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

Strategy Paper - Case Study Example

Cite this document
Summary
were to source for additional amount of dollars. Myers (1977) argued that, “The optimum level of debt, if a company were to take on additional amounts would be the point at which…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.9% of users find it useful
Strategy Paper
Read Text Preview

Extract of sample "Strategy Paper"

Kelly Services Inc. The objective of this paper is to determine the optimum capital structure if Kelly Service Inc. were to source for additional amount of dollars. Myers (1977) argued that, “The optimum level of debt, if a company were to take on additional amounts would be the point at which additional dollars of debt were outweighed by the cost of bankruptcy.” Optimal capital structure is the mix of securities that minimizes WACC and maximizes stock price. As leverage increases, a company’s, ROE increases.

Steps involvedFirstly, we determine the WACC, which is the expected rate used for paying financing activities of Kelly Service Inc. =[(D/V) x Rd x (1-Taxc)] + [(E/V) x Re] Secondly, we determine the stock price of Kelly Service Inc. We first determine the beta of Kelly, when it is unlevered and when it is levered.Beta (levered) = Beta (unlevered) [1+ (1-Tax Rate) (Debt/Equity)]We then determined the RRR of Kelly Service Inc. using the CAPM model. RRR= Rf – (Rf –R)Beta using the calculated betas above and the most current Rf from the 3 year Treasury bond of Dec.

1985 of 8.4%. Using the RRR we then finally determine the price of the stock at different levels of debt and also the risk premiums with Po-$25.Lastly, we determine the value of the firm =Value (unlevered) + PV (Tc x Debt) (Tax Shields) or Value of Equity + Value of Debt. Using the determined stock prices above, based on different percentages of risk premiums and debt, we calculate the value of the firm.Works Cited Myers, Stewart C. "Determinants of corporate borrowing." Journal of financial economics 5.2 (1977): 147-175.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Strategy Paper Case Study Example | Topics and Well Written Essays - 250 words”, n.d.)
Strategy Paper Case Study Example | Topics and Well Written Essays - 250 words. Retrieved from https://studentshare.org/finance-accounting/1632901-strategy-paper
(Strategy Paper Case Study Example | Topics and Well Written Essays - 250 Words)
Strategy Paper Case Study Example | Topics and Well Written Essays - 250 Words. https://studentshare.org/finance-accounting/1632901-strategy-paper.
“Strategy Paper Case Study Example | Topics and Well Written Essays - 250 Words”, n.d. https://studentshare.org/finance-accounting/1632901-strategy-paper.
  • Cited: 0 times

CHECK THESE SAMPLES OF Strategy Paper

CinnZeo Strategic Expansion Plan

My complete paper will talk about the demographics of the area, choice of entry strategy, competition, choice of locations, marketing and delivery options, organization and staffing, seasonality effects if any, and cost and profit implications.... It will therefore be a complete and well rounded paper complete with SWOT analysis and recommendations.... The question that remains is: what should be the entry strategy, how long should they wait, and how should the results be measured (David, 2009)....
2 Pages (500 words) Research Paper

The Process of Developing E-Commerce

The paper "Strategic Business Plan for an Online Store" is a strategic business plan for an online store that deals with the sale of electronic devices, including mobile phones, DVDs, and home appliances among other electronic devices.... In this paper, various issues concerning e-business have been explored in relation to how these can be integrated into the business plan of the online store.... Nonetheless, this paper bases on different e-business issues to develop a strategic business plan for the online store....
12 Pages (3000 words) Term Paper

Strategy Proposal Plan for InteCom

The paper "Strategy Proposal Plan for InteCom" develops a strategic plan for the development of InteCom Company, one of the players in the US for PBX (Private Branch Exchange) devices.... The paper is based on the case study report prepared by Ghemawat (1986).... hellip; The strategic development plan for InteCom has analyzed the current market scenario and proposed the strategy for development.... The strategy report has performed a detailed SWOT analysis to understand the current market situation and has framed some strategic objectives along with vision and goals....
6 Pages (1500 words) Research Paper

Research Strategy Paper

I wish that this would mean that I am early, but no!... Sadly it implies that I am always late, whether it is in submitting an assignment or simply making it to office on time.... Most of the time you are able to… I mean the bus tyre, the dog, the terrorist, the disease that you ever so often get from your dog, the death of your relative mostly grandma, I mean how many grandmothers can you really kill in a year?...
4 Pages (1000 words) Research Paper

Foreign Direct Investments Rules in Morocco and the Democratic Republic of Congo

There are various factors which will attract an investor; these factors may include tax exemption, specialized economic zones, preferential tariffs, political stability and… On the other hand there could also be some barriers to this foreign investment which may include protection of local investors and political instability. All of the above mentioned characteristics could be managed by a set of regulations, here the economies of the host country may attract foreign investment in the lagging areas of the economy and on the same time protect the local investor....
10 Pages (2500 words) Term Paper

WK 5 Strategic Philanthropy for Organizations

In this paper, several examples have been used to demonstrate how strategic philanthropy has been incorporated in different corporations' overall strategy for performance improvement.... As discussed in… this paper, variables such as customer loyalty, organization reputation, employee commitment, investor attitude are key outcomes of Strategic Philanthropy.... Strategic Philanthropy therefore forms part of the broader philosophy that outlines how involvement in citizenship can Strategic Philanthropy for Organizations This paper explores the benefits of Strategic Philanthropy for organizations....
2 Pages (500 words) Term Paper

Why Strategic Planning Is Important for FBI Investigations

In the paper “Why Strategic Planning Is Important for FBI Investigations” the author discusses strategic planning as a process that defines an organization's strategy in deciding on resources allocation.... An effective strategic planning process includes mission and objectives, environmental scanning, strategy formulation, as well as strategy implementation, evaluation, and control.... In addition, managers must embrace the strategy and must aim at meeting the customer's needs....
6 Pages (1500 words) Research Paper

Potential Political System of Afghanistan

The author of this paper "Potential Political System of Afghanistan" explores the fact that Afghanistan has remained under political and economic instability for a very long time, which can be traced to the numerous wars, uprisings, and insurgencies that plagued the country....
5 Pages (1250 words) Term 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.
Contact Us