $185,000         $126,000       $296,000       2 60,000       185,000         96,000       250,000       3 60,000       185,000         48,000       176,000       4 60,000       185,000         21,000       120,000       5 60,000       185,000         9,000       83,000       Total $300,000       $925,000         $300,000       $925,000         Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665…

1. Accounting Rate of Return on average investment of Project A (expressed to twodecimal places). 1.2 Net Present Value of both projects. 1.3 Internal Rate of Return of Project B (expressed to two decimal places) usinginterpolation

Suppose a firm has the following information: Operatingcurrent assets = $2.7 million; operating current liabilities =$1.5 million; long-term bonds = $3 million; net plant andequipment = $7.8 million; and other long-term operating assets =$1 million. How much is tied up in net operating workingcapital (NOWC)? ($1.2 million) How much is tied up in total netoperating capital? ($10 million)

The specific financial aspects to be considered with your analysis are:• Profit Margin• Total Owners' Equity.• Current Ratio.• Return on Equity.• Debt Equity Ratio.• Earnings per Share.

MCL is an Oman based company and engaging in hospitality industry, across the Sultanate. BDM is responsible to take decisions under the capital rationing circumstances. MCL has the following equipment to be purchased for the next budged period: Project Initial Investment NPV CF 1350000 250000 BG 750000 140000 BD 550000 190000 UB 550000 80000 a) Rank the projects based on the Profitability Index and make recommendations on initial findings. Calculate the total initial capital required for the above combination* (addition of initial investments) and assume always your higher management will approve you 20% less than the required capital. b) Calculate the maximum possible NPV as perthe initial ranking assuming that all projects are infinitely divisible. c) When the projects are not infinitely divisible, Calculate the Weighted Average Profitability index (WAPI) separately for THREE options (Options are from your own choice). 多 d) Select the best option from the part -Cabove with your…

The Collins Group, a leading producer of custom automobile accessories, has hired you to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. Assets Current assets $ 38,000,000Net plant, property, and equipment 101,000,000Total assets $139,000,000Liabilities and Equity Accounts payable $ 10,000,000Accruals 9,000,000Current liabilities $ 19,000,000Long-term debt (40,000 bonds, $1,000 par value) 40,000,000Total liabilities $ 59,000,000Common stock (10,000,000 shares) 30,000,000Retained earnings 50,000,000Total shareholders' equity 80,000,000Total liabilities and shareholders' equity $139,000,000 The stock is currently selling for $15.25 per share, and its noncallable $1,000 par value, 20-year, 7.25% bonds with semiannual payments are selling for $875.00. The beta is 1.25, the yield on a 6-month Treasury bill is 3.50%, and the yield on a 20-year Treasury bond is 5.50%. The required return on the stock market is 11.50%, but…

In 250 words please tell me whether or not you would recommend that I invest in Nike - you will need to substantiate your recommendation with your ratio findings from the first part of this assignment.      A: Working Capital: Working Capital = Current Assets - Current Liabilities  For 2018: $15,134 - $6,040 = $9,094  For 2017: $16,061 - $5,474 = $10,587 Interpretation: This ratio determines a company's ability to weather financial crunch. Banking institutions are interested for this ratio before granting a loan.  B: Current Ratio: Current Ratio = Current Assets / Current Liabilities For 2018: $15,134 / $6,040 = 2.5 For 2017: $16,061 / $5,474 = 2.9 Interpretation: Current ratio is a measure of short term solvency which measures the entity's capability to cover up its current liabilities through its current resources.  C: Quick Ratio: Quick Ratio = Quick Assets / Current Liabilities  Where, Quick assets = Current assets - Inventories - Prepaid expenses For 2018: Quick assets = $15,134 -…

a. As a financial analyst at a leading UK investment company, one of your tasks is to assess drivers of profitability, in order to provide investment recommendations.Required:Based on the current year (2022) conditions, critically discuss three internal and three external factors that would affect the profitability of firms operating in the airline industry.   b. The summarised reformulated items (£) for B&M plc for financial years 2020 and 2021 are given below:                                                                                            2021£ (millions)                              2020£ (millions) Operating assets                                                                   3322.45                                           3530.43 Operating liabilities                                                                 561.26                                             611.08 Financial assets…

explain the following: Weighted Average Cost of Capital (WACC): formula and what it measures Cost of Debt: formula and what it measures Assume a company has 10 million of total assets:

Using attached, Accounting Rate of Return on average investment of Project A (expressed to twodecimal places).

