Saturday, August 31, 2019

Revisiting Cost of Capital in Commercial Banks

CHAPTER 1: INTRODUCTION 2 Background Capital Structure decision remains one of the corporate strategies to corporate managers because it affects firm’s value. This research is conducted within the commercial banks. In many research journals and articles the cost of capital is the expected rate of return of capital in investor’s investment. Weighted average cost of capital is considered as required rate of return in the company. Component of cost of capital are; long-term debt, preferred stock, and common stock. Each must have minimum return.We analyze from previous research articles that the banks should not focus on historical cost but on new cost, because in order to invest and rise, new cost of capital is used to make decisions. Level of interest rates, tax rates are two of the factors that affects cost of capital in the commercial banks. Interest rates apply on debt and equity. It is the most important factor for investors. Cost of debt affects by the level of inter est rates and also the cost of equity. As described in many articles, if interest rates increases the cost of debt increases, which increases the cost of capital.So, the raising of capital delayed till interest rate become favorable. This shows how the interest rate can be a source effective measure of the cost of capital. Similarly, if the tax rates increases, the cost of debt decreases, which decrease the cost of capital as it affects the after tax cost. The cost of capital directly and totally linked with capital structure. Capital structure influence the value of the banks, firm, company potentially by reflects the financing strategy. And capital structure should consider tax strategies.We found from different articles that the most important capital structure decisions are when the expected tax rates goes higher. The basic function of capital structure is to minimize the cost of capital and risk. Interest is tax deductable. The deductibility of interest payments provides influe nce for value. Higher the tax rate, the greater impact of deductibility of interest potentially on the after-tax cost of debt. These are the proved facts that are evaluated in previous researches. According to this research we are trying to find what role these factors play in commercial bank’s capital structure.It is necessary for top management of any business institutions to ascertain the banks or firms relevant cost of capital. From the banks’ perspective, the cost of each source of capital reflects the level of return because it is affected by certain factors like tax rates, interest rates, dividends etc. as the time period changes, the level of return also changes. In its simplest form, the capital structure decision is the selection by firm management of debt-to-equity ratio for the firm. Cost of Capital is perhaps the most fundamental and widely used concepts in financial economies.Managers of banks or corporation and also regulators employ the weighted average cost of capital for investment decisions. The WACC and the tax rates are endogenous to the firm’s debt policy. The interest rates affect the cost of debt as increasing debt increasing interest payments. We also derive the sources of capital structure that which source is better for the commercial banks and how the interest rates, tax rates brings variation in the cost of debt and the dividends and growth rates affects the cost of equity that totally affect the weighted average cost of capital.Our methodology allows us to value the government tax rates and interest rates that affect cost of debt. We specify numerically the affects of the variations in the factor like interest rates, tax rates and dividends, thus providing useful conceptual framework for the tax and interest policy debates that influence cost of capital of debt and equity. Finally we come to analyze that cost of debt increase or decrease by variation in the interest rates and tax rates and that help in the est imation of WACC that show that whenever the WACC decreases, it results in an increase in the profit that is useful for any organization or commercial banks. . Problem statement (Revisiting the cost of capital in the commercial bank) The problem statement of this research proposal includes re-examine the cost of capital in commercial banking sector of Pakistan and also to evaluate the direct and indirect association of the factors that affects weighted average cost of capital and how this variation (increase or decrease) can affect the profit and also the capital structure -debt and equity- of the commercial banks. 2. Research objectives While doing research planning, we analyze that the cost of capital considers the factors affecting decision making.The following object of the research comes into play: ? We will find out the factors which creates the variation (increase or decrease) on cost of capital and their effect on the capital structure decision making. ? To analyze the after effects of these factors on capital structure. ? To examine up to how much extent they are controllable or not from bank’s perspective. 3. Significance The importance of this research paper is that, the relation between the different determinants of the costs of capital creates different impact on the different commercial banks by affecting capital structure of that commercial bank.We know that as the weighted average cost of capital decreases, it increases the profit n the Commercial Banks. Risk associated with cost of capital and capital structure taking needs to b looked at differently in the case of the commercial banking institutes. This research sheds new light on how the cost of capital computed in the case of commercial banks. Also the relationship between the cost of capital and capital structure is investigated. This research has another importance as banking system has a vital role to play in the economic development of a nation. A healthy economy requires a sound banking system.This research states that how banks applies different techniques that enhance their performance and also affect the decision making of the Mangers regarding their capital. In this research, the main finding of the paper suggests that the commercial bank should focus on reducing the cost of capital that maximizes the profit. According to our findings, it is concluded that each banks has its policies of financing. Each bank takes decision of selecting capital structure for minimizing their cost, risk factor differently that occupies good financial position in market.Factors that have impact on cost of capital as well as on capital structure are tax rates, interest rates, dividends payout, risk of default and other like market fluctuation, corporate governance. This research plays a vital role by showing the significant contribution of Commercial Banks while equating debt to equity ratio. It also shows the understanding of the performance of Banks by evaluating weighted average cost of capital. The main findings of the paper suggest that private commercial banks should focus on reducing the cost of capital which can magnify the returns to their stockholders.Finally this research paper would also help the students in academics in understanding the relation between the factors and the cost of capital and also their after affects that create impact on the weighted average cost of capital. 4. Limitation Time constraint of this semester is the issue for this study as we have limited time in this semester as compared to the actual time required for the research. By being in banks we will acquire interviews approximately 15 -30 minutes with questionnaire because of the time given by the Mangers of Finance Division.The information given by the managers is also limited because it difficult for them to provide all necessary information as they are bound by the policies of the commercial bank. 1. 6 Report Structure Chapter 1 represents the introduction of res earch topic its background, problem statement, objectives of research that set, significance of this research and limitations. This chapter gives brief information about the topic pervious information, the scope of research and its benefits, the target of the research. And also provides the basic information that already conducted by different authors researchers.Chapter 2 deals with the literature review and conceptual framework. In this portion you will find the different views of different researchers related to this research topic cost of capital in commercial banks including capital structure importance its link with cost of capital, and factors that affect cost of capital. This portion also gives the direction and relevant information which is very helpful in proceedings the research. Conceptual framework helps in determining the relationships of factors with WACC.Chapter 3 provides the detail of methodology that is adapted to proceedings the research. This portion gives expla nation of research type, method, sample size, instruments that is used in finding and collecting the data. Chapter 4 gives the analysis of data that is collected through the questionnaire, interviews and calculating the WACC of commercial banks that chosen with assumptions, and research findings that proves the hypotheses that is set. Chapter 5 includes the conclusion of research findings and literature review findings.Also gives the recommendations. Finally Appendix attach to our research that contain Questionnaire. CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK 1 Literature Review 2 Capital structure (Khadka 2005) has analyses in his research that the firms meet their operational needs by raising their funds and this can be done through the capital structure that involves the two major sources of debt and equity. There should be an appropriate balance between debt and equity as it has effects on the risk and return of the shareholders of the company.If there are reasonable proportions of debt and equity in the capital structure of the firm, it maximizes the shareholders wealth while minimizing the cost of capital and that could be considered as the optimal capital structure. (John J. Pringle, Jun. , 1974) Since banks are private economic units, it is reasonable to suppose that shareholder interests will influence, if not control, managerial decisions. Capital is an important managerial decision variable and that it plays an important role in the financial management of the individual bank. Groth 1997) said that the selection of capital structure affects the cost of capital. Carefully selection of capital structure is more important. Banks and companies consider more conservative capital structure with sensitivity to cyclical effects of economy. It involves in dividing not in sharing. If payments of dividend are not deductible and if interest is tax deductible on debt then capital structure is important. Barton and Gordon (1987) Financing and capital s tructure choices are among the several key decisions made by firm managers.Yet the study of these questions has been generally neglected by strategy researchers. Several scholars have noted that the issues involved are concerned with fundamental choices ‘which should support and be consistent with the long- term strategy of the firm. Balakrishnan and Fox (1993) said that by selecting suitable financing, a ‘firm's ability to manage its relationship with lenders thus becomes a key source of competitive advantage. Capital is a critical resource for all firms, the supply of which is uncertain. This uncertainty enables the suppliers of finance to exert ontrol over the firm. Stearns (1986) and Mizruchi (1993) estimate the cost of equity capital use a dividend discount model (DDM) methodology and earnings estimates. They find that the cost of equity capital for large U. S publicly traded companies ranged between 10% and 12% during 1979-1995, depending on the assumptions used wi th the DDM approach. Interestingly, Myers and Borucki (1994) obtain the same range of estimates for the cost of equity capital of a limited sample of U. S. utility companies using a DDM-type method.Bruner (1998) and Weaver(2001) surveying large corporation and confirm about WACC methodologies. Both authors find that there is a significant difference exists in estimating the equity capital component of the firm. Some uses CAPM while other uses different methods. 