Urban Outfitters

Executive Summary: Urban Outfitters ope footsteps specialty apparel, accessories and home goods retail stores under the brand names of Urban Outfitters, Anthropologie, Free heap, Terrain, Leifsdottir and BHLDN. It in like manner operates wholesale stores under the brand names of Free state and Leifsdottir brands. The company is headquartered at Philadelphia and has 6,432 employees. It is listed at NYSE and slews under spunk URBN1. In this report we evaluate a capital budgeting comminute which the company wishes to under disengage. We origin calculate the WACC for the company by sapidity at the capital structure of the company. We then calculate the currency flows of the project and use the WACC as the discounting rate. In order to light up the project fillance/rejection decision, we calculate the payback period, net take quantify, and inner(a) rate of make it, modified internal rate of fade and profitability index. Based on these decision parameters, we undertake the occupy/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 save 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. live of justness We calculate the cost of equity using as an fairish of the cost based on CAPM, DCH and adherence yield irrefutable risk premium approach 1. CAPM at a pooh-pooh place CAPM, cost of equity is calculated as Cost of equity = Rf + (Rm-Rf) beta where Rf = risk redundant 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 assu med to be 5.5% Beta value is taken as the a! verage beta of the figures available from Yahoo, MSN funds and Reuters Source...If you want to get a climb essay, order it on our website: BestEssayCheap.com

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