StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Cost of Capital - Dissertation Example

Comments (0) Cite this document
Summary
Mergers and Cost of Capital: Delta Airlines as Case Study Abstract The terms mergers and acquisitions involve a large number of transactions. Mergers can be of different forms like one firm can take over a different firm resulting in both the firms ceasing to exist individually to create a new firm…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER93.7% of users find it useful
Cost of Capital
Read TextPreview

Extract of sample "Cost of Capital"

Download file to see previous pages Cost of capital is the minimum returns that a company can give shareholders on their investments and accordingly the company has to earn the minimum returns. If merging happens between one company that has high cash flows and another company that has low internally generated cash flows, then such merger can reduce the cost of capital. Introduction In today’s economic world, mergers and acquisitions (M & A) have become common strategy for growth and diversification of companies. During the 1990s, M & A activities broke all previous records both in terms of the number of such transactions and also the size of the mergers or acquisitions. In the early 2000s, there were major setbacks in the economies all over the world with global recession setting in. This resulted in drop of M & As worldwide although the volume still remains at a high level (Stahl & Voigt, 2003, p.2). The terms mergers and acquisitions involve a large number of transactions. Mergers can be of different forms like one firm can take over a different firm resulting in both the firms ceasing to exist individually to create a new firm. The principle purposes of merger of two companies are to strengthen their hold in the market and also to earn a competitive advantage in the industry. There are five common types of mergers. ...
This type of merger is done to reduce the manufacturing cost and to acquire a larger share of the market. For instance, merger between Coca-Cola and Pepsi will be a horizontal merger and will allow both companies to acquire large share of the soft drink market. The third type of merger is market extension merger. This happens between two firms dealing with similar products but in different markets. The goal is to capture greater portion of the market. For instance, acquisition of Eagle Bancshares Inc by the RBC Centura has allowed RBC to extend its operations in the North American market. The fourth kind of merger is vertical merger which occurs between two firms that manufacture different types of products, but the products are manufactured for the purpose of common finished products. Vertical merger is done between firms in different stages of the industry’s supply chain to increase efficiency of their production process. For instance, vertical merger can take place between an automobile manufacturing firm and its supplier firm. The fifth and final kind of merger is production extension merger which takes place between firms manufacturing associated products in the same market. One example is the acquisition of Mobilink Telecom Inc. by Broadcom. Here it is expected that the products of the two firms will compliment each other (5 types of Company Mergers, 2013; Vadapalli, 2007, p.1). The processes involved in mergers and acquisitions are complicated and needs a complex web of preparations. Series of negotiations are needed along with due diligence which means the buyer company needs to be aware of any obstacles that may arise because of the merger. Activities also include ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Cost of Capital Dissertation Example | Topics and Well Written Essays - 9500 words”, n.d.)
Cost of Capital Dissertation Example | Topics and Well Written Essays - 9500 words. Retrieved from https://studentshare.org/finance-accounting/1482731-cost-of-capital
(Cost of Capital Dissertation Example | Topics and Well Written Essays - 9500 Words)
Cost of Capital Dissertation Example | Topics and Well Written Essays - 9500 Words. https://studentshare.org/finance-accounting/1482731-cost-of-capital.
“Cost of Capital Dissertation Example | Topics and Well Written Essays - 9500 Words”, n.d. https://studentshare.org/finance-accounting/1482731-cost-of-capital.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Cost of Capital

The Mystery of Capital

Even as he mentions this, however, De Soto (2000) disputes it, insisting that effective poverty eradication and alleviation strategies exist but their implementation, let alone success, is dependant upon the support of both donor and debtor governments, upon the cooperation of both developed/industrialized and underdeveloped/developing nations. Sachs agrees, arguing that not only is poverty possible to eliminate but that it can be eradicated within the span of two decades. Even though the arguments presented are economically sound, they are politically idealistic as evidenced in the fact that poverty is largely defined as an economic problem and not as a political-economic one.
Although numerous economists, primarily Malthusi...
6 Pages(1500 words)Assignment

Optimal Capital Structure

One of the recent concepts applied in financial management is the effective utilization of resources and choosing the optimal and most appropriate capital structure. In a resource constraint situation, the importance of financial management is especially highlighted as financial strategies are required to get the company or organization pass through several constraints that it may confront in the day to day functioning. The reasons leading to these sources constraint situations could be lack of demand, scarcity of raw materials, labor problems, liquidity control, lack of technological awareness, prejudiced policies about management and finance, etc. If the problem is not taken into consideration during the initial stage itself, th...
6 Pages(1500 words)Coursework

The Major Issues in the Debate Regarding the Existence of an Optimal Capital Structure

