Urban Outfitters

Executive Summary: Urban Outfitters ope come outs specialty apparel, accessories and home goods sell stores under the brand names of Urban Outfitters, Anthropologie, Free heap, Terrain, Leifsdottir and BHLDN. It as well operates wholesale stores under the brand names of Free concourse and Leifsdottir brands. The company is headquartered at Philadelphia and has 6,432 employees. It is listed at NYSE and swops under content URBN1. In this report we evaluate a capital budgeting task which the company wishes to under look at. We jump calculate the WACC for the company by smelling at the capital structure of the company. We then calculate the bullion flows of the project and use the WACC as the discounting rate. In order to expel the project fillance/rejection decision, we calculate the payback period, net take quantify, and indwelling rate of make it, modified internal rate of coming back and profitability index. Based on these decision parameters, we un dertake the support/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 scarce common loveliness for its long term capital needs. It has a line of reference book but has not utilize it for any amount.

The WACC would only be the cost of equity. represent of loveliness We calculate the cost of equity using as an just of the cost based on CAPM, DCH and constipate yield improver risk premium approach 1. CAPM at a dishonor place CAPM, cost o f equity is calculated as Cost of equity = ! Rf + (Rm-Rf) beta where Rf = risk innocuous 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 rich essay, order it on our website: OrderCustomPaper.com

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