4 Cost of capital Cost of capital is the minimum required rate of return by investors in firm’s securities. It occupies an important role in the theory of financial management and in the investment decision making as it provides criteria for allocation of the capital that what a firm pays for its capital like debt, preferred stock and equity.Cost of Capital is related with the level of risk associate with existing and new assets and investments. (Khadka 2005) Modigliani and Miller (1958) proved that firms cost of capit al is independent of capital structure as it has no effect on the capital structure. The traditional belief of Modigliani and Miller (1963) is that the cost of capital can affect capital structure as in this belief they said that the personal taxes may include that brings variation in the cost of capital and hence affects the capital structure of the company. Khadka 2005) states that there is an empirical relationship between the cost of capital with capital structure, the size of the firm, growth of the firm, dividend payout ratio and liquidity of underdeveloped economy like Nepal but the major focus was the relationship of the leverage with the cost of capital where he conclude that negative beta shows that there is a negative relationship of cost of capital with the leverage as cost of capital decreases with the use of the leverage and this is done by the tax deductibility of the interest charges in the Nepalese firms.Cost of capital is the expected rate of return of capital in i nvestor’s investment. On debt, the amount of interest is paid is called cost of debt. Whereas cost of equity is equivalent to the risk free rate of interest plus risk premium for business risk. (Groth 1997). 5 Factors that affects cost of capital Groth (1997) further said that risk is one of the factors that affect the cost of capital which determines the expected risk of cash flow in the asset side of the bank. Business risk is that when bank and companies cash flow are not able to meet its operating expenses.Risk is linked to economic changes. And it would be at risk to business risk when change in economy occurs and when financing is done by totally with equity. Cost of equity influenced by business risk. Equity holder’s risk has not accepted by the creditors and preferred stock holder if present. If increase in business risk occurs then it decreases the financial risk and the optimal D/E ratio, and increases the cash flow uncertainty of asset side. Financial risk i s that when bank and companies cash flow are not able to meet its financial obligations. If firm finances through debt, then it has financial risk.Tax rates and interest rates are also factors. Interest payment expected deductibility give opportunity for value. If the tax deductibility is realized by the company then stockholders get the expected benefit of the tax deduction. Jorgenson and Landau (1993) or Bond and Devereux (2003) analyses that the government’s choice of the corporate tax rate is an important factor with respect to the investment decision made by shareholders and it is well known that the existence of corporate taxes distort this investment decision away from the social optimum . John J. Pringle, Jun. (1974) said that the traditional function of risk-bearing, capital is important in adjusting the maturity structure of liabilities. Risk is a function of uncertainty regarding future events, e. g. , earnings, losses on loans and securities, fluctuations in depos its, conditions in the financial markets, etc. Cost of equity increases if the financial risk become high. The cost of equity and debt increases with the increase in debt. The deduction of tax and its benefit is an expected benefit, to allow deduction of interest; the pre-tax EBIT income must be large.On after tax cost of debt, there is the greater the impact of interest deductibility, if the tax rate s higher. John R. Graham, (2003) analyze that the appropriate cost of capital in the presence of personal taxes does not depend directly on either the dividend payout rate or the tax on dividends. Equity shares have a market value lower than the difference between the reproduction cost of a firm's assets and the market value of its debt obligations. Because of this capitalization, it need not be true that an economy without risk or uncertainty would have no equity financing.Groth (1997) said that asymmetry of effects is that the expected return to stockholder will goes up, if in place of some equity; some debt is used. The good or bad leveraging effects are asymmetry if interest is tax deductable. The inability to realize the interest deduction result in an asymmetry effect on expected return to stockholder. Weighted average cost of capital become low with the cost of capital high, if the debt capital increase in proportion. Cost of equity increases with the cost of debt.If the cost of components high the weighted average cost of capital increases and reason is that shareholder prefer to use of debt when expected value of tax benefit is attractive as compared to the added financial risk associated with the debt. The Demanded rate of increase in cost of debt and equity, effects on value of the expected increase in tax benefit of using more debt. Interest rate affects the cost of debt. It involves the risk components that have the probability of default on the debt. Meziane (2006) in his article said that a company pays interest which is treated as an expense for t ax purpose and therefore it is tax deductable.Company will be bankrupt, if default on payment of interest to bank present by company. Equity financing cannot create a tax advantage because dividends are paid after interest and tax. Interest is paid on debt before tax deduction, whereas, dividend is paid after tax benefit. So, the cost of equity is high then cost of debt. Debt financing becomes attractive when tax is deductable from interest. Banks use cost of capital for decisions, a weighted average interest on debt. Bank should select D/E ratio for which the cost of capital fluctuate with the degree of debt finance is minimized.The D/E ratio is considered as one of the way of financing. (Alan J. Auerbach, aug. 1979). William F. Coffin and Sean Collin (2006) said that in the mid of 1990, a trend towards higher B/S debt in which low cost interest rate, lending level reduced by commercial banks and increase payback period for borrowers, a stable banking system. Cost of capital become low that could lower by the management in down market through viewing current corporate governance themes, taking action on giving management training with respect to capital market issues of today and advanced planning to identify the potential investors. Cost of capital and Corporate Governance Ramly and Rashid said corporate governance is also the factor that affects the cost of capital. CG directly affects the cost of equity, And indirectly with beta. This means poor performance of manager created through weak rights, thus increase cost of capital. Strong (weak) shareholders right associated with increase (decrease) cost of equity capital. CG generate liquidity problem in which investor high the sell price and decrease the buy price which can high the transaction cost and also affects the COEC.Thus, the CG creates strong mechanism on COEC and provides positive shareholder value for firm. It has also reducing effects on cost of capital. Banks and other financial institutes have negative influence on CG. Hennart, (1994) Both classes of suppliers (debt holders and equity holders) have governance abilities. The level of governance ability varies between the two and the optimal selection of the type of financing depends on the nature of resources of the firm. Seth, (1990) financing choices have the potential to affect performance by changing the level of governance costs. Importance and difficulties of WACC Denis Boudreaux (1995) in his article uses the buildup model for the cost of equity capital by estimating cost of equity capital for capital budgeting analyses. He said that whenever there is a need to determine the value of the firm, the cost of capital must be estimated. He said that the cost of debt of closely held firm is much higher that the publicly traded organization because of the loans or debt borrowed by the closely held firms including the commercial banks.He further said that the public traded firms have the low risk whereas a huge risk factor is involved in the closely held businesses. Experts have recognized that the exploitation of debt and equity can enhance the corporate value in 1940s. Later in the years, five concept developed on this area(1) early gearing leverage model; (2) the model of Modigliani and Miller (MM); (3) Capital Asset Pricing Model(CAPM); (4) Arbitrage Price Theory (APT); and (5) Gordon Model Shubbar and Alzafiri, (2008). Unless a firm can gain in excess of its cost of capital, it will not add value to its investor’s wealth.Company’s cost of capital is expressed by the weighted average of the cost of individual sources of capital employed. Bruner et. al. , (1998). For a firm using common stock (equity) and bond (debt) financing, with re and rd as the cost of equity capital and the cost of debt capital, the WACC is expressed the following equation: WACC = r = wd rd (1 ? t) + we re Where, wd (weight (proportion) of debt) = (value of debt/value of debt and value of equity), we (weight (pr oportion) of equity) = (value of equity/value of debt and value of equity), wd + we = 1, and t = tax rate on corporate income.The component costs, re and rd, as well as the weights are based on market values: re is frequently calculated as the risk free rate plus a risk premium, based on the capital asset pricing model, and rd reflects the market rates on the firm’s outstanding debt and on the rd of similar firms. The standard treatment includes (1? t) in the WACC calculation to reflect the deductibility of interest payments in the calculation of the corporate tax on the firm’s income statement: the interest cost of debt, by this procedure, is reduced.Also, to avoid double counting the tax â€Å"advantage† of debt, the interest payments are not calculated in the prospective cash flows. This is the textbook treatment in calculating a firm’s cost of capital. (Miller2006) Evaluating a firm’s weighted average cost of capital has its importance to the m anagers who estimate investments projects for capital budgeting purposes or to the investor whose desire is to assess the overall riskiness and expected return from a company’s activities for valuation purposes. (Miller 2006).Fama and French (1997, 1999) analyse that few difficulties arise because there is some uncertainty in evaluating a firm’s (or banks) cost of capital. This uncertainty is a sort of risk faced by the firm when projecting a project’s cash flow. Bruner, Eades, Harris, and Higgins, (1998) also analyze that there is wide variation in estimating WAAC by different methods. This is due to the manager’s differences in firms cost’s of equity capital that helps in investment decision making. 8 Conceptual Framework DV= DEPENDENT VARIABLE IV= INDEPENDENT VARIABLE MV=MODERATE VARIABLE 9 Conceptual HypothesisHo: WACC increases with increase in interest rates and decreases with decrease in interest rates. H1: WACC increases with decrease in ta x rates and decreases with increase in interest rates. H3: Cost of debt increases with increases in interest rate and decreases with decrease in interest rates. H4: Cost of debt increases with decrease in tax rates and decreases with increase in interest rates. CHAPTER 3: RESEARCH METHODOLOGY 10 Type of Research Research can be defined as the search for knowledge, or as any systematic investigation, with an open mind and facts, usually using a scientific method.Our research is empirical research, which tests the feasibility of a solution using empirical evidence. This research comprises of both the qualitative and quantitative research method for the data analysis. Firstly we search for the secondary data in order to know and understand the analysis of the previous researcher that how they work and create different perspective for the Weighted Average Cost of Capital than we include the researches of the previous researcher in the literature review of this research in order to creat e relation and direction between the previous researches with our research. 1 Sampling Technique Sampling Technique used in our research is Random Sampling in which we chosen from a population for investigation. In this method we chose from managers in the Commercial Banks and estimates obtained from the random sample in order to solve our queries related to WACC. 12 Sample Size The Sample Size is comprises of 5 Commercial Banks of Karachi. More than the given sample size is not possible because of the time of this semester and also the little difficulty in finding the appointments with the Mangers of Finance Departments. 3 Instruments Questionnaire includes 12 question given to the Managers of the Commercial Banks in order to analyses the perception of the manager that how each individual differs in their perception for the factors that affects the weighted average cost of capital. Most of them include five point likert scales. Other than questionnaire, the balance sheet of 2009 of each bank is used to estimate the WACC for the year and evaluate how the factors like tax rates, interest rates affect WACC. 14 Data CollectionThis research has been carried out to evaluate the correlation between the factors of cost of capital like tax rates, interest rates and the WACC that how these factors affect the WACC in the commercial banks. The selected five banks include: Allied Bank Limited (ABL), Habib Bank Limite(HBL), Muslim Commercial Bank(MCB), Alfalah Bank and Soneri Bank Limited. Descriptive Data Analysis is taken place in order to estimate WACC. This study employs after-tax cost of debt and equity in order to estimate WACC for selected banks. The procedure of calculating after-tax cost of debt and cost of equity has been stated here.The cost of debt measures the cost of borrowing funds of the firm. In calculating the after-tax cost of debt of each bank for the year 2009 by the following formula: After-tax cost of debt = pre-tax cost of debt (1 – tax rate) The cost of equity evaluated through the given formula: Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Finally the Weighted Average Cost of Capital calculated by WACC = (Weighted average cost of debt) + (weighted average cost of equity) CHAPTER 4: DATA ANALYSIS 15 QUESTIONNAIRE ANALYSIS Banks normally prefer financing through debt plus equity. 