Here is the synopsis of our sample research paper on OHLSON AND WACC. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
This 3-page paper compares to financial methods for evaluating a company's value -- the Ohlson Model and the Weighted Average Cost of capital or WACC. The paper also compares the two with each other. Bibliography lists 6 sources.
Page Count:
3 pages (~225 words per page)
File: D0_MTohlwac.rtf
Buy This Term Paper »
Unformatted sample text from the term paper:
In this paper, we will analyze two of such methods -- the Ohlson Model and the Weighted Average Cost of Capital (WACC). As with many evaluation methods, neither of these
is good or bad -- using them basically depends on the circumstances in which an analyst is attempting to evaluate the value of a company.
In order to define what, exactly WACC entails, it would be helpful to examine what cost of capital entails. We talk about cost of capital, what
we are talking about is the amount of capital invested in order to provide a return on investment (Hamm, 2002). For example, if the firm has a cost of capital
of 12 percent, the firm can only have a positive net profit if the returns exceed 12 percent -- and that the firm must earn 12 percent simply to compensate
investors for use of their capital in the particular project (Hamm, 2002). Cost of capital therefore depends on the use of funds, rather than source of funds (Hamm, 2002).
Going one step further therefore, but Weighted Average Cost of Capital is a situation in which the firms overall costs of capital must
reflect a required return on the firms entire assets (Hamm, 2002). If the firm uses of debt and equity financing for example, the cost of capital needs to factor in
the cost of both debt and equity, then wait the proportion of each to the firms capital structure (Hamm, 2002). In another
analysis, cost of capital refers to a discount rate -- or capitalization rate -- typically used by those will want to acquire a company in assessing the value of an
...