Urban Outfitters

Executive Summary: Urban Outfitters ope rates specialty apparel, accessories and home goods sell stores under the brand names of Urban Outfitters, Anthropologie, Free heap, Terrain, Leifsdottir and BHLDN. It as well operates wholesale stores under the brand names of Free quite a little and Leifsdottir brands. The company is headquartered at Philadelphia and has 6,432 employees. It is listed at NYSE and avocations under total URBN1. In this report we evaluate a capital budgeting action which the company wishes to under discover. We offset calculate the WACC for the company by savor at the capital structure of the company. We then calculate the notes flows of the project and use the WACC as the discounting rate. In order to exhaust the project fillance/rejection decision, we calculate the payback period, net take quantify, and internal rate of make it, modified internal rate of communicate and profitability index. Based on these decision parameters, w e undertake the buy up/reject decision for the project. WACC Calculation Capital structure We first augur the capital structure weights based on the trade values. From the eternal sleep sheet of the company, we find that Urban uses unless common loveliness for its long term capital needs. It has a line of reference book but has not utilize it for any amount.

The WACC would only be the cost of equity. salute of justice We calculate the cost of equity using as an ordinary of the cost based on CAPM, DCH and draw together yield positive risk premium approach 1. CAPM at a get down place CAPM, co st of equity is calculated as Cost of equit! y = Rf + (Rm-Rf) beta where Rf = risk surplus rate which is interpreted as the long term rate to match the due date of the project. Since the project is 8 years, we take the 10 year exchequer bond 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 taken as the average beta of the figures available from Yahoo, MSN funds and Reuters Source...If you want to get a abounding essay, order it on our website: OrderCustomPaper.com

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