Cost of Capital of Home Depot - 2570 Words

1. Company Introduction Established in 1978 by Bernie Marcus and Arthur Blank, the Home Depot Corporation opened its first store in Atlanta, becoming the world’s largest home improvement retailer. They are now the second largest retailer in the United States, offering 40,000 to 50,000 different types of home improvement supplies, building materials, and lawn and garden products. They carry a wide assortment of low-cost products, and offer expert advice and exceptional customer service. As an innovator of the home improvement industry, Home Depot has expanded into Canada, Mexico, Argentina, Chile, and Puerto Rico. Currently there are 1,459 stores including fifty EXPO Design Centers, one Floor Store, and three Home Depot Landscape†¦show more content†¦The average tax rate is 0.3859. Our estimation for the firm’s after-tax cost of debt is about 2.25%. The analysis of the cost of debt is summarized in Appendix D. 5. Weighted Average Cost Of Capital In estimating the weighted average cost of capital, we used the cost of equity of 11.63% and the cost of debt of 2.25%. We calculated the weight of debt to be 2% and the weight of equity to be 98%. For the weight of debt we divided debt by the sum of debt and equity, and for the weight of equity we divided equity by the sum of debt and equity. Our estimated Company’s cost of capital is 11.44%, or 12%. The calculations for the cost of capital are shown in Appendix E. Appendix 1. Income Statement Period Ending: 3-Feb-02 28-Jan-01 30-Jan-00 31-Jan-99 Total Revenue $53,553 $45,738 $38,434 $30,219 Cost Of Revenue $37,406 $32,057 $27,023 $21,614 Gross Profit $16,147 $13,681 $11,411 $8,605 Operating Expenses Research And Development N/A N/A N/A N/A Selling General And Administrative Expenses $11,098 $9,348 $7,503 $5,935 Depreciation and Amortization N/A N/A N/A N/A Non Recurring $117 N/A N/A N/A Other Operating Expenses N/A $142 $113 Operating Income $4,932 $4,191 $3,795 $2,670 Total Other Income And Expenses Net $53 $47 $37 $30 Earnings Before Interest And Taxes $4,985 $4,238 $3,832 $2,700 Interest Expense $28 $21 $28 $46 Income Before Tax $4,957 $4,217 $3,804Show MoreRelatedManagement Science1641 Words   |  7 Pagesratios in case Exhibit 7 tell you about the operating performance of Home Depot? What additional information do the different ratios provide? Complete and compare a similar analysis for Lowe’s. 2. How sensitive is return on capital to the forecast assumptions in case Exhibit 8? What independent changes in Carrie Galeotafiore’s estimates are required to drive the 2002 return-on-capital estimate below Home Depot’s cost-of-capital estimate of 12.3 percent? Look specifically at gross margin, cashRead MoreBackground Of Home Depot, Economy, And Outlook For The Future1736 Words   |  7 PagesBackground of Home Depot, industry, economy, and outlook for the future The Home depot is considered the largest home center retailer in the US. They have four hundred and seventy-eight warehouse and also stores. The Home Depot sells approximately forty thousand different inventory for the company known for its do it yourself home improvement. The Home Depot became incorporated around 1978 (Depot, 1990). The Home Depot had backing from a capital firm in New York, the Home Depot opened its firstRead MoreFIN515 Second Course Project1093 Words   |  5 Pagesï » ¿ Weighted Average Cost of Capital: Home Depot, Inc. Second Project FIN515 – Managerial Finance Instructor: Prof. David Eichenholtz Group: John Okogeri Fiona Harrison-Butts Haider Chaudhry Mia O’Blenis Christopher Cardenas Date: April 5, 2015 TABLE OF CONTENTS Introduction 3 company profile 3 WACC calculation 4 explanation of calculation/results 5 Limiting factors 5 Conclusion 6 references 7 Weighted Cost of Capital: Home Depot, Inc. Introduction The purpose of thisRead MoreYou Work in the Corporate Finance691 Words   |  3 Pagesfinance division of The Home Depot and your boss has asked you to review the firm’s capital structure. Specifically, your boss is considering changing the firm’s debt level.Your boss remembers something from his MBA program about capital structure being irrelevant, but isn’t quite sure what that means. You know that capital structure is irrelevant under the conditions of perfect markets and will demonstrate this point for your boss by showing that the weighted average cost of capital remains constant underRead MoreValue Line Publishing Essay900 Words   |  4 Pagesthat shows Home Depot in an positive light. It also prepares to do the same with an analysis of Lowes. She supports the changes proposed by the new Home Depot CEO and that would play a role in improving Home Depots financial health in the home center and building industry. Galeotafiore supports her by mentionin g a number of sources that would help the growth of the two companies. She mentions the recent consolidation throughout the building industry with both Lowes and Home Depot acquiringRead MoreFin 516 Mini Case Week 2 Essay731 Words   |  3 PagesHome Depot Fiscal year end of Jan. 29, 2012 1. What is the name of the company? Home Depot. What is the industry sector? Home Improvement Retailer. 