FIN-516 – WEEK 2 – MINI – CASE ASSIGNMENT
Select a major industrial or commercial company based in the United States, and listed on one of the major stock exchanges in the United States.
Each student should select a different company.
Avoid selecting an insurance company or a bank, as the financial ratios for these financial businesses are different.
Make sure that all the information required below is available before deciding on your company---you will want to choose a company for which you are comfortable that all the information required is readily available.
Use a Question/Answer format (formal paper NOT required)
* At top of document--indicate student name
* On a ...view middle of the document...
Provide both book value and estimate of market value (for debt assume book and market value is same, for equity base market value on stock price and shares outstanding)
6. What is the company’s current actual Beta? (most recent published---note source, publication date and period over which Beta is calculated - if available)
7. What would the Beta of this company be if it had no Long Term Debt in its capital structure? (Apply the Hamada Formula; provide formula, data inputs and product.)
8. What is the company’s current Marginal Tax Rate? (Provide source, rate. As a reference, calculate effective rate based on most recent annual report- Income Statement)
9. What is the Cost of Debt, before and after taxes? (quote current yield on bonds---identifying source and date of source, also compare to interest expense and effective tax rate as indicated on most recent Income Statement, For WACC, indicate which rate you are using for rd (effective or marginal can be used for purposes of this assignment)
10. What is the Cost of Preferred Stock (if any)? (quote current yield on...