1% of the commercial banks use both (debt and equity) as their sources of finance while remaining 29% of the banks prefer debt for their investment. Only exploitation of equity is not preferred by any banks because through debt finances, the banks gain and improves profit. [pic] Equity sources liable bank to pay dividend, 71% of the banks says that the dividend payment increases the cost of capital while the other 14% said that it decrease the cost of capital and the remaining said that dividend payment has no such impact on the cost of capital. [pic] 5% of the commercial banks said that by using tax shield , cost of capital decreases as it decreases cost of debt and also impact interest rates. While 14% said that it has no such impact like some of Islamic bank like Meezan Bank. [pic] 71% of the sample size agreed that the Cost of capital has positive impact on the capital structure by using both sources of finance while 15% disagree and other 14% are highly disagree. That means most of the commercial banks are in the favor of Ho that the using both sources improves the profit of the commercial bank. [pic] 7% agrees and 28% strongly agrees that the risk factor of the default increases as there is an increases liabilities when bank finance through debt while only 10% of the sample size disagree to this fact but still they have profit by increasing their liabilities. [pic] Approximately 86% of the commercial banks agree from the fact that the fluctuation in the interest rate affects Cost of Capital and also the Capital Structure of their banks while other says that there is no as such im pact of the interest rates but from secondary data we analyze that interest rate is the factor that affects the cost of capital and the capital structure. pic] 71% of the managers agrees that as low dividend payout affects the reputation of their bank, similarly high dividend payout and dividend growth also affect the capital structure decision whereas 29% of the managers said that high dividend has no such impact on the cost of capital and on investment decision. [pic] 100% of the sample size agrees that cost of capital highly impact the investment decision in the commercial bank that also affects capital structure decision making and increases the profit if the weighted average cost of capital is low. [pic] 5% of the sample size agrees that the cost of capital has a huge impact on the level of risk because the maximization of the profit in the commercial bank is truly based on cost of capital and its other factors. [pic] 57% of the sample size agree that the taxes bring variation in the cost of capital in commercial bank while the other denied that taxes has no such affects on cost of capital but many researches has proved that taxes highly affects the cost of capital. [pic] 100% of the managers agree that weighted average cost of capital reduces as there is reduction in the net financial debt.It can be explained by the fact that if the cost of debt remains same but there is variation in the weightage of the debt. The lower weightage reduces the WACC of the commercial bank. [pic] While the method used for the cost of equity varies in different banks. 15% uses the CAPM, 42% uses the Gordon Growth Model whereas the remaining percentage uses both the CPM and Gordon Growth Model method when they finances through the equity. [pic] 16 DESCRIPTIVE ANALYSIS 17 Allied Bank Limited WACC = (Weighted average cost of dbt) + (weighted average cost of equity)WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |20 08 |2009 | |DIVIDEND/SHARE |2. 5 |2. 5 |3 |3. 5 |4 | |GROWTH |0% |0% |20% |16. 66% |(14. 28%) | Average growth=4. 476% Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Cost of equity =4(1+0. 4476)/59. 11+0. 04476 = 11. 54% | |g |Growth Rate |4. 476% | | |Do |Last Dividend |4 | | |MP |Market Price |59. 11 | | | | | | COST OF DEBT: Interest Rate = 9. 619% Tax rate = 32. 4% Weighted average cost of debt after tax = 0. 09619(1-0. 324)Weighted average cost of debt after tax =6. 503 % WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand |(a) |(b) |(a*b) | | |(000) | | | | |DEBT |39,457,216 |0. 0055 |0. 650 |0. 00036 | |EQUITY |7,110,007,580 |0. 9945 |0. 1154 |0. 11476 | |TOTAL |7,149,464,796 | | |0. 11512 or 11. 51% | ANALYSIS In order to prove our research hypotheses, we find different relation between the interest rates, cost of debt and WACC; we assume different variation in the interest rates as it is the independent v ariable that affects the WACC hich is the dependent variable. In 2009, the interest rate of ABL was 9. 619%, we assume two different rates in which one is greater than 2009 rate i. e. 15% and other is less than 2009 interest rate i. e. 7. 00%. As the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital. Hence, hypotheses Ho and H3 of our research has proved by this analysis because as the interest rate decreases to 7. 00%, the cost of debt also declines which result in decreases in the WACC and vice versa. INTEREST |COD |WACC | |7. 00% |4. 73% |11. 50% | |9. 62% |6. 50% |11. 51% | |15. 00% |10. 14% |11. 52% | pic] For the relation between the taxes rates, cost of debt and WACC. We find different variations among them. Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, ABL has the tax rate of 32. 40%. Similarly we assume one tax rate greater than 32. 4% and another is less than 32. 4% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital.Hence, hypotheses H1 and H4 of our research have proved by this analysis. |TAX RATES |COD |WACC | |30% |6. 73% |11. 84% | |32. 40% |6. 50% |11. 51% | |35% |6. 25% |11. 50% | [pic] 8 Habib Bank Limited (HBL) WACC = (Weighted average cost of debt) + (weighted average cost of equity) WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |2008 |2009 | |DIVIDEND/SHARE |1. 5 |1. 48 |1. 48 |3. 01 |0. 30 | |GROWTH |0 |-1. 333% |0 |103. 378% |-90. 033% | Average growth=2. 4024%Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Cost of equity = 0. 03 (1+0. 024)/40. 9+0. 024 = 2. 475% | |g |Growth Rate |2. 4024% | | |Do |Last Dividend |0. 03 | | |MP |Ma rket Price |40. 90 | | | | | | COST OF DEBT: Interest Rate = (LIBOR+1. 75) = 18. 65% Tax rate = 37. 2% Cost of debt after tax = 18. 65 (1 – 0. 3732) Cost of debt after tax = 11. 69% WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand |(a) |(b) |(a*b) | | |(000) | | | | |DEBT |33,536,837 |0. 786 |0. 169 |0. 0912 | |EQUITY |9,108,000 |0. 214 |0. 0246 |0. 0053 | |TOTAL |42644837 | | |0. 0965 or 9. 65% | ANALYSIS We find different relation between the interest rates, cost of debt and WACC in order to prove our research hypothesis. We assume different variation in the interest rates as it is the independent variable that affects the WACC which is the dependent variable.In 2009, the interest rate of HBL was 18. 65%, we assume two different rates in which one is greater than 2009 rate i. e. 20% and other is less than 2009 interest rate i. e. 12. 00%. As the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital, this can easily proved by given table and you can also find this relation through the given graph. Hence, hypotheses Ho and H3 of our research has proved by this analysis because as the interest rate decreases to 12%, the cost of debt also declines to from 11. 69% to 7. 2% and which result in decreases in the WACC from 9. 65% to 6. 44% and vice versa. |INTEREST |COD |WACC | |12% |7. 52% |6. 44% | |18. 65% |11. 69% |9. 65% | |20% |12. 536% |10. 38% | pic] Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, HBL has the tax rate of 32. 40% that having COD 6. 503% and a WACC of 11. 51%. Similarly we assume one tax rate greater than 32. 4% and another is less than 32. 4% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital. Henc e, hypotheses H1 and H4 of our research have proved by this analysis. Tax rates |COD |WACC | |30% |6. 73% |11. 84% | |32. 4% |6. 503% |11. 51% | |35% |6. 25% |11. 50% | [pic] 19 Muslim Commercial Bank (MCB)WACC = (Weighted average cost of debt) + (weighted average cost of equity) WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |2008 |2009 | |DIVIDEND/SHARE |4. 5 |5. 1 |5. 6 |6 |6. 8 | |GROWTH |0 |13. 33% |9. 8% |7. 14% |13. 33% | Average growth=8. 72%Cost of equity = Gordon growth model = (Do (1 + g))/ (market price per share)] + g) Cost of equity=6. 8(1+0. 0872)/189. 79+0. 0872 =12. 62% | |g |Growth Rate |8. 72% | | |Do |Last Dividend |6. 8 | | |MP |Market Price |189. 79 | | | | | | COST OF DEBT: Interest Rate = 12. 75% Tax rate = 33. 07% Cost of debt after tax = 12. 275 (1 – 0. 3307) Cost of debt after tax = 8. 216% WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand (000) |(a ) |(b) |(a*b) | |DEBT |44,662,088 |0. 0221 |0. 0822 |0. 0018 | |EQUITY |1,972,537,950 |0. 778 |0. 1262 |0. 1234 | |TOTAL |2,017,200,038 | | |0. 1252 or 12. 52% | ANALYSIS From many different previous researches, we find different relation between the interest rates, cost of debt and WACC. We assume different variation in the interest rates as it is the independent variable that affects the WACC which is the dependent variable. In 2009, the interest rate of MCB was 12. 28%, we assume two different rates in which one is greater than 2009 rate i. . 11. 6% and other is less than 2009 interest rate i. e. 14. 90% in order to find the after affects of these changes. Remaining other things constant, as the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital, this can easily proved by given table and you can also find this relation through the given graph. Hence, hypotheses Ho and H3 of our research has proved by t his analysis because as the interest rate decreases to 11. 6%, the cost of debt also declines to from 8. 22% to 7. 6% and which result in decreases in the WACC from 12. 52% to 12. 51% and vice versa. |INTERSET RATES |COD |WACC | |11. 60% |7. 76% |12. 51% | |12. 28% |8. 22% |12. 52% | |14. 90% |9. 97% |12. 6% | [pic] For the relation between the tax rates, cost of debt and WACC. We find different variations among them. Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, MCB has the tax rate of 33. 07%. Similarly we assume one tax rate greater than 33. 07% and another is less than 33. 07% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital.Hence, hypotheses H1 and H4 of our research have proved by this analysis. |TAX RATES |COD |WACC | |30% |8. 59% |12. 53% | |33. 07% |8. 22% |12. 52% | |40% |7. 36% |12. 50% | pic] 20 Al-falah Bank Limited WACC = (Weighted average cost of debt) + (weighted average cost of equity) WACC = (interest (1-tax)) + (Do (1 + g))/ (market price per share)] + g) COST OF EQUITY: |YEAR |2005 |2006 |2007 |2008 |2009 | |DIVIDEND/SHARE |0. 5 |1. 25 |1 |2. 25 |2. 25 | |GROWTH |0 |150% |-20% |125% |0 | Average growth=51%Cost of equity = Gordon growth model =(Do (1 + g))/ (market price per share)] + g) Cost of equity = 2. 25(1+0. 51)/26. 13+0. 51 = 64% | |g |Growth Rate |51% | | |Do |Last Dividend |2. 25 | | |MP |Market Price |26. 13 | | | | | | COST OF DEBT: Weighted average Interest Rate = 6. 406%.Tax rate = 34. 84% Cost of debt after tax = 0. 06406 (1 – 0. 3484) Cost of debt after tax = 4. 174% WEIGHTED AVERAGE COST OF CAPITAL: | |AMOUNT |%AGE COMPONENT |COST |WACC | | |Thousand (000) |(a) |(b) |(a*b) | |DEBT |18,687,600 |0. 00138 |0. 0417 |0. 000057 | |EQUITY |13,491,562,500 |0. 986 |0. 64 |0. 639104 | |TOTAL |13,5 10,250,100 | | |0. 639 or 63. 9% | ANALYSIS Many different researches have concluded that different variation in the interest rates as it is the independent variable that affects the WACC which is the dependent variable. In 2009, the interest rate of Alfalah Bank was 6. 404%, we assume two different rates in which one is greater than 2009 rate i. e. 8. 6% and other is less than 2009 interest rate i. . 4. 6% in order to find the after affects of these changes. Remaining other things constant, as the interest rates increases, it also increases the cost of debt that results in the increase in the weighted average cost of capital, this can easily proved by given table and you can also find this relation through the given graph. Hence, hypotheses Ho and H3 of our research has proved by this analysis because as the interest rate decreases to 4. 6%, the cost of debt also declines to from 4. 174% to 2. 997% and which result in decreases in the WACC from 63. 914% to 63. 0% and vice versa. |I NTEREST RATES |COD |WACC | |4. 6% |2. 997% |63. 90% | |6. 406%. |4. 174% |63. 914% | |8. 6% |5. 604% |63. 