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F. Naz
F. Naz, B.Com
Category: Multiple Problems
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Experience:  have completed B.Com and CA Finalist
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Hello I am working on a case regarding Starbucks Coffee. Can

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Hello I am working on a case regarding Starbucks Coffee. Can you please provide your expertise in estimating Starbucks WACC and the intrinsic value of the firm and common stock. Also, what could Starbucks do to lower their cost of capital. Lastly, should an individual invest in (or not) Starbucks based on where Starbucks is now. I believe I have to use the CAP or DCF Models for this case and I have to calculate the firm’s cost of long term debt and preferred stock. THANKS!

Jawaad Ahmed :

The intrinsic value can be determined by using dividend model and PE ratio method or DCF method. The required rate of return or WACC to be used in this method. Please provide detial and also mention your deadline, thanks.

Customer:

Hello, we specifically have to answer the following and show work:



  1. The firm’s WACC

  2. The intrinsic value of the firm and the common stock.

  3. Write a paragraph on each of the following issues:


- what can the firm do to lower their cost of capital


- if you had any money to invest in this firm now, why would you or not invest in this firm based on where you see this firm.

Customer:

using the following guidelines:


State in clear and simple terms how you came up with all estimates. Identify all the assumptions and models used to derive the estimates. As far as it is relevant to the presentation of the estimates, explain the workings of these models. Keep the report clear and concise.

Customer:

We were given the following hints:


In order to present these estimates, you will need to calculate:


 



  1. The firm’s cost of equity using: CAPM or Discounted Cash Flow (DCF) models


b. The firm’s cost of long term debt and preferred stock



  1. Cost of capital of the firm (WACC)

  2. d. The intrinsic value of the firm and its common stock

Customer:

Hi Jawaad.

Customer:

Were you able to understand what is being requested of us?

Customer:

Deadline is 8/20. Thank you.

F. Naz and other Multiple Problems Specialists are ready to help you
Okay will try my best to answer it by your deadline, thanks.
Customer: replied 3 years ago.

Thank you in advance for your detailed response.

take care.
Customer: replied 3 years ago.

does this mean you'll continue working on the problem

Yes
Customer: replied 3 years ago.

awesome thank you very much

You are welcome, thanks
Customer: replied 3 years ago.

I'm in the field, but I took a quick glance and it appears to be spot on. You are truly the "Expert" Jawaad!

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