Worldwide Paper Company

The appropriate discount rate was calculated using WACC formula as shown in the ‘WACC’ exhibit using the following assumptions:

General speaking, WACC is the rate that a company’s shareholders expect to be paid on average to finance its assets, and it is the overall required return on the firm as a whole. Therefore, company directors often use WACC to determine whether a financial decision is feasible or not. In this case, I will choose 9.38% as discount rate. The reason why I choose 9.38% as discount rate is because the estimated Debt/Equity is 26% under the assumptions by CFO Sheila Dowling, which is most close to 25% of Debt/Equity from the projected WACC schedule. There might be some flaws existing by using WACC as discount rate. As we know, the cost of debt would be raised significantly as the leverage increased. The investment will definitely increase the firm’s current debt. So, the cost of debt would not keep at 7.75%.

1. How would you classify Forest Hill Paper Company in terms of size and ownership?

Family owned paper company, New England Paper Tube (NEPT), was facing bankruptcy and was on a verge of being shut down after over 100 years of service. Bill Kirby was sent to the rescue. He was a career banker for over 15 years and knew exactly what this company needed to do to turn their business around. They started of by figuring out why the company was not making any profit and actually losing money. The following were some of the reasons: new technology was introduced, foreign competition, domestic recession, and the product was being sold for way less than it cost to make. Things started to turn around when Kirby invested some money in the company and they decided to make the product that they had comparative advantage

I used WACC as the discount factor, we expect the rate of return to be higher than it, the same at least. The WACC reflects the average risk and overall capital structure of the entire firm [2]. It’s the required return and it presents how much the company pays for the capital it finances. In this case, the cost of equity is 10.33%, the cost of debt is 6.50%. I calculated WACC using those numbers and got a result of 8.49%.

In the case of Mendel Paper Company which produces four basic paper products lines at one of its plants: computer paper, napkins, place mats, and poster board. Although the plant superintendent, Marlene Herbert is pleases with increased sales he is also concerned about the costs. The superintendent is concerned with the high fixed cost of production, the increases in fixed overhead and even variable overhead. He feels that the production of place mat should be discontinued. His reason for the discontinuation is that the special printing is driving up the variable overhead to the point where the company may not find it profitable to continue with the line. After reviewing the future predictions of the

Since this project is a going concern, the levered terminal and present values are calculated using the weight average cost of capital (WACC) as the discount rate, which we calculate to be 16.17%.

International Paper Company was incorporated January 31, 1898, upon the merger of 18 pulp and paper mills in the northeastern United States. Its founders and first two presidents were William Augustus Russell and Hugh J Chisholm. The newly formed company supplied 60 percent of all newsprint in the country. Through many changes it has become one of the largest producers of paper and paper products and had facilities in twenty-four countries. The company now manufactures plastic lids and paper cups for fast-food giants like McDonald 's, Wendy 's and Subway. They also produce printer and copier paper, envelopes, corrugated packaging and shipping containers, consumer packaging for cosmetics and home entertainment. International Paper has made advantageous changes to stay competitive and profitable in the industry and to reduce their carbon footprint on the environment as times and conditions have changed.

In order to find the WACC, we need to find the cost of the components of the capital structure and their proportion in the total capital.

We used this calculation of WACC as our discount rate on the expected cash flows from the Winglets project.

The Norris Company is a large printing company that focus in quality color work with three quality printing plants. Chet Craig, who is the manager of the Norris Company’s central plant, has a huge issue with depression and anxiety recently. Chet thinks he didn’t accomplish anything during day work, and he owns his family and local community too much. Chet has an ambition project that called “open-end unit scheduling” to help the company, but because of the unreasonable staff structure makes him too busy; he cannot take a time to think about his project. Therefore, he needs to figure out the solution to solve this

* EMS, the local parcel delivery service, is less expensive than the entering international companies (FedEx, UPS, DHL, etc.)

The following report will describe an overview of the current environment and how it is affecting the hotel industry, and then will be preceded by a corporate level and business level strategy analysis. The company that will be the subject of the paper will be Hyatt Global Corporation, and its brand, Hyatt Regency.

Forest Hill Paper Company (FHPC) is a small, closely-held paperboard manufacturer that produces a broad line of paperboard in large reels, termed parent rolls. These parent rolls are sold to converters who further process them into containers used for a diverse line of consumer products, such as packaging for microwavable meals. The owners of FHPC have long pursued the strategy of producing a full range of products. As a small company competing against large companies in a commodity market, management believes Forest Hill must offer a full range of both products and services. Thus, Forest Hill’s strategy is to create a niche based on

This case was about International Paper’s Ridding Mill which was the largest paper- and forest – Products Company in the world in 1995. This company produces different type of products in 31 countries. The Redding Mill produced paper pulp from wood chips. So, to supply all wood needed for this process they produced about half of its wood on-site and purchased another half from open market. To produce wood chips from wood logs they used chipper to shred. For doing this process there were two way: 1. Using modern chipping machinery that called longwood 2. Using old style chipping process, used at Redding,