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Module 4 and 5

Module 4 and 5. Alysha Zimmerman. Introduction. Comparables. Bloomberg Beta. Bloomberg WACC. Beta. http://www.google.com 0.55 http://www.nasdaq.com 0.93 http ://www.reuters.com 0.42 http://finance.yahoo.com 0.15 http ://www.nyse.com 0.42

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Module 4 and 5

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  1. Module 4 and 5 Alysha Zimmerman

  2. Introduction

  3. Comparables

  4. Bloomberg Beta

  5. Bloomberg WACC

  6. Beta • http://www.google.com 0.55 • http://www.nasdaq.com 0.93 • http://www.reuters.com 0.42 • http://finance.yahoo.com 0.15 • http://www.nyse.com 0.42 • http://www.zacks.com 0.55 • http://www3.valueline.com 0.80

  7. Regression

  8. Reliability of Beta Range = 0.15-.93 Bloomberg = 0.699 Regression = 0.715 β

  9. Cost of Equity Cost of Debt Return on the market – 8% β (Bloomberg) – 0.699 α – 0.011 ε – 0.074 rEQ = α + Rmkt*β + ε = 0.0411 + 0.08*0.699 + 0.074 = 14.13% NFL – $2,603 FEAT - $188 rD= FEAT/NFL = 188/2603 = 7%

  10. WACC Vd – $2,603 Veq – $9,936 Vent – $12,539 rEQ – 14.13% rD = 7% WACC = rD*(Vd/Vent) + rEQ*(Veq/Vent) = 0.07*(2603/12539)+ 0.1413*(9936/12539) = 0.07*.21 + 0.1413*.79 = 13%

  11. Discounted Cash Flow

  12. Questions?

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