Urban Outfitters

Executive Summary: Urban Outfitters ope marks specialty apparel, accessories and home goods sell stores under the brand names of Urban Outfitters, Anthropologie, Free heap, Terrain, Leifsdottir and BHLDN. It as well as operates wholesale stores under the brand names of Free good deal and Leifsdottir brands. The company is headquartered at Philadelphia and has 6,432 employees. It is listed at NYSE and shares under inwardness URBN1. In this report we evaluate a capital budgeting delve which the company wishes to under run into. We first calculate the WACC for the company by nip at the capital structure of the company. We then calculate the cash flows of the project and use the WACC as the discounting rate. In order to conduct the project fillance/rejection decision, we calculate the payback period, net take quantify, and cozy rate of make it, modified internal rate of offspring and profitability index. Based on these decision parameters, we undertake the use up/reject decision for the project. WACC Calculation Capital structure We first augur the capital structure weights based on the trade values. From the eternal sleep sheet of the company, we find that Urban uses plainly common loveliness for its long term capital needs. It has a line of reference book but has not utilized it for any amount.

The WACC would only be the cost of equity. appeal of paleness We calculate the cost of equity using as an just of the cost based on CAPM, DCH and deposit yield nonnegative risk premium approach 1. CAPM at a sink place CAPM, cost of equity is calcu lated as Cost of equity = Rf + (Rm-Rf) of ! import where Rf = risk unfreeze rate which is interpreted as the long term rate to match the due date of the project. Since the project is 8 years, we take the 10 year exchequer bond rate as the risk free rate. The occurrent 10 year Treasury bond rate is 2.32% (Rm -Rf) is the market risk premium and is assumed to be 5.5% Beta value is taken as the average beta of the figures available from Yahoo, MSN funds and Reuters Source...If you want to get a replete(p) essay, order it on our website: BestEssayCheap.com

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