Cost Of Capital Structure In H. J Heinz Case Study - 2475 Words

Cost Of Capital Structure In H. J Heinz Case Study (Case Study Sample) Content: NameTutorCourseDate of SubmissionCost of Capital Structure in H.J Heinz Case StudyQ1aThe weighted Average Cost of Capital refers to the average price of return that a firm should pay to creditors and shareholders. Financial analysts normally focus on a companys total capitalization, which is the capital structure or mix of long- run sources of finance used by the company. Firms capitalization consists of bonds, preference shares and common stock. To estimate the WACC, one need to identify the capital constitution mix and the cost of all the sources of fund utilized. The vital assumption in any system of weighting is that the company will definitely increase capital in the specified proportions. These firms hike funds marginally to make incremental investments in latest projects. Thus the capital cost of the marginal is used wholly in the firm instead of using the firms capital in general.The Heinz case assumptions incorporates that the firm managers have to leave the ir own desires and concentrate on maximizing the wealth of stockholder (Brynjolfsson, McAfee, and Cummings p12). This might happen due to the fear of being replaced by stockholders during their annual gathering or board of directors meetings or because they hold sufficient stock in the company thus maximizing wealth of stockholder becomes their core as well. Secondly, its assumed that the lenders to the company are totally protected by stockholders from expropriation. This can happen due to the effect of reputation. The stockholder will not take any step which hurts their lenders when borrowing funds in future (Brynjolfsson, McAfee, and Cummings p18). Lenders have also the right to fully protect themselves through writing agreements forbidding the company from taking any hurting steps on their end.The scenario assumption is that managers of the company do not try to lie or mislead to financial markets on the companys future vision. This is due to enough ideas for the markets to do j udgments about the impacts of actions on long run value and cash flow (Christian). In conclusion, the social benefits or social costs are absent (Christian). All costs made by the company in its effort of maximizing the wealth of stockholder can be charged and traced to the company. With these mentioned assumptions, there is lack of side costs in maximization of stock price. Therefore, managers can focus on stock prices maximization. In the practice, wealth of stockholder and company value will be utilized and community will be well again.Q1b calculation of WACC WACC=Cost of debt + cost of equity Year cost of debt cost of equity WACC 2009 0.341*10 2.51*1.2 3.41 3.012 6.422 2010 0.441*10 30.1*0.1 4.41 3.o1 7.42 Q2WACC is a weighted standard cost of debt, equity and shares of preference. Weights are the capital percentage sourced from every element correspondingly in value terms of the market. It is mostly called the overall capital cost for the firm as a whol e. The WACC can also operate as a hurdle rate in calculating the new projects given the assumptions for those projects are correct. The structure or capital mix of the new scheme investment should be similar as the structure of the existing firm (David). When the firm has a ratio of 70:30 of debt to balance in their latest balance sheet, involvement of the new scheme will retain the same. In addition the risk accompanied with the new scheme will be similar to the existing schemes. Example a textile production increases and expands the supply of looms from 60 looms to 100. Due to similar business and industry, there will be no difference in the profile risk of current production and the new development.The major advantage of WACC is its simplicity. When calculating, it does not require complications. The manager will just apply weights of every finance source with its cost and total the result. Also, a single rate of hurdle for schemes saves managers time in calculating the new proje cts (David). If the schemes are of similar profile risk and there is no difference in the structure of proposed capital, the latest WACC can be instituted and effectively applied. Another advantage is that accurate decisions have to be applied at the accurate time (Gleiner and Femerling p8). Since all new schemes use single rate, the decisions can be reached quickly and new opportunity grabbed and benefits taken.The disadvantages can be traced from the applicability assumptions of WACC. The limitations and practicability of the assumptions are difficulty in the capital structure maintenance. The unreasonable assumptions of no difference in capital organization has exceptional possibilities of persisting all the time (Gleiner and Femerling p19). It shows similar capital organization for new schemes. This process has two possibilities for its funding. First, one requires funding using the retained earnings (Paul). In the case assumption, the new scheme is funded using similar capital organization. There is lack of free cash with the firm. Even if free cash is present, it will create a cap on the investment size (Paul). Example if the new scheme needs US D.100 million the firm can only raise USD. 70 Million. What about the USD. 30 Million? Secondly increasing fund in similar capital mix. The main concern of company management is to reduce the capital cost as low as needed to enable them achieve the profits of shareholders and maximization of wealth. Another disadvantage is taking poor projects and rejecting the quality ones. The assumption can be considered right if the firm is growing its own company and similar business. Example the textile company, it can be false due to the risk accompanied with putting looms being different since the past. The technology may be complicated and different. The cost and quality methods may differ. In the concept of firm growing in different industry, the case might prove malicious due the heavy machineries and FMCG lacking simi lar risk profile. In