Question

Your company has 2 divisions: One division sells software and
the other division sells computers through a direct sales channel,
primarily taking orders over the web. You have decided that Dell
Computer is very similar to your computer division, in terms of
both risk + financing. You go online and find the following info:
Dells beta is 1.21, the risk-free rate is 4.5%, its market value of
equity is $67 billion, and it has $700 million worth of debt with a
yield to maturity of 6%. Yours tax rate is 35% and you use a market
risk premium of 5% in your WACC estimates.

a. What is an estimate of the WACC for your computer sales
division?

b. If your overall company WACC is 12% and the computer sales
division represents 40% of the value of your firm, what is an
estimate of the WACC for your software division?

Answer #1

Your company has two? divisions: One division sells software and
the other division sells computers through a direct sales? channel,
primarily taking orders over the internet. You have decided that
Dell Computer is very similar to your computer? division, in terms
of both risk and financing. You go online and find the following?
information: Dell's beta is 1.16, the? risk-free rate is 4.4%?, its
market value of equity is $65.8 billion, and it has $699 million
worth of debt with...

Your company has two divisions: One division sells software and
the other division sells computers through a direct sales channel,
primarily taking orders over the internet. You have decided that
Dell Computer is very similar to your computer division, in terms
of both risk and financing. You go online and find the following
information: Dell's beta is 1.22, the risk-free rate is 4.7%,
its market value of equity is $65.6 billion, and it has $694
million worth of debt with...

Your company has two divisions: One division sells software and
the other division sells computers through a direct sales channel,
primarily taking orders over the internet. You have decided that
Dell Computer is very similar to your computer division, in terms
of both risk and financing. You go online and find the following
information: Dell's beta is 1.18, the risk-free rate is 4.3 %,
its market value of equity is $ 65.6 billion, and it has $ 709
million worth...

Your company has two divisions: One division sells software and
the other division sells computers through a direct saleschannel,
primarily taking orders over the internet. You have decided that
Dell Computer is very similar to your computerdivision, in terms
of both risk and financing. You go online and find the following
information: Dell's beta is
1.16,
the risk-free rate is
4.6%,
its market value of equity is
$66.4
billion, and it has
$703
million worth of debt with a yield...

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Fixed cost per unit of the part is $20. Division B wants to
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transfer price if Division A is operating at capacity?
2.
Spring 20 Company manufactures lamps. The company
expects to sell 2,000 lamps for $100 each in April and 2,400 lamps
for $110 each in May. Sales...

Wal-Mart Online
Wal-Mart is one of the largest companies in America. It is
definitely the largest retailer, both in terms of the number of
stores (8,970 worldwide in 2011) and the level of sales ($419
billion from the 2011 Annual Report). By pushing suppliers to
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and the stores often attract customers solely in-terested in lower
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