...Ocean Carriers. It is the company’s policy not to operate a ship older than 15 years. At the end of the 15 year period the scrap value of the ship is estimated to be $5 million. Ocean Carriers charges a daily higher rate for the ships and usually earns a 15% premium to the industry, due to younger and larger ships. However, the availability of capsize ships is increasing so it is likely that the daily higher rate will decrease. The cost of operating a capsize ship is currently $4000 per day and is expected to increase at 1% above inflation. With increasing operation costs and a decreasing daily hire rate we must be cautious about the investments we make in new ships. I have explored four cases of analyzing the Net Present Value of the project. Case 1 The first case explores commissioning a United States based ship for fifteen years. In the case we assume the first 3 years are a guaranteed lease to the customer we are building the ship for, where we will receive a $20,000 daily higher rate that will increase by $200 in each of the next two years. The next assumption is that we will then have to charter the ship to new customers thereafter. A forecast for hire rates was prepared for Ms. Linn. It was assumed that we could earn these forecasted rates plus a 15% premium as we have in the past. We will also incur the cost of special surveys in the amounts of $300,000 in 2007 and $350,000 in...
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...company, we focus on tax purpose but not immigration. Government interest on Tax, you earn your profit, no matter which corner you are working in the world, you have to pay tax. That is not only your personal liability to the country who grant you a resident or citizenship, and also the country allow you to acquire profit to rich your pocket.The definition of resident for company is in ITAA36 s6(1) state that:A company which is incorporated in Australia, or which, not being incorporated in Australia carried on business in Australia, and has either its central management and control in Australia, or its voting power controlled by the shareholder who are resident of Australia. Page 77 understanding taxation law 2010 Frank GildersBut the current definition of Australia of residency company do perform a highly compulate system and the double tax with a higher tax rate, which is discourage the over-sea investor and bring trouble to Australian itself. – the decrease the competitive ability in the international trading and business market. Analysis :There are many different kind of business cooperation in which investors can do business in Australia, including corporations, branch offices, subsidiaries, trusts, joint ventures and partnerships. For the international investors, the most common way are usually form a Australian subsidiary companies or Australian branch offices. Owing to the Australia tax law, both of them have...
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...Communication was seeking to acquire AirThread Connections for three reasons. The two companies could help each other become more competitive in an industry that is moving toward bundled package service offerings. The acquisition would help both companies expand into the business market, and lastly American Cable was in a unique position to add value to AirThread’s operations. They could obtain a significant amount of debt financing for an AirThread acquisition. The ATC’s terminal value was calculated by using an estimated growth rate. The assumption of growth rate is made of 2013’s economic growth rate and an estimated inflation rate. The WACC of ACC is 8.05%, The Interest tax shields are 79.6, 73.6, 66, 59.2, 50.8. The unlevered cash flows are 291.54, 342.16, 314.56, 321.42 and 318.64 while the total cash flows are 371.14, 415.76, 380.56, 380.62 and 369.44. To find out WACC, we first calculated cost of debt by using interest rate and tax rate, then calculated cost of equity by using equity beta. I would recommend the acquisition; it is clear that both companies lack what the other one successfully provides. If American Cable Company does not adapt and acquire AirThread Connections, than both companies will find themselves forced out of this highly competitive, constantly changing industry. The overall value of acquiring AirThread Connections is a positive gain for American Cable Company. The estimated enterprise value is set at $23,693,100 but the opportunity cost for not...
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...demand. Petroliam Nasional Berhad(PETRONAS) has decided to analyse its business venture in three different countries all over the world. The countries are United States, China and Russia. Investing in international country may give out some financial risk. This paper is discussing the method Petronas can use to overcome all the financial risk in United States, China and Russia. A study on the derivative market of all the three countries is done to measure the risks and to know the ways to overcome the risks. Besides, this paper also discusses the taxation of every each country and how Petronas can minimize the tax burden. At the end of this paper, a conclusion is made (based on the criteria mention above) to which country to invest with different proportion. 1.0 Company Background and Risk Profile 1.1 Introduction to Oil and Gas industry in Malaysia Malaysia is one of the largest net exporters of oil and gases its region and the world. They have many gas and oil deposits on land and in the oceans surrounding the country. The country produces almost 2% of the world’s natural gas and nearly 13% of the world’s liquefied natural gas (LNG) and is ranked 25th in oil production in the world producing more than 750,000 barrels per day (bpd.) The country's state owned Petronas operates and owns three oil refineries in Malaysia and one in Durban, South Africa and when speaking of Malaysia's oil resources you cannot...