918% | [pic] For the relation between the taxes rates, cost of debt and WACC.We find different variations among them. Tax rates are the independent variable so they create different affects on WACC as it is dependent variable. In 2009, Alfalah has the tax rate of 34. 84%. Similarly we assume one tax rate greater than 34. 84% and another is less than 34. 84% in order to prove our hypothesis. From the following analysis, we come to know that as the tax rates increases, it decreases the cost of debt that results in the decrease in the weighted average cost of capital. Hence, hypotheses H1 and H4 of our research have proved by this analysis as they are negatively correlated. TAX RATES |COD |WACC | |25% |4. 805% |63. 917% | |34. 84%. |4. 174% |63. 9% | |40% |3. 844% |63. 915% | [pic] 21 Soneri Bank Limited ANALYSISSoneri Banks has following interest rates and tax rates, which affe ct WACC in the same manner as it affects other commercial Banks. In 2009, it has interest rate of 12. 63% that has the cost of debt 8. 54% and the WACC is of 0. 37%. Variation in the interest rates brings following changes and hence proves our research. |INTEREST RATES |COD |WACC | |11. 60% |7. 84% |0. 35% | |12. 3% |8. 54% |0. 37% | |14. 60% |9. 87% |0. 43% | [pic] Tax rates posses the same affect. As tax rates increases, it has negative relation with the COD and WACC that proves the hypothesis H1 and H4 of our research as in 2009, the tax rate was 32. 34%, when it decrease, the COD increases which also increases WACC and again inversely proportional when Tax rate increase. TAX RATES |COD |WACC | |25% |9. 47% |0. 41% | |32. 34% |8. 54% |0. 37% | |40% |7. 57% |0. 33% | [pic] CHAPTER 5: CONCLUSION AND RECOMMENDATION 1. ConclusionAccording to past related researches, there should be a suitable balance between debt and equity as it has effects on the risk and return of the sharehold ers of the bank. If there are reasonable proportions of debt and equity in the capital structure, it maximizes the shareholders wealth while minimizing the cost of capital and that could be considered as the optimal capital structure. Factors like Interest payment expected deductibility give prospect for value. If the tax deductibility is realized by the bank then stockholders get the expected benefit of the tax deduction.If firm finances through debt, then it has financial risk. And if through equity, then it has business risk. The cost of capital can affect capital structure that the taxes bring variation in the cost of capital and hence affect the capital structure of the banks. Cost of equity increases if the financial risk become high. The cost of equity and debt increases with the increase in debt. On after tax cost of debt, there is the greater the impact of interest deductibility, if the tax rate s higher. Weighted average cost of capital become low with the cost of capital high, if the debt capital increase in proportion.Cost of equity increases with the cost of debt. If the cost of components high the weighted average cost of capital increases and reason is that shareholder prefer to use of debt when expected value of tax benefit is attractive as compared to the added financial risk associated with the debt. The Demanded rate of increase in cost of debt and equity, effects on value of the expected increase in tax benefit of using more debt. Interest rate affects the cost of debt. It involves the risk components that have the probability of default on the debt.In this research, the main finding of the paper suggests that the commercial bank should focus on reducing the cost of capital that maximizes the profit. According to our findings, it is concluded that each banks has its policies of financing. Each bank takes decision of selecting capital structure for minimizing their cost, risk factor differently that occupies good financial position in market . Factors that have impact on cost of capital as well as on capital structure are tax rates, interest rates, dividends payout, risk of default and other like market fluctuation, corporate governance.These factors differently affect the cost of capital and capital structure of each commercial bank. Some banks agree that tax brings variation in the capital structure as the use of taxes decreases the cost of debt but some banks strongly disagree, like Islamic bank Meezan and Alfalah,. These Islamic banks have no such interest rate risk. Tax impacts on cost of capital increases cost of capital agrees by majority of commercial banks, and disagrees by some commercial banks. Dividend impacts on cost of capital increases cost of capital agrees by some banks, and disagrees by some banks.Interest rate brings effects on increase in cost of capital as the interest rate increases the cost of debt also increases but some banks strongly disagreed. Other factors like market fluctuation also influen ce interest rate to increase. And sometimes sudden increase in interest rates influence market. Due to this, all factors differently impact on cost of capital variation (increase and decrease) and capital structure decision making. We have estimated Weighted Average Cost of Capital (WACC) of commercial banks in order to find the effects of cost of capital and their factors on profit and capital structure decision making.We analyze from computing WACC with different assumptions that; †¢ The interest rates increases (decreases), it also increases (decreases) the cost of debt that results in the increase (decreases) in the weighted average cost of capital. Hence, hypotheses Ho and H3 is verify. †¢ The tax rates increases (decreases), it decreases (increases) the cost of debt that results in the decrease (increases) in the weighted average cost of capital. Hence, hypotheses H1 and H4 is verify. The cost of capital improves the profit and capital structure decision making in wh ich other factors also takes part to maximize the profit in the commercial banks. . Recommendations Cost of capital plays a central role in valuation, portfolio selection, and capital budgeting. Therefore, measuring and validating the cost of capital has been the subject of much research. †¢ For reducing cost of capital of bank, we recommend that proportion of debt plus equity financing is better although debt increases risk of default as most of the commercial banks prefer debt financing. Because, debt financing provides tax benefit under suitable market conditions and reduces WACC. †¢ Through equity financing banks give dividend which increases their reputation in market.In short, payment of dividend gives market position. And it is also important because in terms of financial ratios, equity financing shows bank more strong as compared to debt or liabilities. †¢ Adopt an optimal capital structure to improve shareholder value. Capital structure is part of a bank†™s package of financial policies, which include dividend policy and amount of debt and equity claims issued which improves share holder wealth and reduces WACC. Conventional thinking in the area of finance has also assumed that a certain amount of debt in the capital structure is a good thing. Interest rates are high in Pakistan.The following reforms looked-for from the Government of Pakistan (GOP): †¢ Allow and encourage consideration of financial institutions to reduce disintegration in the financial sector. †¢ Strengthen legal and judicial reform laws to allow financial institutions to foreclose on guarantee to reduce risk in the case of unpaid loans without going through lengthy court proceedings. CHAPTER 7: AREA OF FURTHER STUDIES After performing this research we have concluded that the researches on the Weighted Average Cost of Capital in Banks are less or there is no proper research that has taken place for the Commercial Banks.There should be more researches on the factor that are affecting WACC in the commercial banks as its proper estimation maximizes profit. It is found with the help of weightage there is a huge impact on the cost of capital that may be a source of further studies for the commercial bank because proper weightage of debt and equity can improves or enhances the profit of commercial banks. The WACC affects the profit or Capital Structure decision making that has direct affect on the reputation of the commercial banks. CHAPTER 8: REFERENCES †¢ Nadeem A.Sheikh and Zongjun Wang, June 2010, International Journal of Innovation, Management and Technology, Vol. 1, No. 2, Financing Behavior of Textile Firms in Pakistan, pg 130-135 †¢ Khadka, H Bahadur,2006. Leverage and the Cost of Capital. The Journal of Nepalese Business Studies,Vol. III, No1: 85-91 †¢ Modigliani, F. and Miller, M. H. 1963. Corporate Income Taxes and the Cost of Capital: A Correction. American Economic Review: 433-443. †¢ Shubber, K. and Alza firi, E. (2008). â€Å"Cost of capital of Islamic banking institutions: an empirical study of a special case†, International Journal of Islamic and Middle Eastern Finance and Management, Vol. No. 1, pp. 10-19 †¢ Bruner, R. F. , Eades, K. M. , Harris, R. S. , Higgins, R. C. (1998). â€Å"Best practices in estimating the cost of capital: survey and synthesis†, Financial Practice and Education, Spring/Summer, pp. 13-28. †¢ Miller, R. A. (2006). â€Å"The weighted average cost of capital is not quite right†, The Quarterly Review of Economics and Finance, 49 (2009) 128–138 †¢ Jorgenson, Dale W. and Ralph Landau (1993). Tax Reform and the Cost of Capital – An International Comparison. Washington, D. C. : Brookings Institution. †¢ Fama, E. F. , and K.French, 1997, Industry costs of equity, Journal of Financial Economics 43, 153-193. †¢ Fama, E. F. , and K. French, 1999, The corporate cost of capital and the return on corporate inv estment, Journal of Finance 54, 1939-1967. †¢ John J. Pringle, the Capital Decision in Commercial Banks, the Journal of Finance, Vol. 29, No. 3 (Jun. , 1974), pp. 779-795 †¢ Richard Lambert*, Christian Leuz, Robert E. Verrecchia â€Å"Accounting Information, Disclosure, and the Cost of Capital† September 2005, Revised, August 2006 †¢ Barton, S. L. and P. J. Gordon (1987). ‘Corporate strategy: Useful perspective for the study of capital structure? Academy of Management Review, 12, pp. 67-75 †¢ Balakrishnan, S. and I. Fox (1993). ‘Asset specificity, firm heterogeneity, and capital structure', Strategic Management Journal, 14(1), pp. 3-16. †¢ A. Seth (1990). ‘The impact of LBOs on strategic direction', California Management Review, 32(1), pp. 30-43. †¢ Groth John C. , â€Å"Capital structure: Perspectives. † Management Decision 35:7 (1997): 552–561. †¢ John C. Groth, Professor, Texas A University, USA â€Å"Capi tal Structure: Implications†, 1997. †¢ Ross, Stephen A. , Randolph W. Westerfield, and Jeffrey Jaffe. Corporate Finance. 9th ed.Boston, MA: McGraw-Hill, 2010. †¢ Alan J. Auerbach, Wealth Maximization and the Cost of Capital, the Quarterly Journal of Economics, Vol. 93, No. 3 (Aug. , 1979), pp. 433 †¢ John R. Graham, â€Å"Taxes and Corporate Finance: A Review†, the Review of Financial Studies, Vol. 16, No. 4 (Winter, 2003), pp. 1075-1129 †¢ Meziane Lasfer, Professor, Cass Business School, UK â€Å"Optimizing the Capital Structure: Finding the Right Balance between Debt and Equity†. †¢ William F. Coffin and Sean Collin, 2006, Techniques to lower the cost of capital in today’s volatile markets, CCG Investor Relations. Ali Murtaza, manager financial reporting and analysis, finance division, BANK ALFALAH LIMITED. †¢ Amir Ahmed, risk manager, Asst. vice president, Risk Management Unit, MEEZAN BANK. †¢ Aniel Victor, Asst. manag er, Riak management, UBL FUNDS MANAGERS. †¢ Syed Ali Shabar, Branch Manager, MCB BANK LIMITED. †¢ Raza Abbas, Asst. vice president, Portfolio Management, HABIB BANK LIMITED. †¢ Aamir Maysorewala, customer service manager, ALLIED BANK LIMITED. †¢ Riazullah Khan, Assistant Vice President & Manager, SONERI BANK. APPENDIX A Questionnaire NAME_________________________DESIGNATION_________________ BANK__________________________ BRANCH_______________________ 1. Debt and equity are the sources of finance, through which source your bank finances their investment? a) Debt b) Equity c) Both 2. What is the impact of dividend payment on cost of capital as using equity is source of finance that will liable bank to pay dividend? a) Increase cost of capital b) Decrease cost of capital c) No impact on cost of capital 3. Tax shield also has an important factor in cost of capital, how tax impact on cost of capital? a) Increase cost of capital b) Decrease cost of capital ) No impact on cost of capital 4. Cost of capital has positive impact by using both sources of finance. [pic] 5. When bank finance through debt, it increase liabilities that also increase the risk factor of default. [pic] 6. Fluctuation in the interest rate affects Cost of Capital and also the Capital Structure of your banks. [pic] 7. As low dividend payout will affect the reputation of your bank, is high dividend payout and dividend growth affect the capital structure decision? [pic] 8. Cost of capital occupies an important role in the financial management and in investment decision making in commercial banks. [pic] . Cost of capital affects the level of risk in commercial bank. [pic] 10. Taxes bring variation in the capital structure of commercial banks. [pic] 11. Reducti

