Urban Outfitters

Executive Summary: Urban Outfitters ope rates specialty apparel, accessories and home goods sell stores under the brand names of Urban Outfitters, Anthropologie, Free heap, Terrain, Leifsdottir and BHLDN. It alike operates wholesale stores under the brand names of Free quite a little and Leifsdottir brands. The company is headquartered at Philadelphia and has 6,432 employees. It is listed at NYSE and great deals under core URBN1. In this report we evaluate a capital budgeting push which the company wishes to under reward. We inaugural calculate the WACC for the company by tonus at the capital structure of the company. We then calculate the coin flows of the project and use the WACC as the discounting rate. In order to exonerate the project fillance/rejection decision, we calculate the payback period, net take quantify, and infixed rate of make it, modified internal rate of give way and profitability index. Based on these decision parameters, we under take the look at/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 sole(prenominal) common loveliness for its long term capital needs. It has a line of reference book but has not utilise it for any amount.

The WACC would only be the cost of equity. embody of justice We calculate the cost of equity using as an average out of the cost based on CAPM, DCH and perplex yield sum risk premium approach 1. CAPM at a begin place CAPM, cost of e quity is calculated as Cost of equity = Rf ! + (Rm-Rf) of import where Rf = risk uninvolved 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 just essay, order it on our website: OrderCustomPaper.com

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