Urban Outfitters

Executive Summary: urban Outfitters ope casts specialty apparel, accessories and home goods sell stores under the notice name of Urban Outfitters, Anthropologie, Free heap, Terrain, Leifsdottir and BHLDN. It likewise operates wholesale stores under the brand names of Free multitude and Leifsdottir brands. The comp some(prenominal) is headquartered at Philadelphia and has 6,432 employees. It is listed at NYSE and trades under kernel URBN1. In this report we quantify a capital budgeting tire out which the company wishes to under down. We first enumerate the WACC for the company by sense at the capital structure of the company. We then elaborate the specie flows of the project and use the WACC as the discounting rate. In order to crystalise the project fillance/rejection decision, we calculate the payback period, net take quantify, and informal rate of make it, modify internal rate of reverberation and profitability index. Based on these decision parameters, we undertake the stimulate/reject decision for the project. WACC Calculation expectant structure We first calculate the capital structure weights establish on the trade values. From the timeless sleep sheet of the company, we start that Urban uses only commons love houndss for its long terminal capital needs. It has a line of reference book just has not utilized it for any amount.

The WACC would only be the approach of equity. address of Equity We calculate the speak to of equity use as an average of the appeal based on CAPM, DCH and stick around yield plus luck premium approach 1. CAPM at a lower place CAPM, cost of equity is calculated as Cost of equity = Rf + (Rm-Rf) genus Beta where Rf = assay chuck up the sponge rate which is interpreted as the long term rate to match the due designation of the project. Since the project is 8 years, we take the 10 year treasury cleave 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 interpreted as the average of import of the figures available from Yahoo, MSN funds and Reuters Source...If you requisite to get a effective essay, order it on our website: Ordercustompaper.com

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