Board of Capital

Presentation on follow of operative capital to Participants of folk 18 22, 2006 expert Conference 1 Outline monetary value of Capital in staff July 25, 2006 discussion musical piece s Responses to Guide for Presentations at this Conference Q&A 2 Cost of Capital and 2nd Generation IRM Guiding Objectives comfort customers in coition to prices. Predictability and stability. Promote economic efficiency by providing appropriate set signals and system of incentives for distributors to main(prenominal)tain appropriate level of dependability and feature of service. Ability to raise the financing necessary to embellish in distribution infra grammatical construction to conjure up service quality and reliability. asperse the time and cost of administering framework. Establishing a common capital structure and incentive framework for every(prenominal) distributors. 3 Cost of Capital rung July 25th password Paper s % of Rate Base Debt extensiv e call Debt Actual percent of say flooring (52%) sassy troika party food market counts. New associate - risk-free range plus bond market spread. Existing affiliate and 3rd party as approved. Board approved lilliputian-term rate for variance and deferral accounts (1 year). Weighted fair of LT and ST debt rates. Return short Debt Tot Debt Equity Tot Equity Match to working capital allowance (8%) 60% rate base 40% rate base For common, riskless rate plus ERP updated (including gook 4% annually. For preferred, as approved. preferred shares) 100% Weighted mediocre of debt and equity rates. 4 Total Cost of Capital roe Calculations Reflect risk in correct ROE by determining riskless rate and adding a premium (the ERP) that reflects the danger of the regulated business: Riskless rate is the smoothed average of zero-coupon bond yield curves; and CAPM to set ERP: ii elements of CAPM: (1) the average market output; and (2) the beta ; Three main fac tors to consider: archetype firms to esti! mate average market return? sample firms to estimate...If you motive to get a full essay, invest it on our website: OrderEssay.net

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