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: www.sec.gov/Archives/edgar/data/1402057/000119312513122411/d501911ds1.htm]
[2 Hamada’s equation is explained at http://en.wikipedia.org/wiki/Hamada'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


Leadership, Functional organisational politics Although many people view organisational politics in a negative light or one that causes dysfunction,
2000words, 10 academic references. In text references + References list Harvard style references. Answer each question to follow required.
Sales management, How much i need to pay for it?Can i expect answer 100% free of plagiarism?For any confusion in question contact me immediately
Competitive strategy, Kindly Find the attached file and please follow the instructions in the file and can u please send this assignment by tomorrow?
Assingment, Risk management plan for da gardening supplies that address all the point insteaded in the picture
Leadership strategies, 2500words 15 references ( in text and references list) Leadership is argued to be one the most important roles for managers
Understand the difference between personnel management and human reso, Understand the difference between personnel management and human resource mana
International management, please read chapter (6) and write summary in 3 pages. The book is "INTERNATIONAL MANAGEMENT) Managing Across Borders and
International management, please read chapter (4) and write summary in 3 pages. The book is "INTERNATIONAL MANAGEMENT) Managing Across Borders and
Bm410 sales management & practices, Directions: Be sure to save an electronic copy of your answer before submitting it to Ashworth College for gradin