this case, the WACC should be corrected to take the difference in risk effectively.The WACC disadvantage in the case of difficulty in obtaining latest market capital cost is used for calculation of new schemes. Knowing such sums and the latest day of capital cost is hard. The WACC focuses mainly on preferred, debt and equity. The interest debt cost changes in the market due to economic differences. Also another disadvantage is that the significant capital sources are avoided. When carrying out WACC evaluations, only preference, debt and equity shares are preferred in place of simplicity in assumption that they take major part of the capital. The reason for errors is complexity. The short run borrowings and the credit trade cost is also not considered. If such factors are instituted, WACC will definitely be transformed.Q3The decision of financing has a direct impact on WACC. The WACC can be the simple average weighted debt cost or the equity cost. The weightings are in magnitudes to the values of market debt and equity variation thus WACC.As a firm changes its capital organization, it will definitely effect in a WACC change. Wealth is viewed as present value of prospect cash flows reduced at depositors needed return, the value of the market of a firm is similar to the current value of its prospect cash flows reduced by WACC. The lesser the WACC the higher the value market of the firm. By changing the capital organization to lower the WACC, we grow the value of the market of the firm thus growing the wealth of shareholder.It is the task of all finance directors to seek the optimal capital organization that will effect in lowering WACC (Shapiro and Sarin p5). The debt cost is cheaper compared to the equity cost as debt is termed as less hazardous than equity, the returns needed to compensate the depositors of debt is less than compensating equity depositors. In debt interest payment is mostly fixed quantity and obligatory in nature and paid i n precedence to the dividends payment which are flexible in nature. In the liquidation process, holders of debt get their repayment capital before depositors getting their repayment capital as debt holders are ranked above in the hierarchy of creditor. Debt is low-priced than equity from a firms perspective due to different tax corporate treatment of dividends and interest. Issuing extra debt implies that additional interest is earned out of profits before depositors receive their dividends. This increase is known as rise in financial risk to depositors (Shapiro and Sarin p23). If financial risk rises, a superior return will be needed to compensate them thus increase in cost equity results in the WACC increase. When seeking the lowest WACC, one should give more debt to substitute expensive equity thus lowering WACC. More debt enhances the WACC as keg, Beta equity, financial risk and gearing. In considering capital structure theories, the M+ M theory of the WACC reduction effected by cheaper debt increases financial risk. The cheaper M+M theory in application of tax also raises the financial risk. In the traditional theory, the U shaped WACC is an optimal ratio gearing (Tracy p45). The pecking order theory has no process, just a row of least rejections generated internally funds, followed by debts and in conclusion the issue of equity.In Miller and Modigliani models, assumption of a perfect market capital and disregarding taxation, the WACC remains same at all gearing levels. As a firm gears up, the WACCs decrease effect by having a superior number of cheaper debts is definitely characterized by the rise in the WACC caused...

Definition and Examples of an Antonym in English

An antonym is a word having a meaning opposite to that of another word, such as hot and cold, short and tall. An antonym is the antonym of synonym. Adjective: antonymous. Another word for antonym is counterterm. Antonymy is the sense relation that exists between words which are opposite in meaning. Edward Finnegan defines antonymy as a binary relationship between terms with complementary meanings. Its sometimes said that antonymy occurs most often among adjectives, but  as Steven Jones et al. point out, its more accurate to say that antonym relations are more central to the adjective classes than to other classes. Nouns can be antonyms (for example, courage and cowardice), as can verbs (arrive and depart), adverbs (carefully and carelessly), and even prepositions (above and below).   Examples and Observations You forget what you want to remember and you remember what you want to forget.Every day I remind myself that my inner and outer life are based on the labors of other men, living and dead and that I must exert myself in order to give in the same measure as I have received and am still receiving.Opposition and ParallelismFactors that contribute to particularly good antonym pairings may relate to more than just the two items semantic oppositeness; for instance, the pairing of increase and decrease is supported by their rhyme and the perception of a parallel morphology, as well as their semantic opposition.Three Types of AntonymsLinguists identify three types of antonymy: (1) Gradable antonyms, which operate on a continuum: (very) big, (very) small. Such pairs often occur in binomial phrases with and: (blow) hot and cold, (search) high and low. (2) Complementary antonyms, which express an either/or relationship: dead or alive, male or female. (3) Converse or relational antonyms, expressi ng reciprocity: borrow or lend, buy or sell, wife or husband.The Lighter Side of AntonymsA man in the Land of the Houyhnhnms,Had a large collection of antonyms;He would say, This is great!Theyre in pairs, so they mate,Unlike synonyms, and, of course, homonyms.(W. S. Brownlee) Pronunciation AN-ti-nim Source: Tom McArthur, Antonym. The Oxford Companion to the English Language. Oxford Univ. Press, 1992. Steven Jones et al.,  Antonyms in English: Construals, Constructions, and Canonicity. Cambridge University Press, 2012. Albert Einstein, The World As I See It, 1931. Cormac McCarthy, The Road. Knopf, 2006.

