Urban Outfitters

Executive Summary: urban Outfitters ope computes specialty apparel, accessories and home goods sell stores under the strike out label of Urban Outfitters, Anthropologie, Free heap, Terrain, Leifsdottir and BHLDN. It in like manner operates wholesale stores under the brand names of Free great deal and Leifsdottir brands. The comp any(prenominal) is headquartered at Philadelphia and has 6,432 employees. It is listed at NYSE and trades under vegetable marrow URBN1. In this report we quantify a capital budgeting fatigue which the company wishes to under perplex. We first engineer the WACC for the company by musical note at the capital organise of the company. We then imagine the bills flows of the project and use the WACC as the discounting rate. In order to unload the project fillance/rejection decision, we calculate the payback period, net take quantify, and internecine rate of make it, special internal rate of topic and profitability index. Based on these decision parameters, we undertake the don/reject decision for the project. WACC Calculation slap-up structure We first promise the capital structure weights establish on the trade values. From the unfading sleep sheet of the company, we identify that Urban uses only green love definess for its long bourne capital needs. It has a line of reference book save has not utilized it for any amount.

The WACC would only be the make up of equity. equal of Equity We calculate the personify of equity using as an average of the cost based on CAPM, DCH and sting yield plus encounter 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 = risk of exposure lighten rate which is interpreted as the long term rate to match the due appointment of the project. Since the project is 8 years, we take the 10 year exchequer mystify 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 beta of the figures available from Yahoo, MSN funds and Reuters Source...If you neediness to get a broad essay, order it on our website: Orderessay

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