American Chemical Corporation

Risk free rate is taken to be 4.69% while the market risk premium is 5.01%.

Given these approximations, the CAPM model would total the risk-free rate and the market risk premium times beta to arrive at a cost of equity of 9.68%, which reflects the investors’ expected return from investing in shares of the company.

Alcoa Inc is Aluminum Company of America. It is the world 's third largest producer of aluminum, behind Rio Tinto Alcan and Rusal. Alcoa conducts operations in 31 countries more than 200 locations. Alcoa is a world leader in the production and management of primary aluminum, fabricated aluminum, and alumina combined, through its active and growing participation in all major aspects of the industry: technology, mining, refining, smelting, fabricating, and recycling. Aluminum and alumina represent more than three-fourths of Alcoa’s revenue. Non-aluminum products include precision castings and aerospace and industrial fasteners. Alcoa’s products are used worldwide in aircraft, automobiles, commercial

To find the cost of equity we used the formula rs = rRF + beta*MRP in which rRF2002 = 5.86% and the Market Risk Premium (MRP) = 5% as calculated by the Southwest Airlines finance department. We then calculated the beta for Southwest Airlines based on a regression analysis of five-year monthly returns on Southwest stock from January 1997 to January 2002, compared with the S&P 500 returns over the same period. This regression analysis indicated that Beta = .2219. Therefore,

Evaluating the Risk of the American General Corporation we started from looking at company's market standing from potential investors point of view. First we take a look at the companies profile. American General Corporation is a diversified financial services organization, provides retirement services, life insurance, and consumer loans. The company offers retail financial programs through fifteen thousand merchants. American General Corp. operates in 41 states. Puerto Rico, and the United States Virgin Islands.

Cost of Equity is the return that stockholders require for a company. A company’s cost of equity represents the compensation that the market demands in exchange for owning the assets and bearing the risk of ownership. Based on capital markets the cost of equity varies in direct relation to the assumed risk in that specific market. The distinctive of the firm is the sensitivity to market risk (β) which depends on everything from management to its business and capital structure. Therefore past performances and present conditions have a direct effect on the overall value. Applying calculations at a divisional level allows specified markets to be analysis based on present market conditions for that service or product. The formula used to calculate Cost of Equity is:

Harper Chemical Company (HCC) is a large producer of industrial chemicals including the mineral Dominite. Jim Hood, General Manager of the Special Products Department (SPD), diversified into the Dominite Industry in 1980 and it has now gone unprofitable for five years. In 1986, Diane Segal, representing a medium sized tile company, asked to purchase exclusive rights to Dominite. HCC executives must make a decision to continue pursuing the Dominite operation, with a new marketing strategy, or cut their losses and invest in a more profitable industry.

5. Net working capital would remain at 9% of sales based on AR staying at 10% of sales, inventory staying at 4.5% of sales, and accounts payable constant at 5.5% of sales.

1. A major focus of the lawsuit Chevron Chemical filed against Touche Ross was the auditing profession’s rules regarding the “subsequent discovery of facts existing at the date of the auditor’s report”. Those rules distinguish between situations in which a client cooperates with the auditor in making all necessary disclosures and situations involving uncooperative clients. Briefly summarize the differing responsibilities that auditors have in those two sets of circumstances.

Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26 Chapter 27 Chapter 28 Chapter 29 Chapter 30 Chapter 31 The Corporation Introduction to Financial Statement Analysis Arbitrage and Financial Decision Making The Time Value of Money Interest Rates Investment Decision Rules Fundamentals of Capital Budgeting Valuing Bonds Valuing Stocks Capital Markets and the Pricing of Risk Optimal Portfolio Choice and the Capital Asset Pricing Model Estimating the Cost of Capital Investor Behavior and Capital Market

The largest, publicly traded oil and gas company internationally, is ExxonMobil (“About us,” 2014). ExxonMobil is an industry leader in the inventory of global oil and gas resources (“About us,” 2014). The company’s chemical plant ranks amongst the world’s largest in the industry, and ExxonMobil is the world’s largest marketer and refining producer of petroleum products in the world (“About us,” 2014). The company prides itself on its research and development process, applying innovation and science to develop safer, cleaner, and technologically advanced ways to provide energy for the needs of those around the world.

1) This report considers the potential purchase of the sodium chlorate producing plant in Collinsville, Alabama by Dixon Corporation from American Chemical Corporation in October 1979. The reason for this stems from the fact that American Chemical Corporation was attempting at the time to buy a controlling stake in Universal Paper Corporation, but the management of Universal contested this on the basis that it would be anti-competitive, given that they were both producers of sodium chlorate. The US government supported Universal in this belief and in order to prevent court action American had to agree to divest its sodium chlorate producing plant in Collinsville, Alabama. As of October of 1979 Dixon has agreed to

I decided to construct my essay on Dow Chemicals (DC) Company after reading an article in Business Week. Dow Chemical appears to be developing an aggressive market strategy that aligns with our class topics, and that I have found very interesting. Dow Chemical (DC) company, over the last seven years has built their strategy around and focused on their “niche”, which is core chemicals & plastics-manufacturing operations, while simultaneously reducing infrastructure debt, expanding its market share, and apparently building new strategic alliances. According to Dow Chemical CEO William Stavropoulos, The mission and goals of Dow Chemical company is to be a world leader in chemical and plastics manufacturing by developing new customer

future returns are crucial aspects in deciding if the expected return is worth the risk. The Capital Asset Pricing Model (CAPM) provides a base from which both the risk and the affects of the risk are determined by the investor while the Discounted Price Flow Model (DPCM) can help the investor decide what amount they are willing to invest in a company in anticipation of projected future cash flows.

However, unlike debt, equity does not need to be paid back if earnings decline. On the other hand, equity represents a claim on the future earnings of the company as a part owner. The cost of equity is complicated in the sense that the rate of return demanded by equity investors is not as clearly defined as it is by lenders. Theoretically, the cost of equity is approximated by the Capital Asset Pricing Model (CAPM) = Risk-free rate + (Company’s Beta x Risk Premium).