Worldwide Paper Company

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%.

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%.

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.

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

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

* Compute the value with leverage, VL, by discounting the free cash flows of the investment using the WACC.

A key factor in determining a project's viability is its cost of capital [WACC]. The estimation of Boeing's WACC must be consistent with the overall valuation approach and the definition of cash flows to be discounted. Note that this process is a forward looking focus and is laden with uncertainty. It is how the assumptions are modeled that many costly mistakes can be made. While finding a rate of return for an individual project, it is important to remember that WACC is only appropriate for an individual project.

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.

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,

1. Please define Weighted Average Cost of Capital (WACC). Write down the WACC formula, and discuss its components.

1) Estimate the WACC that is appropriate for discounting the Collinsville plant’s incremental cash flows. You should estimate and present each component of the WACC separately, explaining briefly but clearly what assumptions you are making for each of them. In the same spirit, estimate the appropriate all-equity cost of capital for the APV-based valuation.

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

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

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

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