Use the table for the question(s) below. Name Gannet New York Times McClatchy Media General Lee Enterprises Average Maximum Minimum Enterprise ($ OA. $3.17 OB. $0.32 C. $0.19 D. $3.49 Market Capitalization (S Value million) 6350 2423 675 326 267 million) 10,163 3472 3061 1192 1724 Price/ Enterprise Value/ Enterprise Value/ Book 0.73 P/E 7.36 18.09 2.64 9.76 1.68 14.89 0.39 6.55 0.82 11.33 1.25 +60% 112% 40% -69% Sales 1.4 1.10 1.40 1.31 1.57 1.35 +16% 18% EBITDA 5.04 7.21 5.64 7.65 6.65 6.44 +22% 19% The table above shows the stock prices and multiples for a number of firms in the newspaper publishing industry. Another newspaper publishing firm (not shown) had sales of $620 million, EBITDA of $80 million, excess cash of $60 million, $15 million of debt, and 120 million shares outstanding. If the firm had an EPS of $0.44, what is the difference between the estimated share price of this firm if the average price - earnings ratio is used and the estimated share price if the average…

ABC Enterprise would like to evaluate/analyze an investment proposal. Given the following:Investment amount - 450,000 (2022)Dividends / Revenue stream - 100,000 for the first year and an interval of 5,000 for the succeeding years Discount rate - 14%a. NPV for the period 2023 through 2029;b. Total NPV using manual computation;c. Total NPV using the Excel function; andd. IRR rate.EXCEL COMPUTATION AND FORMULA

Mcq … help

Consider the following data for the firms Acme and Apex:   Equity ($ million) Debt ($ million) ROC Cost of Capital Acme 290 145 17% 9% Apex 1,450 483 15% 10% a. Calculate the economic value added for Acme and Apex (round to 2 decimal places).  Economic value added for Acme $? million Economic value added for Apex $? million b. Calculate the economic value added per dollar of invested capital for Acme and Apex (round to 2 decimal places)? Economic value added for Acme    per dollar Economic value added for Apex   per dollar

The person in charge of the finances of the company MGT, SA wants to know the company's situation concerning the industrial sector to which it belongs. For this, it has the following information regarding the industry: The general liquidity ratio is 1.55; the acid test is 1.20, and the ratio between the available and the current liabilities is 0.95. The debt ratio stands at 1.25. The margin on sales is 21%. The investment rotation is 1.45 times. Economic profitability is around 23%, and financial profitability is 29% The data referred to the company (in thousands of €) are the following: Assets   Liability and net equity   Non-current assets (Net) 170 Equity 125 Stocks of finished products 45 Reservations 25 Clients 65 External resources 105 Banks 70 Loans 65     Suppliers 30 Total Assets 350 Total Net Equity 350   In addition, it is known that: Sales are € 250,000 and its direct cost of € 105,000.…

Simple Investment Allocation Case: This year, 2022 ABM Company selected your team to manage their allotted budget amounting to 10 million pesos for investment diversification portfolio. Your team was assigned to handle the said account. What would you choose? Other investment assets or Alternatives to fixed income and equities

The Collins Group, a leading producer of custom automobile accessories, has hired you to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. Assets $ 38,000,000 101,000,000 $139,000,000 Current assets Net plant, property, and equipment Total assets Liabilities and Equity Accounts payable $ 10,000,000 9,000,000 $ 19,000,000 40,000,000 $ 59,000,000 Accruals Current liabilities Long-term debt (40,000 bonds, S1,000 par value) Total liabilities Common stock (10,000,000 shares) Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 30,000,000 _50,000,000 _80,000,000 $139,000,000 The stock is currently selling for $15.25 per share, and its noncallable $1,000 par value, 20-year, 7.25% bonds with semiannual payments are selling for $875.00. The beta is 1.25, the yield on a 6-month Treasury bill is 3.50%, and the yield on a 20-year Treasury bond is 5.50%. The required return on the stock market is…

You have estimated the NOPLAT for each of the divisions in a three-division firm at $20 million, $30 million, and $50 million, respectively, for Divisions A, B, and C. Using these figures, you assume that Divisions A, B, and C contribute 20, 30, and 50 percent, respectively, to overall firm value. Is this an appropriate valuation technique? Why or why not?

