case1_05

case1_05 - Divisional Hurdle Rates Group 2 Dehnadi, Z....

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5.Statsitical Analysis 6.Additional Material Divisional Hurdle Rates Group 2 Dehnadi, Z.
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AGENDA: 2 Introduction Q1-Q9 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9
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Introduction: 3 Randolph Corporation Multi-divisional producer of: coated ceramics, real estate home product equipment manufacturing ceramic coatings residential real estate Key issues Divisional hurdle rates Project management Capital structure Introduction Q1-Q9 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9
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Question 1: 4 Estimate individual divisional hurdal rates! Given: 45 % debt ratio, rf=8%, 13.5%Rm, Tax rate=40% Div. Beta Cost of equity R=Rf + ß(Rm-Rf) WACC WACC=B/(B+S)*rb* (1-T)+S/(S+B)*rs Real Estate 0.60 11.3 % 9.19% Ceramic Coatings 0.95 13.23% 10.24% Equip. Manu. 1.05 13.78% 10.55% Home Products 0.65 11.58% 9.34% Introduction Q1-Q9 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9
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Question 2: 5 Assumne high/average/low risk projects within divisions. And
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This note was uploaded on 11/16/2009 for the course F 3033 taught by Professor Hh during the Spring '09 term at Maastricht.

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case1_05 - Divisional Hurdle Rates Group 2 Dehnadi, Z....

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