This Case is about FINANCIAL MANAGEMENT
PUBLICATION DATE: November 22, 2012 PRODUCT #: W12324-PDF-ENG
Maria D’souza proposed to expand her company by introducing a brand new product line of frozen foods. She desired to guess the attractiveness of the brand new growth by estimating net present value (NPV) of the estimated cash flows. Her primary concern was to find an appropriate discount rate to be applied to cash flows to determine the NPV of the job. The Adviser buddy of D’souza asked her to evaluate cost of capital of similar businesses operating in the exact same sector. The basic principle in this instance is the fact that companies in exactly the same sector frequently have assets, businesses and similar customers; so they ought to have similar expenses of capital and have comparable business risks.