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Fin 516 Mini Case

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Mini Case: Google

Christina Santino
FIN 516:Advanced Managerial Finance
July 21, 2013

What is the name of the company? What is the industry sector?

Google Inc. is a multi-billion dollar company in the informational technology (IT) industry.
Google Inc. is one of the leading computer search engines in the world and is continuing to grow as the front runner in their industry.

What are the operating risks of the company?

Within business, there will always be operational risks to consider. "Operating risk is the basic or fundamental potential for failure that is associated with the ongoing function of any type of business entity" (Tatum, 2003, para. 1). The operating risks for Google Inc. include: internal fraud, …show more content…

Google Inc. 's actual beta is 1.15 (Yahoo Inc., 2013, Stock Price History).

What would Beta of this company be if it had no Long Term Debt in its capital structure? (Apply Hamada Formula.)

bL = bU[1+(1-T)(wd/ws)]
Google Inc. 's information as stated above is: beta = 1.15 wd = 9.77 rd = 100-9.77 = 90.23 bL = 1.15[1+(1-0.40)(9.77%/90.23%) = 1.22 bL = 1.22

What is the company 's current Marginal Tax Rate?

The current Marginal Tax Rate for Google Inc. is 35%. This

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