Accounting questions

1)Measure leverage using five different ratios. Discuss which one is most appropriate to use in the WACC calculation. 2)What is Tottenham Hotspur’s fair equity value per share if it does not build a new stadium and does not acquire a new player? Perform a discounted cash flow analysis of the company as of January 1, 2008. The market risk premium is 5%. If you need to make additional assumptions, please state them clearly. Note that net working capital is negative for the club, because tickets are typically prepaid. Net working capital is assumed to change in proportion with total revenues. At its current price, is Tottenham Hotspur fairly valued, overvalued, or undervalued? 3)What is Tottenham Hotspur’s fair equity value per share if it builds a new stadium but does not acquire a new player? Perform a discounted cash flow analysis of the company as of January 1, 2008. Based on this analysis, should Tottenham build a new stadium? Here and in questions 3 and 4 below, you can assume that Tottenham Hotspur’s capital structure and equity beta remain the same as in question 1.

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