Find your question
and Get expert's answers*
Homework Help
*Click here to submit
Refer a Friend
Discount up to 15%*
Prepared References
Save up to 50%*
Homework Help >> Other Management
  Determine current cost of equity  

Your task is to determine CDW’s current cost of equity. Since the company is not yet publicly traded1, you need to estimate its cost of equity from a set of comparable companies. Use ‘Hamada’s Equation’2 to adjust for the impact of corporate debt on a firm’s cost of equity. Assume that CDW’s target debt ratio3, D/(E+D), is similar to its ratio of ‘long-term liabilities’ to ‘total assets’, that is, $3.731B/$5.700B ≈ 65%.

[1 CDW’s Form S-1 filing:]
[2 Hamada’s equation is explained at's_equation]
[3 The target debt ratio, D/(E+D), is different from the target debt-to-equity ratio, D/E!]

Question1 ) While adjusting for each firm’s debt level, estimate CDW’s cost of equity based on the following 5 companies: Apple Inc. (AAPL) Dell Inc. (DELL) EMC Corporation (EMC) SanDisk Corp. (SNDK) Seagate Technology Public Limited Company (STX)

Question 2) Select your own set of comparable companies and re-estimate CDW’s cost of equity.

Question 3) Explain why the set of comparables you selected is preferable to the set listed in Question 1.

Question 4) Explain how you forecast the risk-free rate (rf) and the excess return on the market (rmkt-rf).

Take a prinout of your write-up

Guidelines for formatting your Case Write-up

•    One inch margins on each side; double Line spacing
•    Cover page with group name, individual names in alphabetical order, assignment name, submission date.
•    Structured write-up (with subheadings if appropriate)
•    Maximum of four (4) pages
•    Appendix: Maximum of three (3) pages (for tables, graphs). Needs to be formatted.
•    Professional layout; Page numbers; Clearly labeled Tables, Names, Graphs, Exhibits

Ask an Expert for Solution

Ask an Expert for Answer Determine current cost of equity

Request for Solution Files

Expected delivery within 24 Hours

Course: Other Management

Ref. No:- TGS0467

Length: 7 pages

Like US:-
Assignment Help

Ask an Expert & Get Answer

  • Quality work delivery
  • 100% Plagiarism free
  • Time on delivery
  • Privacy of work
Order Now
More Other Management Questions

If the net power generated by the cycle is 100 MW, determine (a) thermal efficiency of the system, (b) mass flow rate of steam and (c) the heat transf
How big a tank do you need to store enough oil to heat your home for a week? The energy content of the oil is 46.2MJ/kg and its density is 0.85g/cm3
Determine the ratio of duct exit pressure to duct inlet stagnation pressure that will result in a standing normal shock at x = + 0.3 m.
Derive an expression for the buoyant force on a spherical balloon as it is submerged in water as a function of the depth below the surface, the volu
Corporate social responsibility (csr), The ability to read, understand, critique, and integrate research studies and to design a study to address a ga
Take into account that some of the oxygen is lost to the surface wall material of the furnace. Find the actual air-fuel ratio, the theoretical air-f
Determine: A) the mass flow rate of combustion gases in kg/s. B) the rate of energy transfer between the gass and vapor streams in the steam gener
Estimate the magnitude and location of the resultant force on the water tower patch. Estimate the pressure at the flange when the faucet is CLOSED.
Assume that there are no eggs available for hatching in the first week. Suggest a hen managentment strategy that will maximize profit for this opera
Heating continues until no liquid remains in the tank. Neglecting kinetic and potential energy effects, determine: A) the amount of heat transfer,