Friday, August 30, 2019

Analysis of Newspaper Article Essay

Exercising daily is beneficial to a person’s health. While many people exercise for this reason, they are seeking methods to improve endurance and performance. In an attempt to offer durability and better endurance, sports drink manufacturers have started to add protein to their products. â€Å"Sports drinks improve performance during prolonged exercise because of two key ingredients, carbohydrates and sodium (Preidt, 2006). † The carbohydrates provide the fuel and the sodium aids in maintaining fluid balance. While sports drinks may be helpful during exercise, added protein may or may not increase performance. Gatorade and Accelerade sports drink companies sponsored two studies to determine if this is true. One study thinks that adding protein increases performance, the other does not. Type of statistical procedure used Sometimes individuals are aware of the experiment and may not be honest about the results from the test. In this test, experimenters were trying to avoid the placebo effect. The placebo effect is when people improve because they think that they are receiving useful treatment (Bennett, Briggs, & Triola, 2003). To rule out the possibility of the placebo effect, the athletes were told that some of the drinks will contain protein; they were not told which ones. The placebo effect would alter the test and the results would be biased because the athletes would claim performance improvement, thinking that their drinks contained protein. When using a placebo, the athletes must know that the drinks may or may not contain protein. But, they must also know that they will not be able to tell the difference in taste. The placebo appears to be the same but lacks the active ingredient; in this case there was no protein present in some of the drinks. The participants were not aware of which drinks had protein, thus their answers would more likely be real. The studies The studies used 10 trained cyclists to determine if adding protein to sports drinks would increase performance and endurance. In the studies, the cyclists did not know which sports drink they were consuming. In both studies the cyclists were given one of three drinks. They were either given a regular sports drink, one with protein added, or a placebo. This trial was taken on three different occasions. Findings The Canadian study, sponsored by Gatorade, found that adding protein does not improve exercise performance (Preidt, 2006). Martin Gibala was the lead researcher for this study. Of the three sports drinks, the results showed that sports drinks overall did improve performance when compared to the placebo. But, the study also showed that the sports drink with the protein was no more beneficial than the regular one (Preidt, 2006). Gibala states â€Å"our study shows that protein confers no performance benefit during ? real-life’ exercise when athletes consume sufficient amounts of sports drinks. † While the Gatorade study does not believe that protein increases performance, Accelerade’s study states otherwise. Accelerade’s sports drink contains carbohydrates, sodium, and protein. The athletes in their study lost about 2. 5 percent of their body weight through exercise-induced sweating. According to the researchers for this study, Accelerade with protein rehydrated the athletes 15 percent better than those drinking Gatorade and 40 percent better than those drinking plain water (Preidt, 2006). Appropriateness of findings Because the cyclists in the studies were trained and all received the same drinks, I think that the results are inconclusive. Gatorade’s results state that adding protein does not improve performance while Accelerade’s results are not given. Accelerade’s study only states that its sports drinks rehydrate better, but does not address the issue of performance. I think that more research should be done and untrained athletes should be used as well. Because more than just trained athletes consume these beverages, a broader group should be trialed. While the study only addresses those trained cyclists, its results may differ for other athletes. Conclusion When studying the affects of adding protein to sports drinks, one must look at all factors. Factors include age, weight, athleticism, and product consumed. One must also determine if the protein actually increased performance. While Gatorade made a conclusive decision, Accelerade did not. If an athlete was going to make a decision on whether or not to purchase a protein-infused sports drink, he or she would not be able to make a decision based on Accelerade’s research. References: Bennett, J. O. Briggs, W. L. , & Triola, M. F. (2003). Statistical reasoning for everyday life (2nd ed. ). Boston, MA: Pearson Education, Inc. Preidt, R. Health Day News. (Aug 2006). Studies Divided on Value of Adding Protein to Sports Drinks. Retrieved September 4, 2006 from http://www. medicinenet. com/script/main/art. asp? articlekey=63522.

Thursday, August 29, 2019

Create a company Assignment Example | Topics and Well Written Essays - 1500 words

Create a company - Assignment Example However, government has to take concrete measures to reduce vehicle abandonment. But, then why government has to intervene and why not any of the corporate entities can do the job. Governmental intervention is necessary because it has the financial and human ability that is needed to manage, control and reduce the vehicle abandonment problem. The involvement of corporate entity in the process of managing the featured problem is ill-advised because corporations always look to maximize their returns and they are least bothered about the provision of societal benefit (Richard, 2007). The project that will be developed in order to control vehicle abandonment is societal in nature and therefore, government is the best institution for running and managing it. Secondly, Saudi Arabian technological outlook is not very notable and therefore, the country has already outsourced its major operations to foreign contractors (Algehtani, 2003). The development of recycling company should not be diff erent. The proposal of outsourcing vehicle destruction and recycling is presented because technological development needed to do the job locally is astronomically expensive. Moreover, the economic development of Saudi Arab is attributed to the practice of outsourcing while the governmental and political leadership is familiar and habitual of working with outsourcers. The outsourcing decision will also assist the government in cutting down time required to get underway. Thus, the goal of removing undesirable machinery from the roadside can be accomplished both efficiently and effectively. In addition, government will have to provide operational licensing to only one international company that has the appropriate technological ability and muscle to manage such a vast operation. The company’s cultural understanding of the local environment of the nation should also be given significant weight while choosing the contracting partner for vehicle demolition (Trompenaars, 1996). Gove rnment on the other hand, has to ensure that corporate competition should not develop in the vehicle destruction industry at least for initial few years. The notion of competition can ruin the societal benefit dimension of vehicle destruction and the goal of maximizing profits will govern the industry once again (Margolis & Walsh, 2003). The top, middle and operational management of the service provider must be responsible for building recycling units across every major city of the country. The general idea is to give people an option to go and deposit their unwanted cars to a recycling center rather than leaving them idol on the roadside. The environmental concerns associated with vehicle abandonment are growing because machinery starts to decompose in few days from abandonment and therefore, its lubricants initiate to seep through. The seeping through of lubricants cause filthiness on the road to increase and when thousands of cars get dumped every year then the environmental cost becomes inconceivably high. According to a recent research project, the overall dirtiness level in the society can be a determinant of public health. The geographical location on the country is also noticeably playing its hand in aggravating the problems and health concerns attached with vehicle abandonment. Additionally, excellent economic conditions of Arab’s citizens permit them to change their cars every now and then whereas, there is no organized

Wednesday, August 28, 2019

Performance Measurement Assignment Example | Topics and Well Written Essays - 250 words

Performance Measurement - Assignment Example Performance measurement is an incessant examining of an outcome with time, frequently for several years, to look for dissimilar signals of change that can be due to different campaigns, programs or initiatives (Chiesa & Frattini, 2009). Evaluation undoubtedly can employ quantitative measures to settle on if the change has occurred or not. But it usually brings qualitative information into the act. With performance measures, change signals in the time sequence of quantitative data are vital. Performance measurement is not a part of the assessment. It is a means that managers use, but not evaluators. Distinct from program evaluation, which calls for an excellent methodological collection and requires the knowledge of trained evalua ­tors, performance measurement is clear-cut. Program objectives along with resultant outcomes are recognized (Chiesa & Frattini, 2009). Another benefit is that measures track results, and data are collected that allow managers and other stakeholders to scrutinize program performance. Performance measures consequently necessary in order to know whether the program is performing where it ought to be. It is then easier to do a program evaluation to find out why it is not meeting the

Tuesday, August 27, 2019

Exploring corporate strategy Essay Example | Topics and Well Written Essays - 1500 words

Exploring corporate strategy - Essay Example This is true for all sectors of industry including the automobile industry. Bayerische Motoren Werke is an established name in the automobile industry and is not excluded from the both the challenges and the opportunities that the new world order has brought. The global automotive industry faces risks at the same time finds new opportunities. Plans to make use of these opportunities could become unstuck if the challenges of competition, supply chain management and the retail environment. The challenges do not just end there In addition they need to cope with new regulations, demands on cost reduction, managing capacity and inventory, and maintaining a control on healthcare and compensation costs.(Automotive). Looking at the opportunities that are available to the automobile industry, the economic development in the Asian region and in particular the more populated countries of China and India present an example of a definite one. The economic development and the large upwardly moving middle class present an opportunity that no automobile would want to miss. An added feature is that the local manufacturing of the region located in Japan and Korea that have offered stiff competition to the European car manufacturers are not expected to meet the growing demand in both quantity and quality from these expanding markets. (Michael, R. 2000. Automotive Industries). Another opportunity that may be considered by high end automobile manufacturers in existing markets is the customer willingness to spend money on automobiles that have trendy looks and powerful engines. (Kelly, K. 2005. The BUSINESS of PERFORMANCE). Globalisation has broken down the political barriers that were present in the past to expansion of markets. This has not diminished the requirement of maintaining the necessary political liaison in countries where the markets are attempted to be tapped or in expansions to manufacturing in existing markets. Location of manufacturing units of the

