The Rate of Return for SLP Company Comcast

We are interested in obtaining the asset beta for Collinsville investment. Here from the reading material, we find there were altogether 6 chemical companies that produce sodium chlorates. They are Hooker, Pennwalt, American, Kerr-McGee, Brunswick and Southern. However, since we are evaluating the addition of a sodium chlorate plant, the two firms (Brunswick and Southern) who specialize in producing sodium chlorate are likely the best “twins”. To determine the asset betas of each company, we

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):

If the company did go public, its share price should be $384.37 for per share with the rapid growth scenario.

Our estimated cost of capital, 20.81%, is lower than Ricketts’ expected return, 30%-50%, thus the investment is worthy. However, it’s higher than other pessimistic members’ expected return, 10%-15%, making the decision more complex and requiring further valuation。

Beta is the slope of the characteristic line. As shown in appendix1, we use the monthly historical data from April 2003 to April 2008 to graph SCL. We use S&P 500 as the market because it contains the stocks of 500 Large-Cap corporations and can reflect the market change broadly. As shown in exhibit 1, we can get the SCL: Ri-Rf = - 0.001 + 0.1649(Rm - Rf). So the beta is 0.1649 and the alpha (intercept) is -0.001. From the regression line, we find the R square is only 0.103. It reflects the degree that X variable explains Y variable is 10.3%. That is, Ri-Rf has no close relationship with Rm-Rf. In addition, due to the fact that beta is only 0.1649, it also provides the same result which Ri-Rf and Rm-Rf have no strong positive relationship. It is a good issue to consider why Wal-Mart stock return does not relate with S&P 500 return very well. From exhibit 2, we find the Wal-Mart price did not change very much while S&P 500 price went up. The major reasons may be that S&P 500 includes many high-tech stocks and those stocks performed very well during the period; therefore the volatility is greater than Wal-Mart. Moreover, maybe Wal-Mart has lower weight in S&P 500 so its trend of price change is different from S&P 500. From exhibit2, we also find Wal-Mart had good relationship with S&P 500 before 2004. To examine the situation, we use the data from 1998 to 2003 and find the SCL

* Stock Beta: Exhibit 5 shows a detailed measurement of the company’s stock returns in relation to the rest of the market through 5-year historical price and index data. The analysis includes monthly returns of both the NYSE and the S&P 500 index in order to capture a comprehensive view of the market return. In each comparison, the monthly returns of the Target stock and market are plotted on Y-axis and X-axis respectively to get the regression line’s slope or beta. The analysis arrives at an average beta of 0.988 which indicates a similar movement of Target stock’s returns in comparison to the whole market over time.

Comcast’s 2014 financial and operational performance was outstanding with revenue increase by 6.4% to $ 68.8 billion up from $64.7 billion in 2013. Operating cash flow also had an increment of 6.9% which accounted more of $ 22.9 billion on hand up from $ 21.4 billion

The Modified Internal Rate of Return is an underused measure for selection of projects that a company can choose because it is more effective at dealing effectively with periodic free cash flows that develop from the time that an asset is purchased through its life to the point where it is sold, ranking projects and variable rates of return through the project life. The Internal Rate of Return is an inefficient model to make decisions with because it lack the ability to account for the periodic free cash flows, proper ranking and variable returns from certain projects.

Some of merger and acquisition were agreements with Group W Cable, Storer Communications, Maclean Hunter, E.W. Scripps and E! Entertainment, Jones Intercable, Prime Communications, Greater Philadelphia Cablevision, AT&T Broadband, Lenfest Communications Inc. Microsoft invested $1 billion in Comcast in 1997. In 2001, Comcast acquired controlling interests in the Golf Channel and the Outdoor Life Network, launched its HDTV service and its video on demand (VOD) service, G4, a 24-hour, seven-day-a-week television network, in 2002.The company completed its merger with AT&T Broadband (Comcast Corporation, 2017).

$10,644,800 / $2,271,400 = 4.69 Times Return on Common Stockholders’ Equity (2002) $647,645 / $1,928,960 = 33.58% Return

We use the equation ri=(Pt-Pt-1+Dt)/Pt-1 to calculate the monthly return of stock of Charles Schwab Corp, Quick & Reilly Group and Waterhouse Investor Srvcs. Then we have two methods to calculate the Beta of Equity for each company.

A common practice to determine the firm’s beta is to draw from historical data from published sources or compare numbers to competitors. In this case, Heinz can compare to Kraft, Campbell Soup and Del Monte and use professional judgement in determining the stock’s sensitivity to the market. A stock’s beta can be determined using a formula as well.

13. According to these three scatterplots, three-year data and three-month data both show the beta of holding Under Armour shares should be around 1.22~1.23. However,

Given that we now have the values of Debt Beta (Assumed to be 0.25), Asset Beta (0.80), Equity Value, Debt Value and Asset Value, the value of equity beta has been calculated to be 0.98 based on the above equation.

Since we did not have any data to establish appropriate weights, we used the arithmetic mean to derive a beta for Ameritrade.