...a. Should Caledonia focus on cash flows or accounting profits in making its capital-budgeting decisions? Should the company be interested in incremental cash flows, incremental profits, total free cash flows, or total profits? Caledonia should focus on cash flows, not accounting profits. Free cash flows are able to be reinvested, whereas accounting profits are shown when they are earned, not when the cash is actually received. The company should be interested in incremental after-tax cash flows. The incremental cash flow will allow Caledonia to see the profits or losses of a project by comparing cash flows with and without the project on an after tax basis. b. How does depreciation affect free cash flows? Depreciation lowers profits and in turn also lowers the taxes that are paid. c. How do sunk costs affect the determination of cash flows? Sunk costs do not affect cash flows. They are cash flows that have already occurred and won’t be considered in the incremental cash flows. d. What is the project’s initial outlay? Cost of new asset + shipping and installation costs + working capital increase = Initial outlay $7,900,000 + $100,000 + $100,000 = $8,100,000 e. What are the differential cash flows over the project’s life? Year 1 Year 2 Year 3 Year 4 Year 5 EBIT $8,200,000 $14,200,000 $16,600,000 $9,400,000 $4,800,000 Less: Taxes ($2,788,000) ($4,828,000) ($5,644,000) ($3,196,000) ($1,632,000) Plus: Depreciation $1,600,000 $1,600,000 $1,600,000 $1...
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...Evaluation of Corporate Performance Kathy Pernell Class: BUS401 Principles of Finance Instructor: Melissa Weigl Date: May 15, 2015 Introduction Each business or corporation has an evaluation of performance of the company to see how the business is functioning and the investments. Evaluation of performance includes the company assets, profit, cash flow, investments, and sales. Calculating each one for a business tells the managers of the company what direction to go and what needs to take place of becoming a successful and functional business. Evaluating the company comes with different risk to take on when running a corporation, so the company has to do a performance of evaluation. Having the initiative to compare to other business of the results to is see, what intent that the corporation need to take to meet their target. In the process management can use financial indicators to evaluate the company performance and compare it to that to other companies in their field. “Agency theory suggests that the extent to which performance measures will be used is a function of firm and manager characteristics and the "quality" of the performance measures” (Indjejikian, June 1999). Alltel was a corporation that provided wireless communication services to individuals and business customers. Through its subsidiaries, the corporation did provide wireless voice and data communication services over nearly to 12.8 million customers in 35 states, as of December 31, 2007. Now, AT&T...
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...Caledonia: Financial Analysis Catrina Sweers BUS401: Principles of Finance Ramzi Salloum April 30, 2012 Caledonia: Financial Analysis Taking on a new project or having an expansion done on an already existing facility takes time. There are several factors that need to come into play, centering mainly on capital-budgeting. As an analysts this is their main job; they need to be able to formulate the cash-flows statement for the project while figuring in such factors as risk, and depreciation, differential cash flows to determine if taking on the project is worth the monetary value as well as the risk. An analyst must also be able to measure the risk that is associated with the project and determine what effects it will have on the corporation. Also, an analyst must be able to not only consider the risk associated with systematic but also with contribution-to-firm when it comes to real life situations. Simulation provides an analyst with the opportunity to run a project through a variety of changes to key factors resulting in or as close to real life results. The project then can be put through a sensitivity analysis to see how sensitive the project will be to any changes that may take place. Capital Budgeting Capital budgeting can be a large fit to tackle. There are two separate options that a financial analyst can consider to focus on; cash flows and accounting profits. Both options have their pros and cons. For instance when it comes to accounting profits, this process...