2. What are the operating risks of the company? * Uncertainty regarding current economic conditions. * Competition. * Timely identifying changes in demand. * Relationships with suppliers and disruptions in the supply chain. * Failure of key information technology or process; including customer facing and privacy disruptionsRead MoreRate Of Return For A Project913 Words   |  4 PagesBrigham, 2017, p. 9). IRR â€Å"measures the rate of return on a project, but it assumes that all cash flows can be reinvested at the IRR rate† (Ehrhardt and Brigham, 2017, p. 809). Since the IRR is greater than the WACC, the project should be accepted. Capital Budgeting Data: Difference According to Ben-Horin and Kroll (2017, p. 6), â€Å"NPV ranks investment projects by their amount of value creation.† In addition, NPV is considered the predominant measure to be used when considering the acceptance or rejectionRead MoreDescription Of The Home Depot Essay1293 Words   |  6 PagesDescription of Firm and Business Model The Home Depot, which was founded in 1978, has established itself as the largest home improvement retailer in the world, earning them the 28th rank on the Fortune 500 list. They boast an impressive 2,200 stores, 385,000 associates and reported annual revenue of $88.5 billion in 2015. Mission Statement Vision Long Term Objectives These impressive statistics suggest a meaningful and powerful vision and mission. The Home Depot vision originated with Bernie MarcusRead MoreHome Depot1422 Words   |  6 PagesTeam Project #1 Home Depot, Inc. in the New Millennium (HBS 9-101-117) Question 1. Assess Home Depot’s financial performance from 1986 to 1999. What explains the decline in performance in 2000? (See Question #1 Exhibit) The slowing economy in 2000 combined with Home Depot’s aggressive expansion efforts was the reason for Home Depot’s poor financial performance. Between June 1999 and May 2000, the FED had raised interest rates six times – or a total of 1.75 percentage points – in an effortRead MoreHome Depot And Building Improvement Materials913 Words   |  4 PagesCompany: Home Depot is a full service retail warehouse, which specializes in home and building improvement materials, installation, and maintenance. Additionally Home Depot owns websites that sell high-end designer decoration items and window coverings. Home Depot uses a multi-step income statement and does not have any short-term investments. Since the financial statement for 2016 became available after the class started, I focused on the fiscal year 2015 financial statement. Inventories: The

Marketing Strategy - 5180 Words

Executive Summary Pensonic company is founded by Dato chew Weng Khak in 1982. The vision of Pensonic company is becoming the successful Asian brand. Pensonic set to deliver product and service in meeting customers satisfaction as their mission. The objective for the company is to become the worldwide well known household appliance brands. Basically, Pensonic target on the niche market. They mainly focus on one product line which is home appliances. The marketing mix is the most fundamental elements that needed to operate a company. Pensonic introduce a green product which is a mini portable fridge need to consider all the factors in term of the quality, safety, design, packaging and so on. After a new green product is†¦show more content†¦Target marketing strategy that use by Pensonic Holding Bhd are Concentrate (niche) marketing. Their selling categories are blender, electric kettle, electric oven and air conditioner and other are most categories in home appliance. So their primary consumer targeted are family is in the middle-upper income professional because they are often use the product that offer by Pensonic. This concentrate marketing strategy can enable them to earn more profit but also suffer greatly if the segment turns sour. MARKETING MIX PRODUCT STRATEGY Basically product is anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a want or need. Nowadays there many products with different brand, in order to identify a product in the market it need product identification which consist of branding, packaging, symbol and others. Besides, a product also must solve consumer problem and benefit them. Pensonic had offer many home appliance, in this case we are focuses on doing research for one the Pensonic product which is Pensonic portable mini fridge for the masses because it is an indispensable home appliance for many people. Product planner need to think about the three levels of the product which are core benefits, actual products and augmented product. The core benefits of Pensonic portable mini fridge are easierShow MoreRelatedCorporate Responsibility and Marketing Strategies1838 Words   |  8 Pagesï » ¿ Corporate Responsibility and Marketing Strategies Wanda Joyce McGhee Dr. Malinda Swigart Business 508 July 13, 2014 Corporate Responsibility and Marketing Strategies There is no question that Apple is a remarkable company. In addition to its business turnaround, its innovative design, and its media content and apps, the unadulterated  sexiness of all its products makes Apple hard to resist. For me, what isn’t hard to resist, is asking: How can a company that is this extraordinaryRead MoreThe Marketing Strategy Of Walmart1496 Words   |  6 Pagesrecognition by consumers escalate to never before seen heights. 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Atlantic Revolution Free Essays