Essay Truth about Teen Pregnancy - 1285 Words

1. Although the rate of teen pregnancy in the United States has declined greatly within the past few years it is still an enormous problem that needs to be addressed. These rates are still higher in 1993 then they were in 1963. In 1963, the case of Abington vs. Schempp, the United States Supreme Court banned school prayer and bible reading in school. Since then our nation has experienced increasing pregnancy rates. (Bennett, 1). 2. Birth rates for unwed girls from the ages 15-19 have now increased every year since 1963. Latest 1993 figures showed 45 births per 1,000. Additionally, birth rates for girls ages 10-14 have increased 553% since the removal of religious principles from our schools. (Bennett, 1). Nationwide more than†¦show more content†¦(ADAM Inc., 3). This is true with a study in 1999 showing that sexual activity amongst teens under 15 years of age has increased. (Christian Science Monitor, 1). Planned Parenthood officials believe thats because Europeans talk to their teens about sex differently from Americans; viewing it as a public health issue rather than a moral, religious, or political matter. And how officials are planning to take the Europeans blunt is mater-of-fact and sometimes a humorous approach to teen sexual health. For European youth, its clear in their minds that sexuality and sexual relations are a normal, healthy part of being a human, and its not something you d o when you are young. (Nairn, 1). European teens are taught that sex is a healthy part of who you are, but it has responsibility. Europeans have accepted that most young people are not going to wait until marriage to have sex. Opinion polls have shown that 80% of young people will have an intimate sexual encounter by age 20, and that 90% of couples have not waited for marriage. (Nairn, 2). I think it is morally wrong to send teenagers into the adult world without the knowledge and values to deal with sexual issues and responsibility. Parents must take an active role and be open to their children talking to them about sex and what can happen when they are careless about it. 4. Every year 3 million, about 1 in 4 sexually experienced teens acquire a Sexually Transmitted Disease (STD). The 2 highest knownShow MoreRelatedEssay on Teen Pregnancy1041 Words   |  5 PagesIt has been said that teens across the world have not been receiving enough sex education. This has led to many issues with teens becoming pregnant, which most of the time is unanticipated. Teenage pregnancy has been a social problem throughout the world for a number of decades now. Many studies have been completed in several countries that pertain to the amount of teens and the types of teens who are becoming pregnant. Rates among teens had been declining for some time, but are starting to takeRead MoreKendra Shipley. Ms. Carico. Senior English. 8 May 2017.1559 Words   |  7 Pagestake birth control while they are still in high school. â€Å"†¦ teen pregnancy is a serious problem in the United States.† (â€Å"Teen Pregnancy†). Girls should be allowed to take birt h control because girls and guys are obviously going to mess around in high school; therefore, birth control provides a safe way for teenagers to have sexual intercourse. If they are going to do it, they should undoubtedly be protected. There are many easy ways for a teen to obtain birth control. For instance, birth control is freeRead MoreCauses and Effects of Teenage Pregnancy Essay813 Words   |  4 PagesThe Truth about Teenage Pregnancy Outline I. Introduction II. Body A. Causes 1. Lack of sexual education 2. Lack of communication between the parents and teens a. Weak relationship b. Too strong of a relationship 3. Drugs 4. Trends a. Social b. Media 5. Abuse B. Effects 1. Unwanted/ unplanned pregnancy 2. Abortion 3. Neglect/ Child abuse 4. Complications a. Maternal deaths b. Birth defects 5. Incomplete education Read MoreShould All Schools Adopt More Sex Education?1748 Words   |  7 Pages Although These classes show a lot of improvement in having great results because they can teach the students about teen pregnancy and reduce these statistics However these classes have a lot of potential because they can teach the students things like reducing teen pregnancy ,Reduced disease like HIV/AIDS, Understanding that it’s a struggle having a kid while still being in school,and lastly debunking myths sexual references . Should all schools adopt more sex education classes inRead MoreTeenage Pregnancy and the Media Essay1531 Words   |  7 PagesThere is a great debate on whether or not mass media has an influence on teenage pregnancy. A study done by the RAND Corporation shows that teens are twice as likely to have sex or engage in sexual acts if they see similar sexual behavior in the media. Many objects in the media that involve sex target teens. Reality TV shows and teen dramas often portray the cool kids as the ones who are having sex (Chandra).Today’s teens are highly influenced by what they see in the media and this can change theirRead MoreTeen Pregnancy and Graduation Rates1175 Words   |  5 Pages Teen pregnancy is surprisingly decreasing over the years. According to Farber, â€Å"the most recent studies have shown that there has been a decrease in the rate of pregnancies among all teenagers and among sexually active teenagers (16). Although this issue seems is decreasing this is still a problem faced by many teenage girls