Finance

THE MARKETS FOR TS AND P&S --------------------------------------------- The psychel situation is to find several(prenominal) competing companies and judge the important or capital market luck for them. Considered to be the best steering to judge company-related risk, this is still an imperfect process. Even taking dickens closely-competitive semiconductor companies such as Intel (NASDAQ: INTC) and Advanced Micro Devices (NYSE: AMD), youll find more things are the uniform (percent of R&D spending; revenue margins on major(ip) product lines; percent of sales & selling spending). -- and youll find many things different (share of microprocessor markets; markets for new product reading; customers; capital structure). Bernard Ingles memo to CFO Margaret Weston in the Teletech case makes diagnose of this in his blend in point but really makes no mention of what companies would support likely comparisons -- or if the companies are publicly-traded. In terms of equity, we subroutine in only that the company has a low gist beta of 1.04. However, we do have a good idea of what debt risks are -- and the deal of capitalization thats allocated to Telecommunications Services (TS) and Products & Services (P&S): Debt: 18% Equity: 82% TS Capital: 75% ($1.18 billion) P&S Capital: 25% ($4.1 billion) TS woo of debt: 7.00% Corporate cost of debt: 7.

03% perspicacious the weighted averages, we know too that: P&S cost of debt: 7.12% (as its 25% of the portfolio). Returns universe required by the splice holders dispense with us to propose a beta o n the debt: rD = rF + Bd * (rM-rF) whe! re, rD: return required by market rF: the unhazardous or T-bill rate Bd: beta for the debt rM-rF: Teletechs link up premium So, the bond beta, Bd, for Telecom Services (TS) is: 7.0 = 6.04 + Bd * (5.5) Bd = .17 And the bond beta, Bd, for Products & Services (P&S) is: 7.12 = 6.04 + Bd*(5.5) Bd = .20 Neither beta is particularly risky, indicating the believe that debt coverage is very adequate...If you want to earmark a full essay, order it on our website: BestEssayCheap.com

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