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Sample cover letter for Full Time position at World Bank
GOT THE JOB? Yes
ØEnterprise Valuation and Equity Valuation has been worked out as at 31st March 2015.
ØThe valuation has been carried out based on free cash flow for 5 years from 1st April 2015 to 30th June 2020 (explicit forecast period). After the explicit forecast period, the KPMG has adopted growth model to arrive at the terminal value.
ØBased on KPMG report we understand that AHSL operates in US and India. Therefore KPMG has considered a weighted average WACC for AHSL by assigning weights based on the revenue contribution of these regions. Blended tax rate is considered based on the profitability split from these two regions.
ØBased on the above, Cost of Equity (CoE) was derived by using Capital Asset Pricing Model (CAPM). The weighted CoE for this business is estimated at 10.9% and the weighted Cost of Debt (“CoD”) has been considered at 5.1% based long term sustainable cost of debt. Cost of Debt considered by KPMG is based on cost of inter-company borrowing of 8% (pre-tax). From a market participant perspective, the cost of debt would be much higher around 13-14% (pre-tax.) Considering a higher cost of debt based on market participant approach would lead to a higher WACC.
To arrive at Weighted Average Cost of Capital (“WACC”), the CoE and CoD was pro-rated based on the long-term debt and equity of the industry as on 31st March 2014
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