Gross domestic product, adjusted for inflation, also known as "real GDP", can tell economists whether an economy is growing or contracting from year to year or from quarter to quarter, a key determinant in deciphering whether the economy is expanding or in a recession. Internationally, gross domestic product adjusted for some benchmark, usually the US dollar, is a good indication of whether a nation's economic output is increasing or shrinking relative to other nations of the world. To exactly know if GDP is a good enough indicator of understanding an economy, it should be compared to an equivalent form of indicator. This is where we come across GNP which is quite similar to GDP. So let us understand what GNP is in order to compare these two entities.
Executive Summary and Introduction In May 2001, portfolio manager Kimi Ford was considering whether Nike, Inc. would be a good investment option. With an emphasis on value investing, Ford estimated that Nike was undervalued at discount rates below 11.17%. Her assistant Joanna Cohen’s did further calculations and estimated that Nike’s cost of capital was 8.4%. Ford manages a well-diversified portfolio and she has the focus on value investing. Therefore, we assume she would be interested in quality stocks with are fairly priced.
Why or why not? If you do not agree with Cohen’s analysis, calculate your own WACC for Nike and be prepared to justify your assumptions (compare yours with Cohen’s) • For the costs of equity, calculate using CAPM, the dividend discount model, and the earnings capitalization ratio. What are the advantages and disadvantages of each method? I do not agree with Cohen’s
Valuation Case Tottenham Hotspur, Plc. 1a – the value of Tottenham Hotspur based on the projections given in the case using a DCF analysis Weighted Average Cost of Capital (WACC) In this paragraph we discuss the WACC of Tottenham Hotspur. In the process of calculating WACC and determining the value of the company we assume that we are valuing the company from the perspective of the marginal investor. Value of debt We use the book value of all interest bearing debt at 31-12-2007 to estimate the value of debt, this equals 43,08 million. We miss essential information like the interest rate and maturity of the debt to calculate the market value of debt.
What was its net income (loss) for those same periods? How does this information compare to the most recent period ended 6/30/06? (1) We can find whether the company has been profitable or not from the CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Income Statement). (2) Total Revenues for the nine months ended 9/30/01 is $ 7,920. Total Revenues for the nine months ended 9/30/00 is $ 8,535.
This is a standard deviation of the mean, i.e. the variability of the mean from sample to sample. When σ is the standard deviation of the population, represents the standard error of the mean. • Given a sample of data x1, x2,…,xn, the standard error of is o p is the population proportion, with p(1)=p and p(0)=1-p, E(X)=p and SD: • Role within a confidence interval. The standard Error forms part of the construction of the confidence interval, as the range of a confidence interval is defined by the number of standard errors away from the mean.
dividend paid by the stock and the appreciation of stock price since the investment was made. From the profitability point of view, factors such as dividend yield and stock appreciation over the last 5-yr period are used as the major decision making criteria to decide whether to invest in any of these two companies, if so, which one? Other financial data are used to verify the financial health of the two companies. The supporting financial data is equally important in the final decision since the profitability of a company can’t guarantee its long-term viability. Other financial data are used to verify
The RRR can also be called as the discount rate, hurdle rate or the opportunity cost of capital. NPV takes into account the principle in economics referred to as the “time value of money” which implies that a dollar earned today is more valuable than a dollar earned tomorrow. It is to be noted that projects with zero or positive NPV are acceptable to a company from a financial viewpoint as the return from these projects equals or exceeds the cost of capital. Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero. IRR represents the discount rate at which the present value of the expected cash inflows from a project equals the present value of the expected cash outflows.
As CEO, Keith is determined to figure out why OSI stock is not performing as expected. His research leads him to a newer trend in company analysis called economic value added. EVA is a residual income approach that was modified and trademarked by a firm called Stern and Stewart. It is defined as after-tax profit that exceeds the required minimum return on capital. Computed by deducting the cost of capital from the after-tax profit, it is said to be the best measure of the true profitability of an enterprise because it is tied to cash flow and not earnings per share.