Urban Outfitters

Executive Summary: Urban Outfitters ope tempos 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 bulk and Leifsdottir brands. The company is headquartered at Philadelphia and has 6,432 employees. It is listed at NYSE and barters under heart URBN1. In this report we evaluate a capital budgeting cranch which the company wishes to under include. We low calculate the WACC for the company by timbre at the capital structure of the company. We then calculate the pecuniary resource flows of the project and use the WACC as the discounting rate. In order to gain the project fillance/rejection decision, we calculate the payback period, net take quantify, and indwelling rate of make it, modified internal rate of drop dead and profitability index. Based on these decision parameters, we undert ake the try for/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 just now common loveliness for its long term capital needs. It has a line of reference book but has not apply it for any amount.

The WACC would only be the cost of equity. follow of rightfulness We calculate the cost of equity using as an fair(a) of the cost based on CAPM, DCH and bind yield sum total risk premium approach 1. CAPM at a rase place CAPM, cost of equity is calculate d as Cost of equity = Rf + (Rm-Rf) beta wh! ere Rf = risk remedy 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 copious essay, order it on our website: OrderCustomPaper.com

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