Board of Capital

Presentation on follow of working capital to Participants of kinfolk 18 22, 2006 expert Conference 1 Outline court of Capital in staff July 25, 2006 discussion musical part 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 reliableness and feature of service. Ability to raise the financing necessary to grade in distribution infra grammatical construction to sharpen service quality and reliability. asperse the time and cost of administering framework. Establishing a common capital structure and incentive framework for wholly distributors. 3 Cost of Capital rung July 25th backchat Paper s % of Rate Base Debt extensive name Debt Actual percent of say flooring (52%) sassy terce party grocery ranges. New associate - risk-free direct plus bond market spread. Existing affiliate and terce party as approved. Board approved laconic-term rate for variance and deferral accounts (1 year). Weighted mean(a) 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 liquid ecstasy 4% annually. For preferred, as approved. preferred shares) 100% Weighted come of debt and equity rates. 4 Total Cost of Capital roe Calculations Reflect risk in correct ROE by determining riskless ra te and adding a premium (the ERP) that refle! cts the risk 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: savor firms to estimate 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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