Group 1 - Ameritrade Case Study

Group 1 - Ameritrade Case Study - Corporate Financial...

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Corporate Financial Management - Section: 32236-001 Cost of Capital at Ameritrade KAB Consulting Inc. - Group 1 Ansel Alfonso, Kathy Maccagnone and Bilal Mirza June 23, 2011
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June 23, 2011 Mr. Joseph Ricketts Ameritrade Holding Corporation 99 Wall St. New York, NY 10005 Dear Mr. Ricketts: We would first like to thank you for giving us the opportunity to help evaluate your upcoming investments by providing a cost of capital estimate. We understand it is your desire to improve your company’s position among your competitors. With all the advances in technology now and in the future, and the development of a sound advertising program, these projects might be a good investment for any company. Because of your short period in the market, we decided to use comparable firms that suitably show the risks of these investments. Our case study will indicate why we feel these projects are too much of a risk for Ameritrade at this time. After reviewing our case study analysis and recommendations, we would like to discuss this information in further detail. Please feel free to call with any questions or concerns you may have. Sincerely, Ansel Alfonso Kathy Maccagnone Bilal Mirza Ansel Alfonso Kathy Maccagnone Bilal Mirza
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Corporate Financial Management: Cost of Capital at Ameritrade Introduction Ameritrade Holding Corporation (Ameritrade) was formed in 1971. Since this time, Ameritrade has been a leader in the area of deep-discount brokerages, and has guided investors by offering unique services that introduced new ways in which they handle their portfolios. As Chairman and CEO of Ameritrade, Joe Rickets believes he can expand shareholder value by accepting projects whose expected return on investment is greater than the cost of capital. Ameritrade filed their initial public offering (IPO) in March of 1997 which raised $22.5 million.
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This note was uploaded on 06/23/2011 for the course BA 7020 taught by Professor Emilyj.huang during the Spring '11 term at Wayne State University.

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Group 1 - Ameritrade Case Study - Corporate Financial...

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