Assume that Google invests $2.42 billion in capital expenditures, including $1.08 billion related to manufacturing capacity. Assume that these projects have a seven-year life and that management requires a 15% internal rate of return on those projects. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)Required1. What is the amount of annual cash flows that Google must earn from those expenditures to achieve a 15% internal rate of return? (Hint: Identify the seven-period, 15% factor from the present value of an annuity table and then divide $1.08 billion by the factor to get the annual cash flows required.)2. Refer to the financial statements in Appendix A. Identify the amount that Google invested in capital assets for the year ended December 31, 2017.3. Did Google or Apple invest more in capital assets for 2017?   What is the amount of annual cash flows that Google must earn from those expenditures to achieve a 15% internal rate of…

Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding thefirm’s warehouse capacity. The relevant cash flows for the projects are shown in the following table.                                                                            Project X         Project Y         initial investment (CF0)                            $500000            325000                 Year(t)                                               Cash inflows (CF0)                           1                                                          $100000           $140000              2                                                            120000               120000             3                                                              150000               95000            4                                                               190000               70000            5                                                               250000…

Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery bags, styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below. Assets Current Assets Net, plant, property, and equipment Total assets $ $ $ Liabilities and Equity Accounts payable Accruals Current Liabilities Long-term debt (40,000 bonds, $1,000 par valu $ Total liabilities $ Common stock (10,000,000 shares) $ Retained earnings Total shareholders equity Total liabilities and shareholder's equity $ $ $ $ $ $ 38,000,000 101,000,000 139,000,000 10,000,000 9,000,000 19,000,000 40,000,000 59,000,000 30,000,000 50,000,000 80,000,000 139,000,000 The Stock is currently selling $15.25 per share, and its noncallable $1000 par value, 20 year, 7.25% bonds semiannual payments are selling for $875. The beta is 1.25, the yield on a 6-month treasury bill is 3.50% and the yield on a…

I need assistance on Identifying each of the following as either capital budgeting (investment) or financing decisions and an explanation on why? Intel decides to spend $1 billion to develop a new microprocessor. Volkswagen borrows 350 million euros from Deutsche Bank. Royal Dutch Shell constructs a pipeline to bring natural gas onshore from a production platform in Australia. Avon spends 200 million euros to launch a new range of cosmetics in European markets. Pfizer issues new shares to buy a small biotech company.

You are a financial analyst working for a financial services provider. The financial information provided below is for two companies operating in the same industry:   Statements of comprehensive income for year ended 31 December 2020     Tiger (Pty) Ltd Lion (Pty) Ltd Sales revenue 8 200 000 6 300 000 Less: variable costs 6 430 000 4 420 000 Cost of sales Selling expenses 6 230 000 200 000 4 160 000 260 000 Contribution 1 770 000 1 880 000 Less: fixed costs 840 000 690 000 Administration costs Production costs Selling costs 180 000 600 000 60 000 140 000 510 000 40 000 Earnings before interest and tax expense 930 000 1 190 000 Less: Finance costs 100 000 90 000 Profit before tax 830 000 1 100 000 Less: Income tax expense 249 000 330 000 Total comprehensive income for the year 581 000 770 000       Statements of changes in equity for year ended 31 December 2020     Tiger (Pty) Ltd…

Subject: accounting

Are the following capital budgeting or financing decisions? (Hint: In one case the answer is “both.") a. Intel decides to spend $7 billion to develop a new microprocessor factory. Answer b. BMW borrows 350 million euros (€350 million) from Deutsche Bank. Answer c. Royal Dutch Shell constructs a pipeline to bring natural gas onshore from a production platform in Australia. Answer d. Avon spends €200 million to launch a new range of cosmetics in European markets. Answer e. Pfizer issues new shares to buy a small biotech company. Answer [ Select ] [ Select ] [ Select ] [ Select ] [ Select ] > > >

The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2024, appears below: Service revenue Operating expenses Income before income taxes. Income tax expense Net income $ 980,000 740,000 240,000 60,000 $ 180,000 The following balance sheet information also available: 12/31/2024 $ 347,000 128,000 78,000 14,000 12/31/2023 $ 74,000 104,000 64,000 23,000 Cash Accounts receivable Accrued liabilities (for operating expenses) Income taxes payable In addition, the following transactions took place during the year: 1. Common stock was issued for $108,000 in cash. 2. Long-term investments were sold for $54,000 in cash. The original cost of the investments also was $54,000. 3. $84,000 in cash dividends was paid to shareholders. 4. The company has no outstanding debt, other than those payables listed above. 5. Operating expenses include $34,000 in depreciation expense. Required: 1. Prepare a statement of cash…