Teletech Corporation Case Study

Executive Summary The recommendation for Teletech Corporation is to change from a unending bank vault rate to the use of two risk-adjusted overleap rates, whiz for each segment. Teletechs performance is evaluated upon economic get ahead calculations. by this performance measure, the risk-adjusted hurdle rates return a higher(prenominal) amount of profit in equation to a undivided corporate hurdle rate: occurrently, the square has been exploitation the changeless hurdle rate of 9.30%, and as a result the unswervings share prices are stagnant. In comparison, the market and manufacturing indexes such(prenominal) as telecommunications and telecommunication equipment have outperformed Teletech. Their price-to-earnings ratio is in ilk manner below indueors expectation in comparison to the political partys risk. With nearly $2 jillion being invested in upcoming capital projects, the discount rate(s) to be used in spite of appearance the firm needs to be m ore accurate, account for risk, and non destroy shareholders value. Introduction Teletech Corporation is change integrity into two chief(prenominal) segments; Telecommunications Services and Products & Systems. Forward-looking, the firm leave behind invest nearly $2 billion into projects. Brief conjurement The gross(a) hurdle rate has been taking some heat from investors and has been court by Victor Yossarian.

As part of the companys responsibility, we are moving forward and evaluating the firm in its catamenia state. The analysis taking place will provide arguments for development a constant hurdle rate versus segment risk-adjusted hurdle rates. The goal of the evaluat ion is to use the method that will returns ! the border in the long-run and provide a come by project taskment for future forecasts. The Firms Current State Teletech has been using a single corporate-wide hurdle rate to prize projects, allocate funds, and as the discount rate. The hurdle rate target at 9.3% is derived from using the weighted average cost of capital. In 2004, Telecommunications Services has returned less than the hurdle rate at 9.1%,...If you destitution to get a full essay, order it on our website: OrderEssay.net

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