Ace Repair Essay

Net Income = 7,238,748/5,321,295 = $1.36/share (mainly from the one time gain on the bond exchange)

Some modifications of the beta coefficient are the adjusted beta and the fundamental beta. The former tries to transform the historical beta closer to an average beta of 1.0. The latter seeks to incorporate information concerning the company to achieve a better estimate for beta. Moreover, beta values out of less-developed financial markets are not good estimates and therefore partly biased. Problems in estimating beta for divisions of a corporations could arise if the divisions are too small and therefore can be compared with less-developed financial markets. Hence, beta coefficients could be biased (Brigham & Daves, 2007).

The table below shows the equity betas for the firms presented in the case (using Jan-92 to Dec-96 equal weight NYSE/AMEX/NASDAQ as market portfolio):

The WACC calculation should include all the sources of capital like common stock, preferred stock, bonds and any other long-term debt.

Also outstanding all year were 6,330 shares of cumulative preferred stock , each convertible into 2 shares of common . The preferred stock pays an annual dividend of $5 per share. DiCenta’s tax rate is 40%. Compute DiCenta’s 2012 diluted earnings per share. (Round answer to 2 decimal places, e.g. 5.23.)

The beta measures the stock's volatility to the market. I would tell my friend to invest in Netflix, because they are recently expanding in international markets which will have a higher potential to expand their capacity. They are increasing their subscribers in the US and internationally everyday. Market return = 10% Risk-free rate = 3% Expected Return =10 +

AT&T had a beta of .55. In order to find the rate of return of AT&T I used

Answer: WACC covers computation of SIVMED’s cost of capital in which each category of capital is proportionately weighted. All capital basis - common stock, preferred stock, bonds or any other long-term borrowings – should be listed under SIVMED’s WACC. We determine WACC by multiplying the cost of the corresponding capital component by its proportional weight and then adding: where: Re is a cost of equity Rd is a cost of debt E is a market value of the firm's equity D is a market value of the firm's debt V equals E + D E/V is a proportion of financing that is equity

WACC means weighted average cost of capital. The company has to bear on average a cost of 10.91 % to finance its operations. However it is significant to note that cost of equity is really high as compared to cost of debt this makes SanDisk a less risky company in respect of debt. But SanDisk can use leverage and geared up its operations by injecting debt as fresh blood in

The beta coefficient is a measure of a stock’s market risk, or the extent to which the returns on a given stock move with the stock market.

Beta: Companies in the same industries usually have different betas, one of the reasons this can happen is the kind of financing or debt equity ratio. The higher the debt equity ratio the higher the beta: this shows why company N has a higher beta compared to company M that has a lower debt equity ratio.

WACC is the weighted average cost of capital, it estimates the firms ability to raise new funds by either selling debt or equity. Using financial weights, the WACC balances these two different methods of

      Beta: is seen as an ‘index of responsiveness’ of changes in a security’s returns relative to changes in returns on the market, in this case is sport utility industry)

By using the company return and the Value Weighted Returns of the Market, we derived the companies’ levered equity betas and then unlevered them.

For beta, there are mainly two different ways to calculate the value for beta. The first is to calculate it yourself based on historical data. By using this method, you run the risk of using inaccurate data if you choose a period that is too broad or narrow. Conversely, the other way to determine it is to use published sources such as Bloomberg and Standard & Poor’s. Similar to using historical data to determine beta, there are variations in these published sources for the values of beta. As a result, the calculation of the overall cost of capital will vary depending on which source of beta you