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"Globalizing the Cost of Capital and Capital Budge...




"Globalizing the Cost of Capital and Capital Budgeting at AES" The report must follow the instructions and reflect on why the topic was assigned. what did you learn from the case? It should not repeat what is in the readings. the report should go beyond the material in the readings. talk about how the topic illustrates course concept. how do the concept from the case related to the financial decision of the multinational firm and its objective of increasing the wealth of the shareholders. think also what you learn from the data collection and analysis. the report should be between 6-8 pages excluding tables and figures double space and one inch margins on all sides."" see attachment of case paper was wrong so professor gave me time to redo it...hopefully you guys will help me out this I always got negative from you guys..also the two question you answer was wrong answer due to which i did not get marks from that...i am here paying money just to get answer and get marks not for please last time please help in this case....also in good answer not wrong answer....if you want synopis plz see below...just do it in correct way..I can extend time till November 23, Hopefully you guys won't upset me...thanks Globalizing the Cost of Capital and Capital Budgeting at AES Synopsis AES is a global power firm with operations in 30 countries and on five continents. The company operates in four business segments: utilities, contract generation, competitive supply and growth distribution. After going public in 1991, AES grew rapidly with much of its growth coming from its international expansion. The global economic downturn that began in late 2000 had a severe impact on AES. The company was hit by currency devaluations in South America, lower energy prices, and changes in the regulatory regimes for energy in some countries. AES?s deteriorating performance led to a steep decline in its stock price and the company?s market capitalization fell almost 95% over a two year period. The financial crisis led AES to create a new planning group, charged with valuing the company?s assets and developing a methodology for calculating the cost of capital for AES?s diverse businesses around the world. In the past, AES had used a 12% cost of capital to evaluate all projects worldwide. Rob Venerus, the director of the new planning group, aims to improve on this approach by developing a methodology that incorporates country risk and other risks specific to a project into the cost of capital for each project. Venerus has to decide if this approach, designed to provide a more accurate financial assessment of the company?s diverse international businesses, would actually improve AES?s financial decision-making. The case presents a methodology for determining a project?s weighted average cost of capital (WACC) that is based on a domestic CAPM familiar to most students, and then provides adjustments for country and project-specific risks. Students can use the methodology to calculate the cost of capital for several of AES?s projects in different parts of the world. In the process, students are forced to consider the economic justification for the widely varying discount rates that the methodology generates for various AES projects around the world, the use of sovereign spreads to measure country risk, and the appropriate way to do valuation in emerging markets. Suggested Assignment Questions 1. How would you evaluate the capital budgeting method used historically by AES? What's good and bad about it? 2. If Venerus implements the suggested methodology, what would be the range of discount rates that AES would use around the world? 3. Does this make sense as a way to do capital budgeting? 4. What is the value of the Pakistan project using the cost of capital derived from the new methodology? If this project was located in the U.S., what would its value be? 5. How does the adjusted cost of capital for the Pakistan project reflect the probabilities of real events? What does the discount rate adjustment imply about expectations for the project because it is located in Pakistan and not the U.S.?,Hello there, I have attached my case study of "globalizating the cost of capital and capital budgeting at aes" Please do not upset me...the case have to do in 6-8 pages long double space no less than 10 font size..also if you want i have send you synopsis and question also to make you easier to do paper...plz i have send you criteria to do for paper..plz do not up set me this time..


Paper#5765 | Written in 18-Jul-2015

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