today. Each year, 7.5 percent of all 15-19 year old women become pregnant (Maynard 1). Not only does this issue affects the pregnant teen but it also affects the economy. TeenRead MoreSex Education Are Essential For Teens1479 Words   |  6 Pagescontroversial but extremely important topic. Yet, we are doing very little to address it. Teaching sex education in schools are essential for t eens to help build a strong foundation of sexual health. Although sex education must begin at home, some parents feel uncomfortable talking about the topic with their children and they believe teaching their children about sex can end up encouraging them to engage in sexual intercourse. Due to that, parents and schools try to emphasize the importance of abstinenceRead MoreWhy Abstinence Programs Don t Work1368 Words   |  6 Pagessexually active and most teens have never had sexual intercourse† (stats and facts). Most teens in the u.s. are choosing to be abstinent. It helps to prove that abstinence programs are working in the u.s. â€Å"in 2006 and 2007 there was a slight increase in teen births (+3% in 2006) teen birth rate resumed its decrease in 2008†(stats and facts).The birth rates went up and then came back down. Abstinence programs do work in bringing down birth rates. â€Å"can avoid facing an unplanned pregnancy when you are abstinentRead MoreShould Society Support Pregnant Teens Essay947 Words   |  4 Pagesto treat a teen that is pregnant? The answer is no, we should not stop the financial and emotional support of pregnant teens but in the same sense we should not increase the financial support. Who is to say that the baby should suffer from the choices the mother made? It is important that throughout the pregnancy a teen has an adult to look up to and ask for help. This will insure the mothers health and reduce stresses during pregnancy and the babies health during and after pregnancy. WhenRead MoreAbstinence-Only Education Is Harmful to American Teens Essay1410 Words   |  6 Pagestransmitted diseases and unwanted pregnancies, abstinence-only instruction should not be the only form of sex education taught. Our youth need to know about all aspects of sex. This intails how to protect them if they choose to become sexually active, where to go in case of unplanned pregnancy, what options are available and proper boundaries, which includes the right to say no. Sex may also be a subject some parents may not feel comfortable talking to their children about, as well as, important issue

Mercury Reader free essay sample

The ad that I have picked to analyze is the Hyundai Santa Fe â€Å"Big Game Ad†. The first time I ever saw this ad was on Pandora. com, and then once again in class as we were discussing different ads. This ad was also one of the ads that aired during the super bowl of 2013. This is a commercial about a boy who is bullied by a few other boys and is challenged to a football game. This commercial portrays the â€Å"underdogs† as winners because they are driving the new Hyundai. A few of the fifteen basic appeals this ad uses includes the need to aggress, need to achieve, need to dominate, and lastly, the need for autonomy. This commercial starts with a little boy who is playing with his football when a group of bigger boys come and take it from him. The little boy tries to get it back, but they tell him â€Å"come back when you have a team†. The boy decides to accept the challenge from the other boys. Soon after accepting the challenge, he runs into the house to get his mother. Then together, they get into the Hyundai they put their game faces on and start making rounds to get the little boys friends. The first two boys they stop to pick up are lifting weights in his driveway as they drive up. The two boys share similar qualities such as hair color so I’m assuming that they are brothers. They appear to be lifting a large amount of weight on the outdoor gym set. The next stop they make is to a garage to pick up a boy who is working on a car using fire with his dad. The fourth boy they stop to get is wrestling with a big grizzly bear. There is a huge crowd around the boy as he has the grizzly bear in a headlock using his legs. The last boy they picked was carrying a fully-grown man out of a burning building. After picking up all of the little boys in the Hyundai, the mother drops them off to play football with the group of bigger boys. The bigger boy from the beginning of the commercial who took the little boys football asked the smaller group if they wanted to play touch football or tackle. All of the smaller boys replied in unison that they preferred to play tackle football. After the boys reply, there is a voice over part providing information about the car being advertised. After this part, the commercial goes back to the two groups of boys and we see one of the smaller boys kick the ball, which ends up hitting one of the bigger boys in the head. This Hyundai commercial uses ethos and pathos very well. Pathos is used the most in this commercial because it makes people laugh and feel a sense of pride when the group of bigger boys gets what they deserve. Some people have even gone so far as to say that this is also an anti-bullying commercial. Ethos is displayed here because the Hyundai Car Company is one of America’s most trusted car companies. Hyundai is known for their safe, family friendly, comfortable, stylish cars. This particular Hyundai commercial uses four of the 15 