You work in Rice Furniture's corporate finance and treasury department and have just been assigned to the team estimating their WACC. Rice Furniture is an unlisted furniture retailer leading the industry with on tread furniture and decorator pieces, offering affordable luxe living. Based in Queensland management is looking to expand into other states by rolling out 15'new stores in 2021. Due to Rice Furniture's private structure, very little financial information is publicly available. As part of the team commissioned to present an analysis to the board you must estimate the appropriate WACC in preparation for a team meeting later this month. You quickly realise that the information you need is readily available online I 1. Detail the methodological approach you will undertake to complete this task. 2. Discuss the practical considerations when choosing and calculating the data inputs for the WACC including the following. 3. Identifying an appropriate peer group of comparable companies for Rice Furniture Stores. Identify the criteria used in selecting appropriate peers for Rice Furniture. 4. For each of the comparable firms within the peer group, explain how you would calculate the Market value of equity and the Market value of net debt. 5. Discuss estimating the cost of equity using the security market line approach by regressing past stock returns on returns of the market portfolio. What are the practical considerations that arise when doing so? Identify any potential problems that may arise from this approach. Identify the type of information you would require from Rice's management team to further refine your estimate of the firm's cost of capital La You work in Rice Furniture's corporate finance and treasury department and have just been assigned to the team estimating their WACC. Rice Furniture is an unlisted furniture retailer leading the industry with on tread furniture and decorator pieces, offering affordable luxe living. Based in Queensland management is looking to expand into other states by rolling out 15'new stores in 2021. Due to Rice Furniture's private structure, very little financial information is publicly available. As part of the team commissioned to present an analysis to the board you must estimate the appropriate WACC in preparation for a team meeting later this month. You quickly realise that the information you need is readily available online I 1. Detail the methodological approach you will undertake to complete this task. 2. Discuss the practical considerations when choosing and calculating the data inputs for the WACC including the following. 3. Identifying an appropriate peer group of comparable companies for Rice Furniture Stores. Identify the criteria used in selecting appropriate peers for Rice Furniture. 4. For each of the comparable firms within the peer group, explain how you would calculate the Market value of equity and the Market value of net debt. 5. Discuss estimating the cost of equity using the security market line approach by regressing past stock returns on returns of the market portfolio. What are the practical considerations that arise when doing so? Identify any potential problems that may arise from this approach. Identify the type of information you would require from Rice's management team to further refine your estimate of the firm's cost of capital La
