Worldwide Paper Case

The cost of equity was found using CAPM, with the given market risk premium of 5%, a beta of .88, and risk-free rate of 4.03%. The beta was found by running a regression of Southwest’s percent change in stock price versus the S&P 500’s percent change in stock price for two years (June 28, 2000 to June 28, 2002). The risk-free rate was the return on a ten-year treasury note issued on June 28, 2002, according to the U.S. Treasury’s website. The tax rate of 39% was used to account for tax savings from leverage. In order to calculate the firm’s leverage, the market value of equity was found from the price per share on July 24, 2002 (Yahoo Finance) and the shares outstanding on the balance sheet of the July 10-Q report, as shown in Exhibit X. The debt value was approximated at the book value since data could not be found regarding its market value. This analysis resulted in a debt weight of 11.74% and equity weight of 88.26%. The final approximation for the weighted average cost of capital was 8.64%.

Cost of Equity = Risk free rate + (Market return – risk free rate) X beta

WACC: is a discount rate with minimum acceptable rate that determine if any project would be optimistic for NPV or not. Capital budgeting is the process of assessing the profits for future business projects especially when the funds are limited (Unknown, 2014).

First, the projected cash flows range from $21.2 million in 2007 to $29.5 million in 2011 as shown in the data exhibit ‘DCF model.’ To generate these numbers Liedtke’s base case performance projections are used for the projected 2007 – 2011 net revenue numbers and the estimated depreciation and then his projections for Balance sheet accounts were used to determine the current net working capital and capital expenditure as in the exhibit ‘Financial statements.’ These projections were based by Liedtke under the following assumptions, women’s casual footwear would be wound down within one year and the historical corporate overhead-revenue ratio would conform to historical averages. These annual cash flows give us a PV (Cash flows) of $96.15 million over the next 5 years.

The cost of equity is the theoretical return that equity investors expect or receive from the company for investing their funds in the company. The risk free rate that is the Government Treasury bill rate is 3.1%, the market risk premium is 7% and the beta has been calculated as

However, the pellet and decking/flooring markets’ substitutes range from wind, solar, oil and coal energy to tile, laminate, composite and hardwood flooring. Our customers and suppliers can’t pressure us with the threat of integration and the larger the mill the more influence over the geographic region. Large mills can provide economic stability to smaller producers of logs and enjoy large profit margins knowing customers cannot create their products on their own.

The items that I have completed for the Business Management Capstone Project as of February 23, 2016, include many components. First, I have included the name of the business that I will be discussing for the project. The name of the company that I will be discussing is John Deere. The company was founded almost 200 years ago (In 1837) in Moline, IL. The current CEO of the company is Samuel R. Allen. The current stock price for John Deere (Deere & Company) (NYSE:

In December 2006, Bob Prescott, the controller for the Blue Ridge Mill, was considering the addition of a new on-site longwood woodyard. Two primary benefits for this new addition include eliminating the need to purchase shortwood from an outside supplier and creating an opportunity to sell shortwood on the open market. Also, the new woodward would reduce operating costs and increase revenues. Blue Ridge Mill currently purchased

Have you ever what happened to the lumber industry in Minnesota? In this paper I, Nolan Moore will be explaining what happened to it. I am going to start way back over hundred years ago so fasten your seatbelt folks and be prepared for a bumpy ride!

One of America’s largest forest products/paper firms with sales of $6.5Billion in 1983 and a net income of $105 million. The case study revolves around Atlantic Corporation’s intention to add linerboard capacity. In order to achieve this goal, they started looking at viable solutions, including purchasing and acquiring mill and box plants instead of through construction and fabrication of new plants and equipment. This included the possible acquisition of Royal Paper’s “crown jewels”, that is, the Monticello mill and the corrugated box plants.

Further talk of the Normal Course Issuer Bid is given in the "Money related Requirements and Liquidity" area of this report. On January 2, 2015, Canfor finished the principal period of the buy of Beadles Lumber Company and Balfour Lumber Company Inc. ("Beadles and Balfour") situated in Georgia, speaking to an introductory 55% possession interest. The second period of the securing whereby Canfor will possess 100% of Beadles and Balfour is planned to close toward the start of 2017. In April 2015, Canfor will likewise get 100% of Southern Lumber Company Inc. ("Southern Lumber") situated in Mississippi. Additionally consequent to year end, on January 30, 2015, Canfor finished the offer of the Taylor Pulp Mill to CPPI (Further exchange of the offer of the Taylor Pulp Mill might be found in Note 32 of the Annual Financial Statements). In the earlier year, the Company finished the offer of its half partake in Canfor-LP OSB Limited Partnership (renamed Louisiana LP OSB Limited Partnership) ("Peace Valley OSB"), which claims the Peace Valley OSB Mill, to Louisiana Pacific Corporation

Using CAPM: Risk Free Rate = 6%; Market Risk Premium = 5%; Beta = 1.2

In 1900, the Great Northern Paper Company began manufacturing newsprint in Millinocket. This mill was, as it opened, the largest in the world, producing 240 tons/day of newsprint, 120 tons/day of sulfate pulp, and 240 tons/day of ground wood pulp. Great Northern expanded the facility in 1906, adding a mill in East Millinocket. These mills are now owned by the Katahdin Paper Company (Maine Pulp & Paper Association).  Before and during the major downfall of the U.S.’s economy, and for it being cheaper to buy products from overseas, most of the paper mills have shut down in the state, with the result being major job losses and a skyrocketing unemployment rate. During the early 1900’s, the in its early heydays, paper mill employees could make $58.00 dollars a week to support their families. By 1890 there were 25 pulp mills in Maine: twelve soda/sulfate mills producing 182 tons of pulp per day, and 13 ground wood mills rated at 157 tons per day. Five years later, between 1890 and 1895, Maine’s capacity increased to 1,036 tons per day of pulp, and 508 tons per day of paper. Maine was the nations leader in pulp production. Three of Maine’s current mills were built during this period of rapid growth. In 1900 the Great Northern Paper Company began manufacturing newsprint in Millinocket. This mill was, when it was opened, was the largest paper mill in the world, producing 240 tons/day of newsprint, 120 tons/day of sulfate

The company’s had a financial strategy based on the following, to fund significant overseas growth, to capitalize in value-creating projects for all three segments, to improve its capital structure and to repurchase undervalued shares. In order to accomplish these goals the company must calculate the cost of capital to figure out the estimates for their

Another popular method of valuation is Comparable Company Analysis process. This process focuses primarily on comparing the company in question to other similar companies in the same market (Shaked et al., 2010). This method is somewhat limited in its applicability based on its reliance on a number of other companies in the same area of the market for an accurate valuation. Additionally, this generic type of model is not useful in decision making within the company but is strictly limited to total company valuation. It does, however, allow for some customization since the specific factors to be compared can be selected by the analysis team. Because of these facts, and the method’s ease of use from outside the company, this method