basic appeals. It uses the need to aggress and we see this in two instances. The first instance we see the need to aggress is when the group of big boys takes the little boys football and will not give it back to him. The second instance we observe is when the smaller boy kicked the ball and hit the other boy in the head. The next basic appeal shown here is the need to achieve. The Hyundai car company wanted to achieve making the viewers want this car. They want everybody who sees this commercial to need this car because it will somehow better their current â€Å"self† because this car is such a success. The third basic appeal is the need to dominate. This occurs when the group of big boys take the smaller boys football. They feel the need to appear and feel more powerful than the smaller boy. We also see the need to dominate when one of the little boys is wrestling with a grizzly bear and is winning. The Hyundai Company wants us to feel that we are dominant if we are driving this car because it is bigger and better than all the rest of the cars out there. The last of the basic 15 appeals that is being portrayed in this commercial is the need for autonomy. The commercial sells the independence of the vehicle and that you can have it your way and don’t need to be a particular type of person to have this car. For example, all of the boys were tough; however, they are not all the same type of tough. One boy was fighting a bear, another was rescuing people from a burning building, and the other two were lifting weights. Gender roles in this commercial are very set. The commercial has all boys casted with the exception of the mother. The mother does not have any lines, and we only see her driving to pick up the other boys. The mom does; however seem to have an attitude. When we first see her driving, she does have her game face on, along with her son. Gender roles of the boys here is very masculine. The boys are playing football, which is known to be a sport for men, as opposed to playing soccer or maybe even tennis, which is not uncommon for women to play. The boys appear very strong, muscular, and athletic, unlike many other nine-year-old boys. All of the male roles in this commercial show boy as the dominant and strong gender due to their rugged appearance. The target audience is parents with lots of kids or parents who drive many kids around very often. The target audience also includes middle class families who can afford tis car. This Hyundai is not very expensive at all and it actually looks like the people who are riding in this car comes from an upper middle class family. In the commercial, we get a quick glance at the house the little boy lives in. It appears to be a nice family house with a garage with the Hyundai in the driveway. It looks like this family lives in the suburbs with a local park nearby where the boys were playing football. In the background of the park, there are many nice cars parked on the street and driving along the road. The clothes chosen for the actors to wear are nothing fancy, but definitely aren’t inelegant. All of the boys are wearing sneakers, maybe not name brand sneakers, but they are in good condition. They are also all wearing denim jeans and either a plaid shirt and tee shirt or just a regular shirt with a jacket. We only see the mothers’ upper half and she is wearing a nice grey sweater. The only other people in this commercial are the men gathered around the little boy wrestling the bear and the people being rescued from the fire. Those other people featured in this commercial are also just wearing jeans and a tee shirt or a plaid shirt. To some people, this Hyundai commercial may be very effective, but to me it is not effective at all. This commercial is very funny and entertaining and I love watching it, but that’s all it is. As I watch this commercial I pay attention to the story of the boys and not the car they are riding in. this ad is so ineffective that I after watching it several times, I couldn’t even remember what car company this ad was for. This commercial is not centered on the car, as opposed to the Volkswagen Beetle Convertible. The Beetle Convertible commercial is very entertaining and focuses on the car itself. The storyline ties into the fact that the car is a convertible. The Hyundai Company could take a note or two. It surprises me that some people are saying that this commercial is about bullying. I can see how they came to that conclusion. The little boy was being picked on by seven other boys who were much bigger and also appeared to be older. Even when the little boy showed up with his team, they were all still smaller in stature than the other group so it still appears that the smaller group is being bullied. Although the smaller group of boys was tougher than the other group, the bigger group was still picking on the smaller boys, however I don’t believe this commercial was targeting the issue of bullying. The Hyundai Santa Fe car seems like a nice affordable car with great features such as seating up to eight people comfortably. The â€Å"big game ad† commercial was very funny and entertained many people during the super bowl, however this ad was not very effective. The ad could have focused more on the car and less on the boys. If their goal was trying to leave a memorable impression, then they most certainly accomplished that, but if their goal was to make people remember the car, they failed.