Therefore the risk free rate is most likely slightly higher than would be if a ten-year treasury bond was used to determine the risk free rate.
Part 4:
You are having second thoughts about your choice of a proxy company and are concerned that a wrong choice may impact on the investment decision. To alleviate your fears (and those of the board) you run a sensitivity analysis to see how changes in the beta estimate affect your investment choice. You include this analysis in your report to the board and discuss the implications of you analysis.
Since the calculations used in the previous section were based off of a historical figure of beta that represents more of a conglomeration than just a grocer it is necessary to consider what would happen if the beta was incorrect. Since both organizations are at least remotely similar in their scope of operations a deviation of twenty percent error in should be sufficient to determine the sensitivity of the beta to such a miscalculation. Therefore an analysis can be conducted using betas of .74 (.93 * 80%) and also .84 (.93 * 90%). Since the beta is remarkably close to 1, it is unreasonable to suspect that the beta value was underestimated and hence the analysis should consider an overestimation by both ten and twenty percent.
Holding the variables used in the previous calculation constant (cet. par.) and changing the beta to .74 would result in a discount rate of roughly eleven and a half percent (11.52%). This would result in the discount rate being a full percentage point higher than previously estimated. If the beta value was only off by ten percent, then the discount rate would be roughly half a percentage point (10.82%). Since the Wesfarmers holdings are reasonably more diversified than the AusGrocer's holdings, it's reasonable...
Harley-Davidson Retail Sales and Deliveries Source: Seeking Alpha (2007) Over the past four years, account receivable growth has outpaced sales and the result is there is more inventory on dealer's lot than at any time in the history of HOG. The analysis states: "If the additional dealer inventory build was taken out of Harley's EPS from the previous two years and shipments evenly distributed throughout the quarters then Harley would have reported
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Apple Inc. Investment Analysis and Recommendations Apple Inc. is an American multinational company specializing in designing and producing mobile telecommunication devices that include iPhone, computer software and hardware, Apple TV, Apple Watch, iPod, and other electronic devices. Apple was incorporated and publicly registered in 1977. Headquartered in California, Apple is one of the most successful American companies in term of revenue with the annual revenue reaching $233.7 billion at the end
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