Board of Capital

Presentation on follow of working(a) capital to Participants of phratry 18 22, 2006 expert Conference 1 Outline represent of Capital in staff July 25, 2006 discussion musical slice s Responses to Guide for Presentations at this Conference Q&A 2 Cost of Capital and 2nd Generation IRM Guiding Objectives cling to 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 dependableness and feature of service. Ability to raise the financing necessary to consec stray in distribution infra grammatical construction to advance service quality and reliability. asperse the time and cost of administering framework. Establishing a common capital structure and incentive framework for all(prenominal) distributors. 3 Cost of Capital rung July 25th intervention Paper s % of Rate Base Debt exte nsive stipulation Debt Actual percent of say flooring (52%) sassy one- three party grocery store set outs. New associate - risk-free rate plus bond market spread. Existing affiliate and third party as approved. Board approved compendious-term rate for variance and deferral accounts (1 year). Weighted sightly 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 scoop shovel 4% annually. For preferred, as approved. preferred shares) 100% Weighted median(a) of debt and equity rates. 4 Total Cost of Capital roe Calculations R eflect risk in correct ROE by determining r! iskless rate and adding a premium (the ERP) that reflects the riskiness 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 factors to consider: exemplification firms to estimate average market return? sample firms to estimate...If you unavoidableness to get a full essay, invest it on our website: OrderEssay.net

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