Nationalism and revolution often go hand in hand. Yet, while nationalism might lead to revolution, and perhaps national independence, it is much broader than revolution, and one should not be confused with the other. â€Å"All nationalists believe that nations can be identified by certain characteristics that all its citizens hold in common. We will write a custom essay sample on Atlantic Revolution or any similar topic only for you Order Now These characteristics include the linguistic, ethnic, religious, or historical traditions that make a nation distinctive. All nationalists†¦are linked across time by [a common] language, literary tradition, and history† (Gelvin 2011). Atlantic Revolution What the American Revolution had in common with the Atlantic Revolution is that it wasn’t one single event or conflict that lead to uprisings everywhere. They were interconnected sharing common political vocabulary and strong democratic character† Where the American Revolution sought to create a new republic the Atlantic republics wished to recreate a new society from scratch. The American Revolution started a Trans-Atlantic Age revolution. Discovery of the New World It all began with the discovery of the New World by Columbus is 1492, which happened on behalf of Castile which was the Spanish crown. Prior to this discovery Europe had switched from the Feudalist system to the Capitalist system. Nationalism in Europe fueled the desire to control colonies in Asia and Africa. Finding a new route to the orient was the goal, when the Americas were discovered. The â€Å"Atlantic revolution,† was the redirection of trade routes brought about by the great geographic discoveries. The Atlantic revolution, however, did not so much replace the old lines of medieval commerce as build upon them† (Britannica). The European merchant capitalism formed a framework that became a joint venture for Europe, Americas and Africa. One that was founded upon coerced labor in which all contributed to the vast complicated network known as the Atlantic economy. â€Å"While not equal in power, each was critical in the contribution to the construction of the Atlantic world†(Benjamin 2011). Atlantic World By 1607 the first English settlement in America was set in Jamestown Virginia. Only Seven out of Ten settlers remained in the New World, due to starvation, harsh living conditions and wars with the Natives. The natives who had traded food for death were fighting two enemies disease and setters. Diseases such as malaria, small pox, scarlet fever and influenza wiped the Natives out. Creating a shortage of labor in the creation of the New World. When Columbus first arrived, he brought Horses. These horses were traded to Native Americans which helped change the face of hunting forever. This allowed the Natives to move from hunting parties requiring several men that lasted days to one hunter on horseback. The New World gave the Old World tobacco, cocoa, beans, tomatoes, corn and potatoes. Both Corn and potatoes became the food of the poor after Europe came out of the epidemic known as Black Death. Although no cure for the countless diseases on both sides of the New and Old Worlds. The retreat of the plague left Europeans with only war, hunger and a raft of other infections to deal with. † Economy The Columbian Exchange brought the Europeans wealth and power. The combined animal and plant products from the Indies exceeded gold and silver in value. While it brought the native Americas an unequal exchange of food for diseases that caused entire Indian cultures to vanish. The Columbian Exchange brought the Africans to other countries; discovered by the Portuguese searching for gold, later kidnapped later to be bartered and sold into slavery to satisfy Europeans unquenchable taste for goods. While the Columbian exchange had life changing positive and disastrous ending negative effects on four continents and three branches of humanity. Ecology became destiny determining who would thrive and who would die. Tobacco John Rolfe was an entrepreneur, who dared to sail to the Americas. He landed in Chesapeake Bay, with a dream and some tobacco seeds. He planted them and a crop grew that was worth One Million United States currency of today. August 1619 the first permanent African involuntary labors arrived to care for the tobacco crops. Slavery did not exist at this point in time, Later another One Thousand settlers arrived with Twenty African indentured servants. â€Å"The black indentured servant, with his hope of freedom, was increasingly being replaced by the black slave. â€Å" In 1705, the Virginia General Assembly removed any lingering uncertainty about this terrible transformation; it made a declaration that would seal the fate of African Americans for generations to come†¦ â€Å"All servants imported and brought into the Country†¦ who were not Christians in their native Country†¦ hall be accounted and be slaves. All Negro, mulatto and Indian slaves within this dominion†¦ shall be held to be real estate. If any slave resist his master†¦ correcting such slave, and