Below you will find the questions for each case. Please answer each question (does not need to be in APA) and submit each case in a separate document.
Case 1: Nike Inc and the Cost of Capital
Here we will discuss how to approach this case and apply some of the cost of capital methodology covered earlier. This will be a running discussion culminating in the completion and submission of this case as one of your required case studies.
1. What is the WACC and why is it important to estimate a firm’s cost of capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not?
2. If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and be prepared to justify your assumptions.
3. Calculate the costs of equity using CAPM, the dividend discount model, and the earnings capitalization ratio. What are the advantages and disadvantages of each method?
4. What should Kimi Ford recommend regarding an investment in Nike?
Case 2: Teletech Corporation Case
1. How does Teletech Corporation currently use the hurdle rate?
2. Please estimate the segment WACCs for Teletech (see the worksheet in case Exhibit 1). As you do this, carefully note the points of judgment in the calculation.
3. Interpret Rick Phillips’s graph (see Figure 2 in the case). How does the choice of constant versus risk-adjusted hurdle rates affect the evaluation of Teletech’s two segments?
4. What are the implications for Teletech’s resource-allocation strategy? Do you agree that “all money is green”? What are the implications of that view? What are the arguments in favor? What are the arguments against it?
5. Is Helen Buono right that management would destroy value if all the firm’s assets were redeployed into only the telecommunications business segment? Why or why not? Please prepare a numerical example to support your view.
6. Has Products and Systems (P+S) destroyed value? What evidence or illustrations can you give to support your opinion?
7. What should Teletech say in response to Victor Yossarian?
Case 3: The Investment Detective Case
1. Before doing any calculations, can we rank the projects simply by inspecting the cash flows?
2. What analytical criteria can we use to rank the projects? How do you define each criterion? Put the numbers up on the board.
3. Which of the two projects, 7 or 8, is more attractive? How sensitive is our ranking to the use of high discount rates? Why do NPV and IRR disagree?
4. What rank should we assign to each project? Why do payback and NPV not agree completely? Why do average return on investment and NPV not agree completely? Which criterion is best?
5. Are those projects comparable on the basis of NPV? Because the projects have different lives, are we really measuring the “net present” value of the short-lived projects?
Case 4: Worldwide Paper Company Case
1. What yearly cash flows are relevant for this investment decision? Do not forget the effect of taxes and the initial investment amount.
2. What discount rate should Worldwide Paper Company (WPC) use to analyze those cash flows? Be prepared to justify your recommended rate and the assumptions that you used to estimate it.
3. What is the net present value (NPV) and internal rate of return (IRR) for the investment?
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Below you will find the questions for each case. Please answer each question (does not need to be in APA) and submit each case in a separate document.
Case 1: Nike Inc and the Cost of Capital
Here we will discuss how to approach this case and apply some of the cost of capital methodology covered earlier. This will be a running discussion culminating in the completion and submission of this case as one of your required case studies.
1. What is the WACC and why is it important to estimate a firm’s cost of capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not?
2. If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and be prepared to justify your assumptions.
3. Calculate the costs of equity using CAPM, the dividend discount model, and the earnings capitalization ratio. What are the advantages and disadvantages of each method?
4. What should Kimi Ford recommend regarding an investment in Nike?
Case 2: Teletech Corporation Case
1. How does Teletech Corporation currently use the hurdle rate?
2. Please estimate the segment WACCs for Teletech (see the worksheet in case Exhibit 1). As you do this, carefully note the points of judgment in the calculation.
3. Interpret Rick Phillips’s graph (see Figure 2 in the case). How does the choice of constant versus risk-adjusted hurdle rates affect the evaluation of Teletech’s two segments?
4. What are the implications for Teletech’s resource-allocation strategy? Do you agree that “all money is green”? What are the implications of that view? What are the arguments in favor? What are the arguments against it?
5. Is Helen Buono right that management would destroy value if all the firm’s assets were redeployed into only the telecommunications business segment? Why or why not? Please prepare a numerical example to support your view.
6. Has Products and Systems (P+S) destroyed value? What evidence or illustrations can you give to support your opinion?
7. What should Teletech say in response to Victor Yossarian?
Case 3: The Investment Detective Case
1. Before doing any calculations, can we rank the projects simply by inspecting the cash flows?
2. What analytical criteria can we use to rank the projects? How do you define each criterion? Put the numbers up on the board.
3. Which of the two projects, 7 or 8, is more attractive? How sensitive is our ranking to the use of high discount rates? Why do NPV and IRR disagree?
4. What rank should we assign to each project? Why do payback and NPV not agree completely? Why do average return on investment and NPV not agree completely? Which criterion is best?
5. Are those projects comparable on the basis of NPV? Because the projects have different lives, are we really measuring the “net present” value of the short-lived projects?
Case 4: Worldwide Paper Company Case
1. What yearly cash flows are relevant for this investment decision? Do not forget the effect of taxes and the initial investment amount.
2. What discount rate should Worldwide Paper Company (WPC) use to analyze those cash flows? Be prepared to justify your recommended rate and the assumptions that you used to estimate it.
3. What is the net present value (NPV) and internal rate of return (IRR) for the investment?
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Our Services
Quality Essay Help has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.
Essays
At Quality Essay Help, we prioritize on all aspects that bring about a good grade such as impeccable grammar, proper structure, zero-plagiarism and conformance to guidelines. Our experienced team of writers will help you completed your essays and other assignments.
Admissions
Admission and Business Papers
Be assured that you’ll definitely get accepted to the Master’s level program at any university once you enter all the details in the order form. We won’t leave you here; we will also help you secure a good position in your aspired workplace by creating an outstanding resume or portfolio once you place an order.
Editing
Editing and Proofreading
Our skilled editing and writing team will help you restructure you paper, paraphrase, correct grammar and replace plagiarized sections on your paper just on time. The service is geared toward eliminating any mistakes and rather enhancing better quality.
Coursework
Technical papers
We have writers in almost all fields including the most technical fields. You don’t have to worry about the complexity of your paper. Simply enter as much details as possible in the place order section.