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FIN 5439 – Capital Structure and Risk ManagementGuidelines for the Diageo CaseThis is a group assignment:Each group will write a mini-report on the case – The report should give concise answersto the questions given below.Only groups in set 2 will create presentations on this case – see the attached “Case Presentation Guidelines.”Groups in sets 1 and 3 will complete “Peer Review Survey” in class– one for each presentation.GradeCase Report + Presentation = 150 PointsCase Report + Peer Review = 60 PointsLearning Objective"Diageo," HBS Case Diageo is one of the largest food and beverage firm and has recently experienced a major refocusing effort. This case will examine the capital structure choices the firm faces at this point and examine the trade off theory of capital structure. You will be introduced to Monte Carlo analysis and you will use this to decide on the optimal capital structure for Diageo.Learning ObjectivesThe static trade-off theory of capital structure is one of the models used to determine the optimal capital structure. While tax shield are well understood, the sources and costs of financialdistress, particularly in a dynamic setting, is less understood. This case studies the capital structure decision of a firm that is undergoing fundamental changes in the business.The heart of the case is a model that is developed by the firm’s corporate treasury staff to help them think about the static tradeoff of tax shields and financial distress in a dynamic setting. The