shall happen to be killed in such correction†¦ the master shall be free of all punishment†¦ as if such accident never happened. † (PBS) â€Å"The Body of Liberties, recognized the enslavement of Africans as not only legal but also moral in 1641† (Code Noir 2008). Slave Revolution When the first record of blacks arrived in US history it was in Virginia in 1619. The Colonists used words like, black skin and connoted words like â€Å"soiled, dirty†¦ horrible, wicked to describe the blacks, while white skin connoted â€Å"purity, beauty, and goodness. â€Å"About 1860 racism reared its ugly head when white settlers started referring to themselves as white. As time progressed, harsh, brutal treatment of the Negro, the African American, the Black, was based on the dehumanizing of this person, and asserting white supremacy. † (Sanders) Unable to swallow the idea that a black man could be their equal, the American White Anglo-Saxon took steps to make sure that equality just didn’t happen. As early as 1740 laws were passed that punished, by death, any act of rebellion Negro slaves committed or any act against a white person that resulted in grievous wounds, bruises, or maiming, without benefit of trial. French Colony of Saint Domingue The French had the slave system down to a science knowing that the average rate per slave was three years. This inevitable death sentence, sparked a revolution within the slaves themselves. The French Revolution sparked, the most famous revolution which began in the French colony of Saint Domingue later known as the country of Haiti. The Haitian revolution lasted for twelve years, under the leadership of Toussaint L’Ouverture. The revolution took a turn when the slaves acquired guns from the neighboring Spanish and used them to fight off the British, French, and Spanish defeating 60,000 soldiers. The revolt caused Britain and France to abandon slave trade, making One Million black slaves French citizens in 1794. The French-Haitian Revolution What Nationalism and Revolution tell us about the role of slavery in the Atlantic World was what was done to justify slavery. In 1831 a Slave revolt lead by Nat Turner was used as reason to continue slavery. The whites were far outnumbered which was why The Haitian Revolution was kept quiet. For this reason, white Frenchmen were not permitted in Cuba for fear that they tell the story of the revolt in Haiti. One Million black slaves became French citizens in 1794 and when Napoleon tried to reinstitute slavery in 1802 things did not go well. Ultimately, Catholicism was used to try to de- Africanize the slaves, the colony wished to assimilate them culturally in order to continue their subjugation. American Revolution The American Revolution affected slavery by creating new ways for the slaves to be free. People started questioning slavery on all sides. The Americans won their independence from the British but the most vital area that America needed to address was the one of racial segregation. The primary cause of the civil war was slavery, and States’ rights. The Americans celebrated when the French overthrew its Absolutist monarchy. Sanctioned violence in France overflowed to the borders of Great Britain where they remained at war until 1815. Once the British war with France began depleting the British treasury. The war known as the French and Indian War is also known as the Seven Years War. The depletion of the treasury caused Britain, who decided the colonies had grown fat under their not so watchful eye to tax the Colonists on goods that had not previously been taxed. The Stamp Act of 1765, caused Parliament to take action, deciding that the colonies needed to contribute to their own defense. That action was followed by the British action to tax the Colonists on goods that had not previously been taxed. The final blow came when British forced the colonists to house and feed British soldiers. These collective actions made the colonists angry. The Colonists were without a representative in Parliament to peak for them. From these collective actions the phrase, no taxation without representation was born. Attempting to further cripple the colonists attempts for independence the English outlawed production of an American currency – and forced the colonies to borrow from British banks at high interest. John Adams stated that,† The revolution was effected before the war commenced. The revolution was in the minds and hearts of the people. † (Adams, 2010) Conclusion The American Revolution and Atlantic Revolution wasn’t one single event or conflict that lead to uprisings everywhere. They were interconnected sharing common political vocabulary and strong democratic character† While Nationalism and revolution often go hand in hand nationalism might lead to revolution, and perhaps national independence. Granted, â€Å"All nationalists believe that nations can be identified by certain characteristics that all its citizens hold in common. These characteristics include the linguistic, ethnic, religious, or historical traditions that make a nation distinctive. All nationalists†¦are linked across time by [a common] language, literary tradition, and history† (Gelvin 2011). How to cite Atlantic Revolution, Papers