This case is part of the introduction to evaluate the rate of return required by investors. It must be followed by one or two class sessions on how to assess WACC. Numerical calculations required light, although some details about the use of risk-adjusted hurdle rates will take time for the beginning student to absorb. The fact is, the CFO telecommunications company, which must respond to the corporate raider, claiming that a major segment of the business of the company should be sold, because it does not earn a satisfactory rate of return. The case examines the use of a single rate obstacle to evaluate all segments of the company compared to the risk-adjusted hurdle rate system. Challenges for students is to settle the dispute, estimate the weighted average cost of capital (WACC) for the two business segments, and to respond to the raider. "Hide
by Robert F. Bruner and Sean Carr Source: Darden School of Business 15 pages. Publication Date: November 17, 2005. Prod. #: UV1375-PDF-ENG
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