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Select a company with the following characteristics:
it should not be a brokerage house or finance related firm.
only select firms which have their Beta listed in finance.yahoo.com, and have long term debt (non-convertible debt) in their capital structure.
it should have its stock and bond prices quoted in finance.yahoo.com.
its Free Cash Flow (FCF) in 2013 is positive.
Presenting the following by estimating (do not forget to answer the questions listed under c below):
The firm’s WACC
The intrinsic value of the firm and the common stock.
Write a paragraph on each of the following issues:
what can the firm do to lower their cost of capital
if you had any money to invest in this firm now, why would you or not invest in this firm based on where you see this firm.
Keeping in mind the following presentation style:
State in clear and simple terms how you came up with all estimates. Identify all the assumptions and models used to derive the estimates. As far as it is relevant to the presentation of the estimates, explain the workings of these models. Keep the report clear and concise.
In order to present these estimates, you will need to calculate:
The firm’s cost of equity using: CAPM or Discounted Cash Flow (DCF) models
The firm’s cost of long term debt and preferred stock
Cost of capital of the firm (WACC)
The intrinsic value of the firm and its common stock
Question Set #54
Word Count: 922 words including References Screenshot: Yes, included 3 screenshots File Format: Microsoft Word Document Editable: Yes
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