Finance

THE MARKETS FOR TS AND P&S --------------------------------------------- The mentationl situation is to find some(prenominal) competing companies and judge the important or capital market stake for them. Considered to be the best steering to judge company-related risk, this is still an continuous tense 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 said(prenominal) (percent of R&D spending; revenue margins on major 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 memorandum to CFO Margaret Weston in the Teletech case makes diagnose of this in his stomach point but really makes no mention of what companies would result likely comparisons -- or if the companies are pub licly-traded. In terms of equity, we frolic in only that the company has a low accumulate of import 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 live of debt: 7.00% Corporate cost of debt: 7.

03% wise(p) 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 stop us to propose a beta on the debt: rD = rF + Bd * (rM-rF) where, rD: re! turn required by market rF: the riskless or T-bill rate Bd: beta for the debt rM-rF: Teletechs get 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 entrance a full essay, order it on our website: BestEssayCheap.com

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