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Teletech Corporation, 2005

15 Pages Posted: 21 Oct 2008  

Robert F. Bruner

University of Virginia - Darden School of Business

Sean Carr

University of Virginia - Darden School of Business

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Abstract

This case serves as part of an introduction to estimating investors' required rates of return. It should follow one or two class sessions covering the techniques for estimating WACC. The numerical calculations required are light, although some of the subtleties about the use of risk-adjusted hurdle rates will require time for the novice student to absorb. The case is about the CFO of a telecommunications company who must respond to a corporate raider claiming that a major business segment of this company should be sold because it is not earning a satisfactory rate of return. The case examines the use of a single hurdle rate to evaluate all segments of the company versus a risk-adjusted hurdle-rate system. The tasks for the student are to resolve the debate, estimate the weighted-average costs of capital (WACC) for two business segments, and respond to the raider.

Excerpt

UVA-F-1485

Rev. Oct. 1, 2010

TELETECH CORPORATION, 2005

Raider Dials Teletech

“Wake-Up Call Needed,”

Says Investor

. . .

Keywords: WACC weighted average cost of capital, hurdle rate, rate of return

Suggested Citation

Bruner, Robert F. and Carr, Sean, Teletech Corporation, 2005. Darden Case No. UVA-F-1485. Available at SSRN: https://ssrn.com/abstract=909917

Robert F. Bruner (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-3823 (Phone)
434-924-0714 (Fax)

HOME PAGE: http://faculty.darden.edu/brunerb/

Sean Carr

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4812 (Phone)

HOME PAGE: http://www.batteninstitute.org

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