Monday, August 26, 2019

The Positioning, Entrepreneurial and Cognitive Schools of Strategy Essay - 1

The Positioning, Entrepreneurial and Cognitive Schools of Strategy - Essay Example It is most commonly used in conducting research on linguistic, history, communication, psychology, political science, education and the study of complex organizations (Waltz, et al, 2010). Strategy content research is especially used in conducting research targeting the often extremely turbulent nursing and healthcare research programs because it is able to provide a basic and relevant approach is suitable in both approaching and retrieval of information and data from a large number of sources in a manner that can be perceived as being more objective and systematic in comparison to intuitive listening or reading this is, in addition to its utility as, a feasible tool in data analysis strategy when one conducts qualitative research (Waltz, et al, 2010). When applied in the conduction of quantitative research, the method invokes the objective simplification and reduction of the recorded data and language to a simple set of categories each representing frequency, intensity or presence of selected characteristics. Strategic thinking is critical in order for one to be able to engage in an effective, strategic planning process. There are several actions that a person can undertake to enable them conduct an effective, strategic planning process. A person needs to try and engage in activities, whether physical or mental that support and encourage the development of strategic thinking on their part. Individuals are encouraged to try and participate in creative art forms. It also greatly aids an individual if the said individual secures the services of a good mentor or coach who can be able to guide them through essential reflective processes involving critical reflection, critical dialogue and critical inquiry. This should be done until it eventually becomes a habit (Sloan, 2012). The use of Constructivist approach can also aid in ensuring adequate mental processes are carried out before an effective mental planning process can be carried

Sunday, August 25, 2019

How Has The Emergence Of The Internet Help The Sport Industry Research Paper

How Has The Emergence Of The Internet Help The Sport Industry - Research Paper Example This research will begin with the definition of the term ‘Information Technology (IT)’ that mainly deals with technology which is utilized for handling information or facts. It is defined as that subdivision of engineering that mainly deals with the utilization of electric devices namely computers and telecommunications protocols to retrieve, accumulate and convey information or facts to other sources, when required. The process of IT includes attainment, dispensation, storage and broadcasting of verbal, pictorial, textual and statistical information with the help of a microelectronics-base, blended by computing and telecommunications. IT mainly utilizes internet as the prime source to transfer information in this era of globalization and industrialization. Internet is an international system which is interconnected with varied computer systems which utilizes numerous usual internet procedure suites (TCP/IP) to serve billions of customers globally. It is a system of netw orks that comprises millions of personal, public, scholarly, business and administration networks around the globe, which are allied by a wide array of electronic, wireless and visual networking equipments. Internet is one of the significant technologies which is utilized to transmit an extensive assortment of information or facts, namely inter-related hypertext credentials of the World Wide Web (WWW) as well as infrastructure to support electronic mails. The introduction of internet has permitted or accelerated innovative types of human relations with the help of immediate messaging, ‘internet forum’, and societal networking sites. ... nd administration networks around the globe, which are allied by a wide array of electronic, wireless and visual networking equipments (Coffman & Odlyzko, 2001). Internet is one of the significant technologies which is utilized to transmit an extensive assortment of information or facts, namely inter-related hypertext credentials of the World Wide Web (WWW) as well as infrastructure to support electronic mails. The introduction of internet has permitted or accelerated innovative types of human relations with the help of immediate messaging, ‘internet forum’, and societal networking sites. In addition, the passion of online shopping also emerged both in retail sectors and in sport industries. This is so, because of internet facility, individuals can access any retail or sports website all round the world in a single span of time, which is highly effective (Rajashekar, 2004). The paper highlights the influences of internet on the industry of sports. It also spotlights vari ous other factors as well affecting the sports industry due to internet. Discussion According to Smith & Westerbeek (2003), internet is one of the primarily used global networks,  which includes an organized set of  computer networks to offer variety of information or facts from one place to the other. Internet is also known by a short form of  scientific term named internetworks, which includes interrelation of computer systems with unique gateways or routers. Moreover, due to emergence of internet, the position of sports industry enhanced in a robust way all around the globe, which is rather quite noteworthy. This is because invention of internet enhanced the competitive advantages of varied sports brands from one another. Competitive Advantage Competitive advantage is referred as the process by

Saturday, August 24, 2019

Effectiveness in the global organisation Essay Example | Topics and Well Written Essays - 2500 words

Effectiveness in the global organisation - Essay Example This study evaluates fundamental functions and concepts of management and the challenges that global organisations face with respect to management function. Leadership as the essence of management has defined or determined the fate of many organisations, at local and global levels. However, leadership at global levels is greatly influenced by factors such as behaviour, perception, attitudes, and knowledge impacted by sociocultural aspects. An awareness of challenges to leadership through ground-breaking principles proposed by Hofstede and Trompenaars is necessary to understand how leadership can contribute to the success of global organisations. Management has been defined in many ways by various people. Earlier, management was defined as ‘getting things done through other people’; currently, management is referred to as ‘working with and through other people to accomplish the objectives of both the organisation and its members’ (Montana & Charnov, 2000; p.2). Evolution of this concept is traced back to Frederick Taylor’s scientific management, also known as Taylorism; later refined by Henry Ford, known as Fordism. However, the foundation for management principles is said to have been laid by Henry Fayol in the form of five elements or functions of management: planning, organising, commanding, coordinating and controlling. Fayol also developed 14 management principles from these functions (see appendix 2.1). These management practices were framed to direct workers to follow specific steps that will help in achieving the larger organisational goal, driven through managers (Lucey, 2004). The process of trans-migration of humans from one place to another for food, eventually trade and business solidified attributed to the huge monetary gains; this process further intensified with increasing needs, development of means of transportation, technology, communication; further reinforced by increasing population, demand for

Friday, August 23, 2019

What academic class has been your favorite and why Essay

What academic class has been your favorite and why - Essay Example In art, I try to conceptualize what to draw; to analyze why this method would be most preferred given the forms, structures, materials that are contemporarily available. There is this anticipation and waiting to determine the outcome of one’s strategies; of the combined details that produce a unique and aesthetic form – materializing before one’s eyes.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Consistent with the Columbia University’s mission of focusing on intellectual mobility, social mobility and career mobility, my personal and professional goals include gaining the theoretical framework in arts and enable me to excel in this field of endeavor. I am aware that although I have manifested interests in arts and mathematics in my high school years, there is much to gain in pursuing higher education in terms of developing the skills, knowledge, and abilities that would make me a connoisseur. There is much to appreciate in the field of arts and I plan to pursue even higher education to delve into the Master of Fine Arts program if and when allowed.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The evolution of arts have undergone significant changes and contemporary art continues to be transformed through the multidimensional skills gained by students from Columbia University. I am confident that what initially began as favorite subjects in math and art would be transformed to productive applications that would benefit future generations.   

Emerging Business Themes Essay Example | Topics and Well Written Essays - 3000 words - 2

Emerging Business Themes - Essay Example It has a more than 7,500 restaurants in the United States and over 5,600 restaurants in 97 countries. (Yum! Brands, 2009). Social Media is defined as "a group of Internet-based applications that are build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content† (Kaplan Andreas M., 2010) . Pizza Hut, which started spreading as a franchise restaurant has evolved over a period of time keeping pace with the latest developments. Needless to say, that its diverse delivery format required huge investment in technology. Now, it is also investing in Social Media technology to keep up with its customers like many other ‘brands [which] are rushing to keep up with consumer behavior’ (Peter Kim, 2009). Pizza Hut is still testing grounds when it comes to social media technology. To find out what the customers want to hear, they engage in conversations with customers over the social media sites. It has initiated various campaigns targeted at increasing its online presence. It has marked its presence on Facebook and Twitter and is offering ‘hot’ deals to the users of these websites. However, a well defined marketing strategy regarding its social media networking is yet not in place. Pizza Hut has set its communication goals as – 1) giving people an engaging and fun way to find news and information from Pizza Hut, and 2) creating two-way relationships with our customers, built on trusted conversation. (Fuller, 2009) Probably its communication goals led Pizza Hut to announce its intention to hire an intern for managing its Twitter account. Although this piece of news was intended to establish camaraderie with the generation using Twitter, it gathered a lot of criticism from marketing gurus who thought it was a bad idea to let an intern handle an international brand on an international platform. (Evans, 2009) While social media technologies represent exciting new opportunities for

Thursday, August 22, 2019

Science Department Essay Example for Free

Science Department Essay Every student has unique study techniques and strategies that fit him or her. Studying at night might be suitable for one student but not for all. Theories are major components in education. Many years have pass and I’m still open for another approach in learning for the betterment of my education. Spoon feeding might be good in some areas or field but not in some. During theoretical approaches I learned a lot but my knowledge was more enhanced when they were put into application. During laboratory activities a particular topic is more expounded and it even inspires me to pursue my education due to the fact that it injected me not only the importance of it but also the fun in doing it. Another thing is the laboratory report. New ideas were learned to ensure that the report is accurate and it also helped me think critically. The subject helped me discover the skills that I have to develop. One of those is the skill in conducting a study. I need to know more about the topic first and even search for the previous work which is related to it. I know everything should be developed and that’s one of the skills that I want to be expounded. Evolution explains the history and diversity of life. The evidences are used to formulate such theory: fossil records and comparative anatomy, embryology and biochemistry. These are used by the researchers to trace the human origin or the origin of life. It is supported by the vestigial structures and biogeography. The theory was developed by Charles Darwin. In his theory he said that man came from apes. Many factors causes particular specie to evolve, one is the environment. Due to it, specie will adopt and thus genetic build up change in a span of time. What interests me with this area of biology is the question: does man came from apes? Although there are many evidences but might be a missing link. Most likely, this can be answered if I learn the theory had its evidences. Metabolic processes have a wide area or field of study. Metabolism is defined as a chemical reaction by which molecules are broken down to produce energy. This energy also uses to build up complex molecules. A simple example of this process is the taking in and digestion of foods to nutrients. There are two types of this process; catabolism and anabolism. Catabolism is a process used to release energy and anabolism is a process used to build up tissues by the use of energy. These processes are very essential to life. Through this are of biology I could learn some knowledge to develop a study that could help attain a perfect metabolism. I want to learn more about how cells and nutrients react and how the chemical reactions occur and help these processes. Genetics is an interesting field of biology. Molecular genetics is a study of the structure and function of genes in a molecular level. This field is the one responsible for mutation and the regeneration of some specie. This study uses the molecular information to determine the patterns of descent or origin. A plant is composed of highly structured components that it can even be compare to human beings. It has also cells that made it a living structure. When it comes to plant, I’m really amazed how a seed can survive a long period of time without water or anything for his survival and even some are dried but when planted, there he goes; a new creation appears that gives beauty and life. This are is so interesting. Even plants finds a way to get light from the sun that’s why there are many trunks are bended due to this characteristic. Homeostasis often described as the resistance of a body to change. Our body has a mechanism that can control the internal equilibrium of the body. When the temperature of our body rises, our body releases a liquid that will serve as a radiator in the form of sweat. This is used to attain the body normal temperature which does not exceed thirty seven degree Celsius. When our anti-bodies can no longer fight the bacteria, our body temperature rises up. Everything in homeostasis is involuntary. We cannot control it, only the environment, also, when our body is in cold, our body shivers. In this manner the muscles in our body will generate friction due to the collision of molecules and will release energy in the form of heat. What I like most in this area is the ability of our body to do as such. I want to learn more about this topic for me to be aware what really will happen to my body in a particular environment or I could even predict how my body will react. Population dynamics is the study marginal and long term changes in quantity or number of a specie. This can be age composition of an individual, weights or several populations. This is commonly used in animal management. This study can determine how long a particular animal be harvest. This can also determine how long and how many will be harvested in a particular time. This also includes the mortality rate and the birth rate of particular specie. This is very useful in animal raising. I want to learn how to compute or determine how fast and how much particular specie will survive in a given environment. This can be useful in conducting studies about biosphere or the artificial environment. Everything in this subject is very essential and interesting that’s why I choose to take this class. I believe that everything I need to learn, the basic or even the sophisticated one, will be learned in this class. Another reason also is because I have tried previous classes and found its worth, I take this. The strategies and evaluations are good. The laboratory activities, reports, and the like makes me feel the significance of this class. To further deepen my knowledge I need to learn through this. Grades or marks do not really matter. They are only the basis and ensure that I know something. What’s important is the knowledge that I can acquire in taking this class but of course it will be good if I’ll get a high marks. This class will only be called a success to me when everything written on the syllabus will be inculcated in my mind and be used in application. Everything is uncertain, of course. I do not know what exactly will happened but I know it will be for my good. What I need to do is to study hard and listen to every discussions. If ever I missed something or I want something that could add my knowledge I will not hesitate to ask. It will be better if I’ll be a fool for a singlke time than be a fool for the rest of my life. What I’m trying to say is that the shame will not matter even if I’ll be the last person to know the information I’ll still ask, remember knowledge is power. I guess I have nothing to suggest because I thing everything goes well and good as what I’ve known. I guess the research work will we enhanced to further improve and broaden the knowledge of the students. As what I’ve stated, research really helped the students to be more resourceful and to think critically. Work cited: Fletcher’s Meadow Science Department (2007). Retrieved January 28,2007 from http//:fmssscience. com Molecular Genetics (2007). Wikipedia Foundation, Retrieved January 28, 2007 from http//:en. wikipedia. org/wiki/molecular_genetics

