Files that you will download:
Word (.docx) & Excel (.xlsx)
Organization of the paper should be as follows:
This section should include background on the company that has been chosen.
- Title page
- Table of Contents
- Introduction/Background (2-3 pages)
- Pages showing equations with data and brief description
There is no page length given for this as it can vary greatly. This section is to be divided up based on the topics. In each section, you must show and explain the equations that are used. In addition, you are to draw any conclusions on the company you can from this data. Please note that detailed worksheets showing all of the calculations for this section are to be included in an appendix.
- Cost of Equity (Common Stock)
- Beta from Regression and two Betas from analysts
- Beta Chosen for CAPM and why
- Capital Assets Pricing Model (include how determined RF and[ RM or (RM – RF)]
- Discounted Cash Flow (DCF) (only if dividends – include how determined)
- Own-Bond-Yield-plus-Judgmental-Risk-Premium (include how determine risk premium)
- Cost of Preferred Stock
- Cost of Debt (make sure to include table that lists all bond issues with weighted average cost of debt)
- Market Value of Debt (will have calculated above, but will need to add any long term leases from balance sheet to get total market value of debt)
- Market Value of Equity
- Market Value of Preferred Stock
- Value of Firm
- Firm’s Tax Rate (explain how determined)
- Weight for Equity
- Weight for Preferred Stock
- Weight for Debt
- WACC (Weighted Average Cost of Capital)
Including but not limited to RF , RM, RPM (which =Rm – RF), growth rate of dividends. This page should have a brief description of how you came up with the estimates with spreadsheets, etc. to be put in the appendix.
Appendix should include all relevant data including debt data from Morningstar, calculations of weighted average cost of debt, stock returns, betas from analysts, beta regression analysis, method/sourcing for RF and RM, growth rates for dividends, different methods to determine tax rates, etc. Detailed descriptions, tables of data and excel sheets etc will be in the appendix.
Sample of Solution:
The company was founded in 1987 with it’s headquartered in New York City, United States. Aéropostale Inc. is a mall-based, casual apparel and accessories retailer, having its stores functional at the different locations all over the United States along with Canada and Puerto Rico. Aéropostale is primarily targeting male and female teenagers of the age 14-17 years through its Aéropostale stores, while the kids of the age 4-12 years are served by the subsidiaries P.S from Aéropostale. The store chain for children clothing “P.S from Aéropostale ” was initiated in 2009 providing apparels to the kids of the age 7-12 years, while in 2011 the apparel collection was further expanded serving the kids of age 4-6 years. Since its inception, the company has been providing its customers exciting fashion trends and high-quality merchandise through its customer friendly store chains and the website. The company has been famous for its quality cloth brands which produce fashionable wearing at the most competing rates. The operations of these brands come under complete control of Aéropostale.
The company operated 860 stores as of January 2015, which includes 773 Aéropostale stores in the United States and Puerto Rico, 61 Aéropostale stores in Canada and 26 P.S from Aéropostale in the 12 States. Along with the stores, the company also makes sales over its e-commerce websites which includes “www.Aéropostale .com” for Aéropostale products while “www.ps4u.com” for P.S from Aéropostale products. Aéropostale also operates a women fashion’s footwear and apparel retail shop, Gojane through its website “www.gojane.com”.