What is ciscos enterprise value

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1.IDX Tech is looking to expand its investment in advanced security systems. The project will be financed with equity. You are trying to assess the value of the investment, and must estimate its cost of capital. You find the following data for a publicly traded firm in the same line of business:

 

537_traded.jpg

What is your estimate of the project’s beta? What assumptions do you need to make?

2.In June 2009, Cisco Systems had a market capitalization of $115 billion. It had A-rated debt of $10 billion as well as cash and short-term investments of $34 billion, and its estimated equity beta at the time was 1.27.

a. What is Cisco’s enterprise value?

b. Assuming Cisco’s debt has a beta of zero, estimate the beta of Cisco’s underlying business enterprise.

3.Consider the following airline industry data from mid-2009:

 

925_traded.jpg

a. Use the estimates in Table 12.3 to estimate the debt beta for each firm (use an average if multiple ratings are listed).

b. Estimate the asset beta for each firm.

c. What is the average asset beta for the industry, based on these firms?

Reference no: EM13496471

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