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...American Axle Tracey Taschereau BUS401 February 3, 2013 April Miller Abstract American Axle Manufacturing (AAM) has already expanded globally into many areas. In order to better understand how a company initiates this process, we will walk through many areas together, including an overview/history; types of products and services offered; Australia and it’s cultural norms, the roles ethics and cultural diversity play; the political, legal, cultural, and economic make-up of Australia; the role that Information Technology and the Internet will play; the advantages or disadvantages of manufacturing and material location; and AAM’s approach to marketing and advertising. International Expansion American Axle Manufacturing is a leading, global Tier-One automotive supplier of driveline and drivetrain systems and related components for light trucks, SUVs, passenger cars, crossover vehicles and commercial vehicles. AAM is a multi-billion dollar company with more than 30 locations around the globe serving over 100 customers on five continents (AAM, 2013,). AAM announced the opening of its Winter Test Center in Arjeplog, Sweden on March 9, 2012 (AAM, 2013, Investors/Media). Overview and History of AAM According to AAM’s website the foundation for what is now AAM was established in 1917 when General Motors Corporation built an aircraft parts manufacturing facility in Detroit(AAM, 2013) . Later, automotive parts were added to the product mix. By 1920, two...
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...Running head: MEDSCAPE INDIA INC. Medscape India Inc. Mohinder Deol Baker College International Business BUS401 Mary Stuart-Linthwaite August 11, 2008 Table of Contents Abstract …………………………………………………………………………..3 Introductory Section……………………………………………………………...4 Purpose of Study........................................................................................6 Limitations of Study……………………………………………………...6 Definition of Terms………………………………………………………7 Review of Literature……………………………………………………………...7 Discussion..............................................................................................................13 Review of Findings……………………………………………………….13 Interpretation/Analysis of Findings………………………………………18 Summary and Conclusions……………………………………………………….27 References.......................................................................................................…...30 Abstract Medical tourism, where patients travel overseas for operations, has grown rapidly in the past decade. High costs and long waiting lists at home, new technology and skills in destination countries alongside reduced transport costs and Internet marketing have all played a role. With the best infrastructure and medical facilities, comparable with any of the western countries, accompanied with the most competitive prices, treatment can be done in India at the lowest charges. The research suggests...
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...Running head: MEDSCAPE INDIA INC. Medscape India Inc. International Business BUS401 Table of Contents Abstract …………………………………………………………………………..3 Introductory Section……………………………………………………………...4 Purpose of Study........................................................................................6 Limitations of Study……………………………………………………...6 Definition of Terms………………………………………………………7 Review of Literature……………………………………………………………...7 Discussion..............................................................................................................13 Review of Findings……………………………………………………….13 Interpretation/Analysis of Findings………………………………………18 Summary and Conclusions……………………………………………………….27 References.......................................................................................................…...30 Abstract Medical tourism, where patients travel overseas for operations, has grown rapidly in the past decade. High costs and long waiting lists at home, new technology and skills in destination countries alongside reduced transport costs and Internet marketing have all played a role. With the best infrastructure and medical facilities, comparable with any of the western countries, accompanied with the most competitive prices, treatment can be done in India at the lowest charges. The research suggests that India represents the most potential as a medical tourism...
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...2012 Catalog Volume 20 Issue 1 March 5, 2012 – December 31, 2012 This Catalog contains information, policies, procedures, regulations and requirements that were correct at the time of publication and are subject to the terms and conditions of the Enrollment Agreement entered into between the Student and ECPI University. In keeping with the educational mission of the University, the information, policies, procedures, regulations and requirements contained herein are continually being reviewed, changed and updated. Consequently, this document cannot be considered binding. Students are responsible for keeping informed of official policies and meeting all relevant requirements. When required changes to the Catalog occur, they will be communicated through catalog inserts and other means until a revised edition of the Catalog is published. The policies in this Catalog have been approved under the authority of the ECPI University Board of Trustees and, therefore, constitute official University policy. Students should become familiar with the policies in this Catalog. These policies outline both student rights and student responsibilities. The University reserves the right and authority at any time to alter any or all of the statements contained herein, to modify the requirements for admission and graduation, to change or discontinue programs of study, to amend any regulation or policy affecting the student body, to increase tuition and fees, to deny admission, to revoke an offer...
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