Wednesday, August 21, 2019

Advanced Design System

Advanced Design System DESIGN AND ANALYSIS OF A SINGLE-STUB NOTCH FILTER USING AGILENTS ADVANCE DESIGN SYSTEM (ADSTM) ABSTRACT: The purpose of this case study is to acquire an idea on the design of single-stub notch filters using Agilent advanced design system (ADSTM). By properly calculating the required width, length and insertion loss of the single stub notch filter using ADS one can design a notch filter which can block frequencies not required. In the micro strip layout when wavelength of the stub is , the open circuit of the stub is converted to short circuit and signals along the notch filter are blocked. By adjusting the width and using various functions like line calc the parameters of the filter are calculated and the filter is designed and analysed. Agilent advanced system is an effective software for the analysis of the microwave links. INTRODUCTION: Advanced Design System (ADSTM): Advanced Design System is the industry leader in high-frequency domain design. It supports electronic systems and RF design engineers developing all types of RF designs, from simple to the most complex, from RF or microwave modules to be integrated MMICs for communications and aerospace/defense applications. ADS is With a complete set of simulation technologies ranging from frequency, time, numeric and physical domain simulation to electromagnetic field simulation, ADS lets designers fully characterize and optimize designs. The single, integrated design, GUI graphical user interface environment provides system, circuit, and electromagnetic simulators, along with schematic capture, layout, and verification capability eliminating the starts and stops associated with changing design tools in mid-cycle. ADS can be used for virtual prototyping, debugging, or as an aid in manufacturing test. To enhance engineering productivity and shorten time-to-market, ADS software offers a high level of design automation and applications intelligence. This proven software environment is easily extensible: we can customize ADS by adding features focused on your particular application needs. An AD runs on PCs and workstations, with complete file compatibility between platforms and across networks. [8] Advanced Design Systemis a powerful electronic design automation software used by leading companies in the wireless communication networking and aerospace defence industries. For WiMAXâ„ ¢, LTE, multi-gigabit per second data links, radar, satellite applications, ADS provides full, standards-based design and verification with Wireless Libraries and circuit-system-EM co-simulation in an integrated platform. Key Benefits of ADS  · Complete, integrated set of fast, accurate and easy-to-use system, circuit EM simulators enable first-pass design success in a complete desktop flow.  · Application-specific Design Guides encapsulate years of expertise in an easy-to-use interface. Components used in (ADSTM) system Term (Port Impedance for S-parameters): Parameters: Name Description Units Default Num Port number Integer 1 Z Reference impedance, use 1+j*0 for complex Ohm 50 Noise Enable/disable port thermal noise: yes, no (for AC or harmonic balance analysis only; not for S-parameter analysis) None yes V(DC) Open circuit DC voltage None None Temp Temperature oC None Table1: Parameters of Term Note: ‘Term can be used in all simulations. For S-parameter simulations it is used to define the impedance and location of the ports. When not in use, it is treated as an impedance with the value R + JX. The reactance is ignored for dc simulations. MLOC (Micro strip Open-Circuited Stub): MLOC symbol MLOC Illustration Parameters: Name Description Units Default Subst Substrate instance name None MSub1 W Line width mil 25.0 L Line length mil 100.0 Wall1 Distance from near edge of strip H to first sidewall; Wall1 > 1/2 Ãâ€" Maximum( W, H) mil 1.0e+30 Wall2 Distance from near edge of strip H to second sidewall; Wall2 > 1/2 Ãâ€" Maximum( W, H) mil 1.0e+30 Temp Physical temperature (see Notes)  °C None Mod Choice of dispersion model None Kirschning Table 2: Parameters of MLOC Range of Usage: 1≠¤Er ≠¤128 ; 0.01 ≠¤ ≠¤ 100 Where, Er = dielectric constant (from associated Subst) H = substrate thickness (from associated Subst) Recommended Range for different dispersion models Kirschning and Jansen: 1≠¤Er ≠¤20; 0.1Ãâ€"H≠¤W ≠¤100Ãâ€"H Kobayashi: 1 ≠¤Er ≠¤128; 0.1Ãâ€"H ≠¤ W ≠¤10Ãâ€"H; 0 ≠¤H≠¤0.13Ãâ€"ÃŽ » Yamashita: 2 ≠¤Er ≠¤16; 0.05Ãâ€"H ≠¤W ≠¤16Ãâ€"H Where, ÃŽ »= wavelength; freq ≠¤ 100 GHz Notes and Equations : 1. The frequency-domain analytical model uses the Kirschning and Jansen formula to calculate the static impedance, Zo, and effective dielectric constant, Eeff. The attenuation factor, ÃŽ ±, is calculated using the incremental inductance rule by Wheeler. The frequency dependence of the skin effect is included in the conductor loss calculation. Dielectric loss is also included in the loss calculation. 2. Dispersion effects are included using either the improved version of the Kirschning and Jansen model, the Kobayashi model, or the Yamashita model, depending on the choice specified in Mod. The program defaults to using the Kirschning and Jansen formula. 3. For time-domain analysis, an impulse response obtained from the frequency analytical model is used. 4. The Temp parameter is only used in noise calculations. 5. For noise to be generated, the transmission line must be lossy (loss generates thermal noise). 6. To turn off noise contribution, set Temp to −273.15 °C. 7. When the Hu parameter of the substrate is less than 100Ãâ€"H, the enclosure effect will not be properly calculated if Wall1 and Wall2 are left blank. 8. Wall1 and Wall2 must satisfy the following constraints: Min(Wall1) > 1/2Ãâ€"Maximum(W, H) Min(Wall2) > 1/2Ãâ€"Maximum(W, H) MLIN (Micro strip Line): MLIN symbol MLIN Illustration Parameters: Name Description Units Default Subst Substrate instance name None MSub1 W Line width mil 25.0 L Line length mil 100.0 Wall1 Distance from near edge of strip H to first sidewall; Wall1 > 1/2 Ãâ€" Maximum( W, H) mil 1.0e+30 Wall2 Distance from near edge of strip H to second sidewall; Wall2 > 1/2 Ãâ€" Maximum( W, H) mil 1.0e+30 Temp Physical temperature (see Notes)  °C None Mod Choice of dispersion model None Kirschning Table 3: Parameters of MLIN Range of Usage: 1 ≠¤ ER ≠¤ 128; 0.01 ≠¤ ≠¤ 100 Where, ER = dielectric constant (from associated Subst) H = substrate thickness (from associated Subst) Recommended Range for different dispersion models Kirschning and Jansen: 1 ≠¤ Er ≠¤ 20; 0.1 Ãâ€" H ≠¤ W ≠¤ 100 Ãâ€" H Kobayashi: 1 ≠¤ Er ≠¤ 128; 0.1 Ãâ€" H ≠¤ W ≠¤ 10 Ãâ€" H; 0 ≠¤ H ≠¤ 0.13 Ãâ€" ÃŽ » Yamashita: 2 ≠¤ Er ≠¤ 16; 0.05 Ãâ€" H ≠¤ W ≠¤ 16 Ãâ€" H Where ÃŽ »= wavelength; freq ≠¤ 100 GHz Notes and Equations: 1. The frequency-domain analytical model uses the Hammerstad and Jensen formula to calculate the static impedance, Zo, and effective dielectric constant, Εeff. The attenuation factor, ÃŽ ±, is calculated using the incremental inductance rule by Wheeler. The frequency dependence of the skin effect is included in the conductor loss calculation. Dielectric loss is also included in the loss calculation. 2. Dispersion effects are included using either the improved version of the Kirschning and Jansen model, the Kobayashi model, or the Yamashita model, depending on the choice specified in Mod. The program defaults to using the Kirschning and Jansen formula. 3. For time-domain analysis, an impulse response obtained from the frequency analytical model is used. 4. The Temp parameter is only used in noise calculations. 5. For noise to be generated, the transmission line must be lossy (loss generates thermal noise). 6. To turn off noise contribution, set Temp to −273.15 °C. 7. When the Hu parameter of the substrate is less than 100 Ãâ€" H, the enclosure effect will not be properly calculated if Wall1 and Wall2 are left blank. 8. Wall1 and Wall2 must satisfy the following constraints: Min(Wall1) > 1/2 Ãâ€" Maximum(W, H) Min(Wall2) > 1/2 Ãâ€" Maximum(W, H) MTEE (Microstrip T-Junction): MTEE symbol MTEE Illustration Parameters: Name Description Units Subst Microstrip substrate name None W1 Conductor width at pin 1 Mil W2 Conductor width at pin 2 Mil W3 Conductor width at pin 3 Mil Temp Physical temperature  °C Table 4: Parameters of MTEE Range of Usage: 0.05 Ãâ€" H ≠¤ W1 ≠¤ 10 Ãâ€" H; 0.05 Ãâ€" H ≠¤ W2 ≠¤ 10 Ãâ€" H; 0.05 Ãâ€" H ≠¤ W3 ≠¤ 10 Ãâ€" H Er ≠¤ 20 Wlargest/Wsmallest≠¤ 5 where Wlargest, Wsmallest are the largest, smallest width among W2, W2, W3 f(GHz) Ãâ€" H (mm) ≠¤ 0.4 Ãâ€" Z0 Z0 is the characteristic impedance of the line with Wlargest Notes and Equations: 1. The frequency-domain model is an empirically based, analytical model. The model modifies E. Hammerstad model formula to calculate the Tee junction discontinuity at the location defined in the reference for wide range validity. A reference plan shift is added to each of the ports to make the reference planes consistent with the layout. 2. The center lines of the strips connected to pins 1 and 2 are assumed to be aligned. 3. For time-domain analysis, an impulse response obtained from the frequency-domain analytical model is used. 4. The Temp parameter is only used in noise calculations. 