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Strategic Corporate Fiance - Essay Example
Finance & Accounting
Pages 10 (2510 words)
Task 1 1) Net Assets Value Net asset value measures the value of the firm’s assets, excluding the liabilities. It is usually calculated based on per share (Babu, 2012). The Net Assets Value of Marks and Spencer for 2011 and 2010 are mentioned in the table below…
From the above-mentioned table, it is quite evident that Net Asset Value of Marks and Spencer have increased for 0.03 bases point and is higher in 2011 than 2010. The company has net assets worth of ?1.72 in 2011 and ?1.69 in 2010, which clearly explains that the Net Asset Value is improving. 2) Cost of Capital (CAPM) In the table mentioned below, the computations have been shown for the weighted average cost of capital of the company, Marks and Spencer. The cost of debt of the company is 4% whereas the cost of capital of the company was found as 4.5%. The weighted average cost of capital of the company, which incorporated the value of debt and value of equity was found to be 4.33%. Cost of Debt Rd = Annual Coupon Current Bond Price = 5 125 Rd = 4.00% Value of Equity Ve = Current Price of Share x Number of Shares outstanding = 3.76 x 1,600 = 6,016 Value of Debt Vd = Current Price of Bond x Number of Bonds Issued = 125 x 2,489 = 3,111 100 Weights Wd = Debt = 3,111 = 34.09% Debt + Equity 3,111 + 6,016 We = Equity = 6,016 = 65.91% Debt + Equity 3,111 + 6,016 3) Dividend Growth Model (DGM) In this section of the paper, computations for Gordon’s dividend growth models have been shown. ...
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