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  • Teletech WACC

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    gsustudent2012
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    This document contains financial information for three divisions of a company: Corporate, Telecom Services, and Products & Systems. It includes the market value and bond rating for each division, along with calculations for equity beta, cost of equity, weights and costs of debt and equity, and weighted average cost of capital (WACC). It then shows net operating profit after tax (NOPAT) and return on capital (ROC) calculations using the corporate WACC and individual divisional WACCs.

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    TeletechWACC

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    This document contains financial information for three divisions of a company: Corporate, Telecom Services, and Products & Systems. It includes the market value and bond rating for each division, along with calculations for equity beta, cost of equity, weights and costs of debt and equity, and weighted average cost of capital (WACC). It then shows net operating profit after tax (NOPAT) and return on capital (ROC) calculations using the corporate WACC and individual divisional WACCs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    554 views2 pages

    Teletech WACC

    Uploaded by

    gsustudent2012
    This document contains financial information for three divisions of a company: Corporate, Telecom Services, and Products & Systems. It includes the market value and bond rating for each division, along with calculations for equity beta, cost of equity, weights and costs of debt and equity, and weighted average cost of capital (WACC). It then shows net operating profit after tax (NOPAT) and return on capital (ROC) calculations using the corporate WACC and individual divisional WACCs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 2

    Corporate

    100%
    A-/BBB+
    5.88%
    40%
    3.53%

    Telecom Services
    75%
    A
    5.74%
    40%
    3.44%

    Products & Systems


    25%
    BB
    7.47%
    40%
    4.48%

    Equity Beta
    R(t)
    R(m)
    R(m) - R(t)
    Cost of equity

    1.15
    4.62%
    10.12%
    5.50%
    10.95%

    1.04
    4.62%
    10.12%
    5.50%
    10.34%

    1.36
    4.62%
    10.12%
    5.50%
    12.10%

    Weight of debt
    Weight of equity
    WACC

    22.20%
    77.80%
    9.30%

    22.20%
    77.80%
    8.81%

    22.20%
    77.80%
    10.41%

    Using Corporate WACC


    NOPAT
    ROC
    EP

    Telecom
    $
    1,180.00
    9.10%
    $
    (25.73)

    Products & Services


    $
    480.00
    11.00%
    $
    74.25

    Using Divisional WACC


    NOPAT
    ROC
    EP

    Telecom
    $
    1,180.00
    9.10%
    $
    37.84

    Products & Services


    $
    480.00
    11.00%
    $
    25.82

    MV of Assets
    Bond rating
    Pretax cost of debt
    Tax rate
    After-tax cost of debt

    Comments
    Given
    Given
    Given
    Given
    Given
    Beta
    Risk Free Rate
    Overall Return of the stock market
    Market risk premium

    Remains constant
    Remains constant

    9.21% Corp WAAC basd on wieghted MV Assets

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