Wackenhut
Market Value of Equity
Value of Debt
Debt to Value
Equity to Value
Tax Rate
Unlevered Asset Beta
Risk Premium
Re Wackenhut
Rd(AA Debt) Wackenhut
WACC Wackenhut
Terminal Growth Rate
$
70.20
$
10.60
0.131
0.869
34%
0.809
7.43%
12.39%
9.68%
11.61%
Wackenhut
Market Value of Equity
Value of Debt
Debt to Value
Equity to Value
Tax Rate
Unlevered Asset Beta
Risk Premium
Re Wackenhut
Rd(AA Debt) Wackenhut
WACC Wackenhut
Terminal Growth Rate
$
70.20
$
10.60
0.131
0.869
34%
0.809
7.43%
12.39%
9.68%
11.61%
Wackenhut Cost of Capital
Market Value of Equity
Value of Debt
Debt to Value
Equity to Value
Tax Rate
Unlevered Asset Beta
Risk Premium
Re Wackenhut
Rd(AA Debt) Wackenhut
WACC Wackenhut
Terminal Growth Rate
Debt Beta
CPP/Pink Unlevered Cost of Capital
$ 7
WASATCH ELECTRONICS
Financial Analysis and Planning
Bob Hosfeld, Chief Financial Officer for Wasatch Electronics, received a phone call in
early January, 2000, from Sam Weaver, a commercial loan officer at Wasatch's bank, Pioneer
National Bank of Salt Lak
Ocean Carrier Case
As Vice President of Finance for Ocean Carriers, Mary Linn must decide whether or not Ocean
Carriers will commit to purchasing a new capesize dry bulk carrier. While costs and revenues are known
for the first few years of operation, the
Equity cost of captal Wackenhut
Value of equity
Value of debt
Tax rate
Asset Beta
Risk Premium
WACC
Case facts
Revenue % of 1987
Gross margin %
operating expenses (% of sales)
Net working capital (% of sales)
Net PPE (% of sales)
Free cash flow
revenue
gr
Marriott Corporation Case
1. What is the weighted average cost of capital for Marriott Corporation? What values did you
use for the various components of the WACC why did you use them and how did you measure
them?
Marriott Corporation uses the following e
2001
Days Per Year
Days/year in Maintenance
Days/year in Operation
Revenue
Daily Rate
Total Revenue per Year
Operating Costs Per Day
Operating Costs Per Year
Survey CAP EX DEP EXP
Ship DEP EXP
Loss on sale of ship
Total Expense
Net Income
$
$

2002
$
$
2
BASIC MATH TOOLS
PART 1
Types of Numbers
Rounding
Relative and Percentage Change
Exponents and Powers
Scientific Notation
BASIC MATH TOOLS
Preliminaries
Types of Numbers
o
Natural numbers: cfw_1, 2, 3, 4, . . .
o
Integers: cfw_0, 1, 2, 3, 4, . . .
BASIC MATH TOOLS
PART 2
Inequalities
Algebra
Logarithms
Linear Relationships
Nonlinear Relationships
Primer on Differential Calculus
Inequalities
a < b means that a is less than b
a > b means that a is greater than b
a b means that a is less than
WASATCH ELECTRONICS
Financial Analysis and Planning
Bob Hosfeld, Chief Financial Officer for Wasatch Electronics, received a phone call in
early January, 2000, from Sam Weaver, a commercial loan officer at Wasatch's bank, Pioneer
National Bank of Salt Lak
Marriott Corporation Case
1. What is the weighted average cost of capital for Marriott Corporation? What values
did you use for the various components of the WACC why did you use them and how did
you measure them?
Marriott Corporation uses the following e
Wasatch Electronics
1) Prepare quarterly pro forma income statements and balance sheets for 2000. He wants you to construct the
balance sheet assuming that the bank is the residual financing source using the "plug" approach.
2) Prepare annual pro forma in
Pinkerton Case
1. What is the value of Pinkertons under the expected improvements forecast by CPP?
If the improvements forecast by CPP come to fruition, the PV of the Unlevered
FCF from Pinkerton is worth $100.83 Million. This assumes a discount rate of 1
Pinkerton Case
Suggested Questions
In your review and analysis of the Pinkerton case, in addition to your own questions
and issues, you might also consider the following.
1) What is the value of Pinkertons under the expected improvements forecast by
CPP?
Requirments
Current Ratio
Debt to Equity
Clean
Have one quarter to correct
1.5 or greater
0.6 less than
at least 3 months per year
0 balance
Prime
Borrowing rate
Ending Cash
Excess Cash
Sales Growth
Plus 2
0.0875
70,000
Pay down Debt
15% on Volume
Then sh
Requirments
Current Ratio
Debt to Equity
Clean
Have one quarter to correct
1.5 or greater
0.6 less than
at least 3 months per year
0 balance
Prime
Borrowing rate
Ending Cash
Excess Cash
Sales Growth
Plus 2
0.0875
70,000
Pay down Debt
15% on Volume
Then sh
Marriott Corporation Case
Suggested Questions
In your review and analysis of the Marriott case, in addition to your own questions and
issues, you might also consider the following.1
(1) What is the weighted average cost of capital for Marriott Corporation
WASATCH ELECTRONICS
Financial Analysis and Planning
Bob Hosfeld, Chief Financial Officer for Wasatch Electronics, received a phone call in
early January, 2000, from Sam Weaver, a commercial loan officer at Wasatch's bank, Pioneer
National Bank of Salt Lak
Beta Estimates
Marriott Cost of Capital
Beta Estimates
Marriott Overall
Current State
Desired Leverage
Lodging
Hilton
Holiday
La Quinta
Ramada
Average
Marriott Lodging Beta Estimate
Restaurants
Church's
Collins
Frisch's
Luby's
McDonalds
Wendys
Average
Mar
Requirments
Current Ratio
Debt to Equity
Clean
Have one quarter to correct
1.5 or greater
0.6 less than
at least 3 months per year
0 balance
Prime
Borrowing rate
Ending Cash
Excess Cash
Sales Growth
Plus 2
0.0875
70,000
0.02
Pay down Debt
15% on Volume
Th