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Both questions are attached, please confirm that you have received the questions, thank you.

1. In 2006, Anheuser-Busch Companies Inc. (BUD), engaged in the production and distribution of beer worldwide, operating through four business segments: Domestic beers, International Beer, Packaging, and Entertainment. The Domestic Beer segments offers beer under Budweiser, Michelob, Busch, and Natural brands in the United States, in addition to a number of specialty beers including non-alcohol brews, malt liquors, and specialty malt beverages, as well as energy drinks. The international Beer segments markets and sells Budweiser and other brands outside the United States and operates breweries in the United Kingdom and China. In addition, the International Beer segment negotiates and administers license and contract brewing agreements with various foreign brewers. The packaging segment manufactures beverage cans and can lids for drink customers, buys and sells used aluminum containers. Finally, the entertainment segment owns and operates theme parks. In 2005, Anheuser-Busch reported the following segment revenues and net income: ($ Millions) 2005 Gross Sales Income before income taxes Equity income Net Income Domestic Beer International Beer Packaging Entertainment $10,121.00 2,293.40 $864.00 70.10 $1,831.50 120.40 $904.40 215.10 $1,421.90 147.10 $433.70 $74.60 $133.40 Assume that you have just been charged with the responsibility for evaluating the divisional cost of capital for each of the business segments. A. Outline the general approach you would take in evaluating the cost of capital for each of the business segments. B. Should the fact that $1,156 million of the Packaging segment's revenues come from internal sales to other Busch segments affect your analysis? If so, how? 2. Valuing Residential Real Estate. Sarah Fluggel is considering the purchase of a home located at 2121 Tarter Circle in Frisco, Texas. The home has 3,000 square feet of heated and cooled living area, and the current owners are asking a price of $375,000 for it. A. Use the information provided in the following table to determine an initial estimate of the value of the home Sarah is considering: 1 B. After making her initial estimate of the value of the home, Sarah decided to investigate whether the owner's asking price of $375,000 might be justified based on unique attributes of the home. What types of details might you recommend Sarah look for in trying to justify the price of the home? C. What if the house Sarah is considering had an asking price of $315,000? What would you recommend Sarah do then? 2 1. In 2006, Anheuser-Busch Companies Inc. (BUD), engaged in the production and distribution of beer worldwide, operating through four business segments: Domestic beers, International Beer, Packaging, and Entertainment. The Domestic Beer segments offers beer under Budweiser, Michelob, Busch, and Natural brands in the United States, in addition to a number of specialty beers including non-alcohol brews, malt liquors, and specialty malt beverages, as well as energy drinks. The international Beer segments markets and sells Budweiser and other brands outside the United States and operates breweries in the United Kingdom and China. In addition, the International Beer segment negotiates and administers license and contract brewing agreements with various foreign brewers. The packaging segment manufactures beverage cans and can lids for drink customers, buys and sells used aluminum containers. Finally, the entertainment segment owns and operates theme parks. In 2005, Anheuser-Busch reported the following segment revenues and net income: ($ Millions) 2005 Gross Sales Income before income taxes Equity income Net Income Domestic Beer International Beer Packaging Entertainment $10,121.00 2,293.40 $864.00 70.10 $1,831.50 120.40 $904.40 215.10 $1,421.90 147.10 $433.70 $74.60 $133.40 Assume that you have just been charged with the responsibility for evaluating the divisional cost of capital for each of the business segments. A. Outline the general approach you would take in evaluating the cost of capital for each of the business segments. B. Should the fact that $1,156 million of the Packaging segment's revenues come from internal sales to other Busch segments affect your analysis? If so, how? A general approch cost of capital of business segment 1 Domestic Beer International Beer Packaging Entertainment Gross Sales 10121 864 1831 904 Income before income tax 2293.4 70.1 120.4 215.1 74.6 133.4 Equity Income Net income 147.1 1421.9 433.7 The general approach to calculate cost of equity is by calculating cost of equity and cost of debt of the firm and calculating the rates to the weights of debt and equity B Yes, the internal sales affects the analysis as in th internal sales as the internal sales does not bear the interest on it. 2. Valuing Residential Real Estate. Sarah Fluggel is considering the purchase of a home located at 2121 Tarter Circle in Frisco, Texas. The home has 3,000 square feet of heated and cooled living area, and the current owners are asking a price of $375,000 for it. A. Use the information provided in the following table to determine an initial estimate of the value of the home Sarah is considering: B. After making her initial estimate of the value of the home, Sarah decided to investigate whether the owner's asking price of $375,000 might be justified based on unique attributes of the home. What types of details might you recommend Sarah look for in trying to justify the price of the home? C. What if the house Sarah is considering had an asking price of $315,000? What would you recommend Sarah do then? 2 3