
H. J. Heinz: Estimating the Cost of Capi...
Lipson, Marc L.
H. J. Heinz: Estimating the Cost of Capital in Uncertain Times
F-1634 | Published November 8, 2010 | 8 pages. Case
Collection: Darden School of Business
Product Details
Given recent changes in market conditions and ongoing market uncertainty, an internal financial analyst at Heinz must estimate the company's weighted average cost of capital (WACC). Data for both Heinz and comparable firms are provided. The case provides opportunities for students to learn or practice a WACC calculation while exploring the economic meaning of inputs to the calculation.
The case provides a context for students to develop an understanding of the WACC calculation; to explore the economic meaning of WACC calculation inputs, particularly those derived from the market; to consider the use of comparable company WACC calculations in determining a company's chosen discount rate; and to raise awareness of how changes in markets will impact discount rates.
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