5. For noise to be generated, the transmission line must be lossy (loss generates thermal noise). Single-stub notch filter: In Radio Communication Systems, undesired harmonics are generated. A micro strip notch filters undesired harmonics in a narrow band device like a mobile phone. A Notch filter is a device that passes all frequencies except those in a stop band centred on a centre frequency. The quality factor plays a major role in eliminating the frequencies undesired. Quality factor (Q) of a band pass or notch filter is defined as the centre frequency of a filter divided by the bandwidth. Where, bandwidth is the difference between frequency of the upper 3dB roll off point and frequency of the lower 3dB roll off point. TRANSMISSION LINE THEORY: place to another for directing the transmission of energy, such as electromagnetic waves or acoustic waves, as well as electric power transmission. Components of transmission lines include wires, coaxial cables, dielectric slabs, optical fibres, electric power lines, and waveguides. Consider the micro strip layout of a notch filter, In the designing of the micro-strip circuits (i.e. filters), the basic parameters are impedance Z0 and guide wavelength ÃŽ »g which are considered as TEM transmission line. The impedance in the open circuit stub Zin is as given below, Zin = ZS} Where ZL=∞, so we ignore ZS Zin = ZS} = ZS { } = ZS { } = j ZS cot ÃŽ ² l However, l = , ÃŽ ² l = = Therefore, cot ÃŽ ² l=0 So, Zin = -j ZS cot ÃŽ ² l=0 hence â”Å'L = = ∞/∞ = 1 so VSWR = = 2/0 = This indicates that the signal whose wavelength is will have very low impedance and hence it is a short circuit Thus Insertion loss response at frequency f0 is high except for other frequencies, this is because cot ÃŽ ² l is no longer zero. Insertion loss and return loss are two important data to evaluate the quality of many passive fiber optic components, such as fiber optic patch cord and fiber optic connector and many more. Insertion loss: Definition The Insertion Loss of a line is the ratio of the power received at the end of the line to the power transmitted into the line. Insertion loss refers to the fibre optic light loss caused when a fibre optic component insert into another one to form the fibre optic link. Insertion loss can result from absorption, misalignment or air gap between the fibre optic components. We want the insertion loss to be as less as possible. Our fibre optic components insertion loss is less than 0.2dB typical, less than 0.1dB types available on request. An expression for insertion loss is IL= 10log10 [1 +(YS/2)2] Return loss: Return Loss is a measure of the reflected energy from a transmitted signal. It is commonly expressed in positive dBs. The larger the value, the less energy that is reflected. Return loss can be calculated using the following equation: IMPRLT10.gif (1294 bytes) Return loss is a measure of VSWR (Voltage Standing Wave Ratio), expressed in decibels (db). The return-loss is caused due to impedance mismatch between two or more circuits. For a simple cable assembly, there will be a mismatch where the connector is connected to the cable. There may be an impedance mismatch caused by bends or cuts in a cable. At microwave frequencies, the material properties as well as the dimensions of the cable or connector plays important role in determining the impedance match or mismatch. A high value of return-loss denotes better quality of the system under test (or device under test). For example, a cable with a return loss of 21 db is better than another similar cable with a return loss of 14 db, and so on. Phase Response of the notch filter: The phase response of a notch filter shows the greatest rate of change at the centre frequency. The rate of change becomes more rapid as the Q of the filter increases. The group delay of a notch filter is greatest at the centre frequency, and becomes longer as the Q of the filter increases. EXPERIMENT SUB PARTS CASE-STUDY PART 1: Aim: Designing and simulation of a notch filter at 3 GHz using Agilents ADSTM for the given design specifications. Requirement: Electrical performance: Centre frequency: 3.0 GHz Insertion loss: >25.0 dB Input/output Impedance: 50 ÃŽ © Substrate specifications: Material type: 3M Cu-clad Dielectric constant (ÃŽ µr): 2.17 Thickness (h): 0.794mm Conductor thickness (t): 35um Conductivity (ÏÆ'): 5.84e+7 S/m tanÃŽ ´: 0.0009 MLIN, MLOC and MTEE are micro strip elements defined in ADSTM which is used to construct the circuit Explanation: We need to simulate and design a notch filter at 3 GHz here, using Agilents ADS. When the above specifications are used in ADS, the width of the microstrip lines is obtained as 2.42mm corresponding to 50 ohms transmission line using Line calc function. The Line Calc function is also used to determine the effective dielectric constant (Keff) of 3M Cu-clad Substrate at 3.0GHZ from which the initial, length of the open circuit stub can be calculated. ÃŽ µr = 2.1 Keff = 1.854 at 3.0GHZ (from line calc) , ÃŽ »0 = 100 m (at 3.0 GHZ) ÃŽ »g = ÃŽ »0 /(Keff)1/2 = 100/(1.854)1/2 =73.44mm; ÃŽ »g/4 =18.36 mm The initial design length of the open circuit stub is 18.354 mm. Thus we obtain the following substrate specifications at Centre frequency: 3.0 GHz, Insertion loss: greater than 25.0 dB and Input/output Impedance: Material type: 3M Cu-Clad, Dielectric constant (ÃŽ µr): 2.17, Thickness (h): 0.794m, Conductor thickness (t): 35um, Conductivity (ÏÆ'): 5.84e+7 S/m, taná ¶ ¿=0.0009, l = 18.36mm W(Width of the micro strip lines)=2.42mm From these specifications we obtain the plot of Insertion Loss Response(S21) indicating about 49.234 dB attenuation near 3 GHz which is shown in 8 To observe the effect of varying the length of the open circuit stub , the same procedure of simulation is repeated twice or thrice with different values of length of open circuit stub given as follows L1=20, L2=18.34, L3=16.As we can see in the 9 that as the length of open stub increases the frequency decreases. As the length of open stub must be ÃŽ »g/4 and so the 50ÃŽ © micro strip line is blocked and hence the signal is passed and if there is change in the length then the micro strip is not blocked hence the signal is blocked. Analysis of the case study 1: From the case study1, it proves that at wavelength ÃŽ »g/4 the open circuit at point S of the stub is transformed to short circuit and the signals passing along AB micro strip is blocked. Thus we design a filter at 3 GHz frequency. When the wavelength is ÃŽ »g/4 the signal will see very low impedance to ground at point S and hence is short circuited. This signal will be absorbed from the signals applied at input A, which will manifest high attenuation in its insertion loss at 3GHz.All other signals remain unaffected, hence low insertion loss accept near 3GHz. CASE-STUDY PART 2: Aim: Using the ADSTM Tuning facility, investigate the effect of varying the width of the stub filter. Determine the width of line which provides minimum out of band loss whilst maintaining the original filter specifications (i.e.>25 db at 3.0 GHz) Requirement: Electrical performance: Centre frequency: 3.0 GHz Insertion loss: >25.0 dB Input/output Impedance: 50 ÃŽ © Substrate specifications: Material type: 3M Cu-clad Dielectric constant (ÃŽ µr): 2.17 Thickness (h): 0.794mm Conductor thickness (t): 35um Conductivity (ÏÆ'): 5.84e+7 S/m tanÃŽ ´: 0.0009 CS2 10: Circuit Diagram of Stub Notch filter obtained by ADS Simulation Explanation: When the width of the stub is 5mm and length is 18.8mm the response obtained is as shown below Now we vary the width of the stub to investigate the effect. . In this process the width of the stub filter is changed at different values from w1=5mm, w2=2.5mm, w3=2mm, w4=1mm, w5=0.2mm as shown in 12. Here we also note that when varying the width of line, both the width of the stub line and corresponding width on the MTEE section must is varied. After varying the width using tuning fork function of the ADS facility we obtain a response at 3GHz and width is noted as 0.2mm.The 13 shows the following. Analysis of case study 2: The width of the line determines its impedance. If the impedance is high thinner the line and viceversa.When the width of the i/o transmission line is equivalent to the width of the stub then Insertion loss is at 0Db and when width of the i/o transmission line is greater than the width of the stub then Insertion loss tends to 0Db. In the above case thus we vary the width of the stub and transmission line and when centre frequency is 3 GHz and the width is 0.2mm the insertion loss is very low. Lower the insertion loss more is the signal transmitted. CASE- STUDY PART 3: Aim To design a notch filter at centre frequency of 4.5GHZ and it should cancel the spurious signal and unwanted harmonics by at least 24db with minimum out of band loss with the specifications given below Requirement: Electrical specifications: Centre frequency: 4.5 GHz Insertion loss: >25.0 dB Input/output Impedance: 50 ÃŽ © Substrate specifications: Material type: 3M Cu-clad Dielectric constant (ÃŽ µr): 2.17 Thickness (h): 0.794mm Conductor thickness (t): 35um Conductivity (ÏÆ'): 5.84e+7 S/m tanÃŽ ´: 0.0009 Explanation: In the responses shown below we have obtained the 24 dB difference by adjusting the frequency at 4.5 GHz. In CS3 14 the length and width are adjusted to obtain the particular response Analysis of case study 3: In case study 3 we understand the way of designing a notch filter to cancel the spurious signals generated by wireless communication systems. CONCLUSION: This case study helps us analyse the notch filter. The notch filter is designed and its basics and working are understood. The tool ADS proves very effective in this learning. To conclude, this experiment gives us a broader knowledge about transmission theory. The concept is deeply understood. In wireless communications the unwanted harmonics and spurious signals generated are cancelled by this notch filter enabling a better reception. Thus designing of such a notch filter is learnt.