Cost of Capital at Ameritrade Case Solution

Ameritrade Holding Corp. offers significant investments in marketing and technology to improve the competitive position of the company deep discount brokerage emerging enjoy economies of scale. To assess whether the generation of sufficient cash flow to justify the investment strategy, Joe Ricketts, chairman and CEO of Ameritrade, requires an estimate of the capital cost of the project. There is considerable disagreement about the exact cost of capital estimation. A research analyst pegs the cost of capital of 12%, CFO of Ameritrade uses 15% and Ameritrade some officers believe that the rate of 9% of the loan is the rate at which future cash flows are discounted Expected project. There is also disagreement on the type of business that Ameritrade is in. Management insists that Ameritrade is a brokerage firm, while some analysts and managers from other companies online research suggests that Ameritrade is a leading technology / Internet. For calculation sheets executable (tutorials), please contact our customer service at [email protected]
Mark Mitchell,
Erik Stafford
Source: HBS Premier Case Collection
24 pages.
Date of publication October 31, 2000. Prod #: 201046-PDF-ENG
The cost of capital for Ameritrade settlement of cases

Cost of Capital at Ameritrade Case Solution
Share This