Business Case Studies & Business Publications

Procter & Gamble: Cost of Capital (Abrid...

Eades, Kenneth M.

Case

Procter & Gamble: Cost of Capital (Abridged)

Eades, Kenneth M.

F-1183 | Published October 21, 1997 | 10 pages Case

Collection: Darden School of Business

Product Details

This case asks the student to compute Procter & Gamble's weighted-average cost of capital to determine whether another company should enter the household-products market; the student must also compute Clorox's cost of capital as a check on the P&G estimate. The case emphasizes the conceptual as well as mechanical aspects of computing cost of capital for a company with homogeneous business risk and stable capital structure. (The unabridged version of the case is UVA-F-0931.)