Financial Analysis on DOMTAR and Kimberly.docx - Financial Analysis on DOMTAR and Kimberly-Clark By Kyle White 2 Table of Contents CAPM

# Financial Analysis on DOMTAR and Kimberly.docx - Financial...

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Financial Analysis on DOMTAR and Kimberly-Clark By: Kyle White

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2 Table of Contents CAPM Calculations (using both methods)………………..…………………3 Estimated Market Return for S&P 500 ……………………………………..4 Risk Free Rate……………………………………………………………….4 Dividend Discount Model…………………………………………………...5 Cost of Debt…………………………………………………………………5 WACC (both Calculations)………………... ……………………………….6 Conclusion…………………………………………………………………..8 CAPM
3 Formula: ? ( ? ? ) = ? ? ( ? ( ? ? ) − ? ? ) + ? ? ? ?= 0.62 ? ?= 2.10 ? ( ? ? )= 0.34 ? ( ? ? )= 0.34 ? ?= 2.42 ? ?= 2.42 KBM: ? ( ? ? )= 113.90% UFS: ? ( ? ? )= -265.04% Above is the calculation for the expected return on an asset also known as CAPM. This formula takes all the past returns, in this case the past 5 years, and estimates the return for the next year. For KBM, they are estimated a 113.90% return which is a very high return especially when its compared to one of its competitors UFS who has a -265.04% return. These are both completely different and shows that KBM has a much better chance for a high return next year. This doesn’t mean UFS is guaranteed to have a negative return next year but based on their

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• Spring '14
• GeraldAbdesaken
• Interest, Risk-free interest rate, KBM

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