Since PacifiCorp is not a publicly traded company, we must use valuation multiples from comparable firms to determine the value of the firm. As you can see in Exhibit 1, if we use the valuation multiples we arrive at an implied firm value of between $6,252 million (low end) and $9,289 million (high end). This means that our offer of $9.4 billion is right in line with the high end valuation of the company. We also used multiples to determine that the market value of equity was worth between $4,277 million and $5,904 million (see Exhibit 1). As stated earlier, we offered to pay $5.1 billion for the equity portion of the company.
Monopoly Practice Quiz Directions-Place a piece of paper on your screen to cover the answers as you quiz yourself The nondiscriminating monopolist's demand curve: A) is less elastic than a purely competitive firm's demand curve. B) is perfectly elastic. C) coincides with its marginal revenue curve. D) is perfectly inelastic. Answer: A If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue: A) may be either greater or less than $35.
We assume that the amount of debt has been constant over 2007. A better option to calculate cost of debt would be to use a synthesized rating based on the interest coverage ratio and use the corresponding default spread, but unfortunately we do not have data of these spreads for 2007. We use the market value of equity to estimate the weight of equity. The market capitalization of the firm was 128,2 million on 31-12-2007 (we assume that this is the date of the balance sheet, since this isn’t mentioned in the case). From this we can calculate the following ratio’s: debt/equity = 0,31 debt/(debt+equity) = 0,24 equity/(debt+equity) = 0,76 In calculating these ratio’s we use gross debt instead of net debt, because in our opinion the debt and cash of the firm
Mission Statement Capital One’s financial mission statement is “Helping to build strong and healthy communities benefits us all. We apply the same principles of innovation, collaboration and empowerment to our work in the community that we do in our business." (Company Statements, 2009) Competitors Capital One’s principle business is credit card issuing, see table 1. It is also a chief competitor in auto loans and home loans. Table 1 Top Ten U.S. Bank Credit Card Issuers, Third Quarter 2004 Rank Company Market Share 1 JPM Chase 19.1% 2 Citigroup 16.3 3 MBNA 11.8 4 Amer.
The firm has a ( of 0.75 but this project is twice as risky as the firm’s normal operations. The expected return on the market is 10% and the risk free rate is 6%. Should the firm undertake this project? The first stage of deciding whether the firm should undertake the project is to calculate the required rate of return for the project using CAPM. As the project is twice as risky as the firm’s normal operations, it beta will be equal to 2 x 0.75 = 1.5: [pic] We will now use this required rate of return to calculate the NPV of the project: [pic] As the project has a positive NPV, it should be accepted.
Offer a coffee card to the customers that give repeat business, for every 10 cups of coffee that they purchase they will get one on the house. There should be a survey asking the customers that have been so loyal what things that they think should change and what things they think should stay the same. This would give the Café a better understanding on what its customers want to make the right decisions on the changes that need to be made to bring the Café up-to-date. Supplier power: The Café has been most likely using the same suppliers for all of the years that they have been in business and they have probably built a good working knowledge of their supplier’s costs and methods. The café needs to go out and look for other suppliers as this will give them a better understanding and they might be able to find their products at a better price.
Office Max strives to help customers do their best work with the products and services they offer. Office Max has services in over 900 stores, catalogs and online. Wal-Mart focuses on servicing customers and members more than 200 million times per week. A low cost strategy is implemented to help consumers save money. Wal-Mart is located in 15 countries and employs more than 2 million associates worldwide.
Trader Joe provides this to his employees. Trader Joe increases job satisfaction and performance for his employees by hiring manager only within the company, offering medical, dental, vision and my favorite; company paid retirement, it is rumored that, he pays his managers over $100,000 per year, what a great perk! Trader Joe’s managing process includes buying high end products and he is still able to sell them at a lower price, which allows him pay more to his employees. Kowitt states, (2010) by offering substantial salaries, Trader Joes say,” Happy customers spend more and visit the store more frequently. This attitude is rare in the retail industry at large, where employees are often seen as expendable (p.86).
(Wal-Mart Corporate Website) Huge turnover, large customer base and returning customers show that Wal-Mart has been able to achieve this goal in its 50 years of existence. Wal-Mart sources material from third world countries at low price. Very efficient supply chain management and bargaining power has enabled Wal-Mart to sell goods at low price. Company is also pursuing vertical integration strategy to lower cost. Answer-2) Wal-Mart Stores had turnover of $446.95 billion and net income of $15.77 billion in financial year ending
Based on the case study, Coe’s has opened at least 1,000 stores and their strengths are showed in many situations. For the example is at the early paragraph where Aubrey the store manager of Coe’s in South Tuscan tell the CEO that they already have over 100 customers even though just open less than a month. Its shows that Coe’s company is already well-known in local market. Besides that, have good staff also one of the strengths of the company. It can be seen how Aubrey fostered immediate trust with their customers and from the conversation Stan with Carmen at Circle K about she get everything furniture from Coe’s services.. Coe does also have strength in systems of service.