WACC & EVA
The purpose of this project is to apply this course?s concepts and theories to a comprehensive analysis of
a publicly-traded firm. The final grade will be determined by your final deliverable; the interim grades are merely to
indicate the current evaluation of your project. Your client is the board of directors of a large US
conglomerate that is considering acquiring the company that you have selected; they have hired your
group as consultants. In conducting the analysis, you may use any sources you find helpful: textbook(s),
public documents, academic papers, discussions and analysis from internet sources, discussions with
choose the company is Tiffany & Co.
And you should solve this two question in one page paper.
1. Is there a possible financing motive? Assume the acquirer is AA-rated and has a WACC of 7%. If
your firm has a higher WACC (because of higher debt costs, higher risk or inefficient capital
structure) then it could be made more valuable by being acquired by a stronger firm (this is a basic
motive behind many of Berkshire Hathaway?s acquisitions). Thus, determine your firm?s WACC and
EVA (percentages). If the EVA is positive it is a good sign that the firm is finding attractive
2.Get the market value of equity (market cap) and book value of debt from Yahoo; get the tax rate &
ROIC from the income statement (for simplicity we will define ROIC as : Net income – Dividends/ LT debt + Equity -Cash.) to compute and interpret the firm?s EVA.
pic Tecumseh’s Address to the Osages
Paper should be a review/summary of the title. Paragraphs 1 and 2 must introduce the topic of the article by summarizing the time of events in which the article is written (Historical Perspective). I should consist of background information that I would like the reader to know but not include any information from the article. Paragraphs 3-5 Should express the main points and arguments of the article in my own words. Final paragraph should be a personal response to the article. It must include how the article applies to American History, How it connects to current day and personal thoughts about the article. It should consist of 2 full pages, use formal English writing techniques and typed in Calibri 11PT double-spaced body.