The level of capital has been used as a criterion for the classification of a company within its market. Regarding this issue it is noticed by Penrose (1952, 810 in Cooper, 1997, 750) that ‘positive profits can be treated as the criterion of natural selection -- the firms that make profits are selected or 'adopted' by the environment, others are rejected and disappear’On the other hand, Ruhnka (1985, 45) supported that ‘the primary source of capital for most start-up and development stage companies is equity capital raised through limited stock offerings that are exempt from expensive federal and state registration requirements’. In other words, the capital of the firm can be formulated through a series of...
13 Pages(3250 words)Term Paper

Job Prime Cost

The limitation with fixed costs is that these are uncontrollable as these are normally ‘policy costs’. Fixed cost help in marginal costing in the sense that these costs enable us to identify break-even point, that the contribution needs to cover to reach at ‘no profit no loss’ level.

Variable costs are those costs that change within the same ratio in which the output or production changes. For example, in our study the direct Material cost and direct labour costs are variable cost. We have first calculated the these costs on per cabinet basis and then found total direct material or direct labour cost by multiplying per cabinet cost with total production of400 cabinets. This cost is called ‘...
6 Pages(1500 words)Case Study

Money & Capital Markets

The subprime lending crisis rocked the U.S. economy in late 2006 and early 2007. Subprime lending refers to the loans which are provided to the borrowers having less than ideal credit histories. In other words, subprime lending is provided to persons who do not qualify for conventional credits or loans.

The subprime loans gave rise to inflated credit facilities, increased availability of infrastructure and more circulation of more currency in the economy. But this system also gave rise to unprecedented meltdown, liquidation of funds and resultant heavy losses of financial institutions due to non-payment of loans by the borrowers.

The main reasons for the crisis are more than one. They are the failure of the b...
10 Pages(2500 words)Assignment

Human Resource As Proactive Human Capital: World Bank

Since employees are the pillar of the organization, the role of human resource management becomes crucial in the employment of its workforce. In the emerging challenges of the changing business equations, when the labor deployment is undergoing quantitative and qualitative transformations, HR strategy needs to be redefined to create versatility and flexibility of the contemporary work environment.

Access to information is a vital part of organizational management processes as it not only promotes efficiency and knowledge-based discharge of duties by the employees but it a great tool for the management to exploit the available information to improve its performance. The information provides wide-ranging knowledge about t...
12 Pages(3000 words)Case Study

Project Planning Human Capital

Project planning involves a lot of factors and areas that we need to address for the effective management and handling of the project. The aim of this report is to provide a deep insight into some of the main areas that we need to address for the project of Adams's family farmhouse renovation. These issues are project team communication, project risk management, and deadline handling. Effective communication in a project provides a huge advantage regarding the better working and handling of the project. I have selected a very significant project regarding the preservation of the old and historical places. Here we require effective communication to provide better interaction among the designer, developers, and history preservation...
8 Pages(2000 words)Coursework

Capital Asset Pricing Model and Recent Developments

It is the most essential aspect of any venture. The important considerations that finance has within it, is that of profit and loss. The business as a whole or a person as an individual always strives to earn a profit. To earn a profit, one has to undertake uncertainties that are known as risks. Therefore, profit is also known as the reward for incurring risks.
In the present world of today, the capital market has come up as a viable investment opportunity for individuals all across the globe. People invest their hard money only with the expectation to earn profit or return. The stocks of various companies that are traded in the capital market are also known as capital assets. Prior to investing in any of the stock or capital...
7 Pages(1750 words)Assignment

Real Cost of Capital

Also, other academics criticize the models' failure to incorporate other determinants of risks such as firm size, book-to-market ratio, etc. then the plain correlation of the risk of the assets to the market. Despite these criticisms, many practitioners in the corporate world still use CAPM for capital budgeting. These issues are probed in this paper.
CAPM or the capital asset pricing model has been a tool in modern finance that has been extensively used for capital budgeting. The capital asset pricing model is useful in estimating the required return on an equity stock of a company (Perold 2004). Under the principle of finance that rational investors will require higher returns to compensate them when they undertake projects...
8 Pages(2000 words)Assignment

Capital Punishment as Deterrence to Homicide

Counter research argues that different research techniques give different results. Murder trials in the United States cost millions of dollars. There has been the pressure that this cost should result in a deterrent effect on potential criminals. The deterrence theory argues that criminals weight the cost and the benefits of any criminal venture.
Although deemed a controversial topic by many, the use of capital punishment, or in other words, the death sentence, is a widely used method of punishing convicts in homicidal crimes. The use of the death sentence has the notoriety of being an inhumane and barbaric form of justice. On the other hand, many believe that it is the consequence that is rightfully deserved to people who co...
9 Pages(2250 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Dissertation on topic Cost of Capital for FREE!

Contact Us