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...wealthy and do not improve economic equality. Supporters of fiscal policy claim that cutting taxes enables the American to increase their savings, consumption, and investment (7). While tax cuts were observed in the 1920s and 1960s, expansive fiscal policy tax cuts quickly became associated with a neoliberal capitalist approach to governing, also including ideas surrounding deregulation, privatization, reduction of social services,...
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...Business Analysis of Canada Canada is the leading country in the world for an American business to expand because of the very similar culture and business environment to the United States. Americans operating in Canada will feel very comfortable integrating into society and will be able to successfully execute their business objectives. The key areas of focus to effectively prove Canada’s compatibility with American firms is based on the following criteria: * Culture * Management * Population Demographics * Compensation * Religion * Ethics * Political Risk * Economy Culture Canada’s culture is very similar to the United States and by analyzing the cultural dimension theory by Geert Hofsted, American businesses will be able to understand how the similarities positively impact the success of American expatriates working in Canada. Hofsted’s cultural dimensions theory is an analysis of 5 specific factors that define the makeup of a society. Using a ranking system he was able to compare over 50 countries to Canada in all of these dimensions: power distance, individualism, uncertainty avoidance, career success and planning for the long-term horizon. Power distance This dimension measures the rigidity or flexibility of a country in terms of how organizations structure management and subordinate relationships. If a country has a high power distance, management structures seem to be more rigid or hierarchal and a chain of command system is...
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...to vote for. Mr. Trump has a very decorated background and has had a tremendous amount of success building his value. Trump is a conservative that offers conservative reforms through bold strategies in order to connect with constituents. His far-right position leaves room for discrepancies, like the other candidates also running for the 2016 Presidential Cabinet. Donald Trump is a conservative Republican supported by his impressive history to foster business across an array of fields. If he should go on to become the next president of the United States his proposal to reform regulations such as veteran affairs alongside a compelling tax reform may come to fruition. His positions are traditionally renewed, therefore making him appealing to the older, upper class American citizens who can merely stand the current ways presented by President Obama’s administration. According to Trump’s campaign website, he is opposed to the current state of the Department of Veterans Affair (VA). He offers his plan to reform it in three stages: First, to ensure our veterans get the care they need wherever and whenever they need it, second, to support the entire image of a veteran, and last, to make the VA great again(Donald Trump). In emphasizing to help...
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...them are industry consolidation phenomenon, privatization and liberalization of the economies. The volume of cross border mergers has increased over the period from 23% of total merger volume in 1998 to 45% in 2007. Cross border mergers provide another dimension to domestic mergers because of cultural or geographic differences, government related differences, imperfect integration of the capital markets, changes in exchange rate and stock market valuations in local currency. A parallel literature to that on cross-border mergers concerns FDI. In this paper, we focus our empirical work on mergers and acquisitions rather than all FDI due to data quality. FDI contains components other than investment such as inter-company loans and retained earnings. As per the journal, the merger sample includes deals announced between the period 1998 and 2007. The total sample was of 187,841 mergers covering 48 countries. Out of this, 56,978 were cross border mergers with a total transaction value of $2.21 trillion and majority involved private firms outside of the United States. The results showed that univariate comparisons of pre-mergers performance outperform targets by all measures. Mergers generally occur when the managers of an acquiring firm perceive that the value of the combined firm is greater than the sum of the values of the separate firms. This can occur because of reasons like...
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...Bryant and Stratton College ECON220: The History of Recessions in the U.S. Instructor: P, Created by: Brandon April 8, 2014 Throughout history the United States has gone through many economic ups and downs and has tried to create new procedures to ensure that the same problem does not occur again. In this presentation we are going to look at some of the recessions that the country has endured, how these recessions happened, when, and how the government attempted to correct the problem. While there are many different opinions on how to correct and prevent these recessions from happening we are going to look at the facts that lead to these crisis’ in the U.S. economy. The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. NBER (National Bureau of Economic Research) states that a recession is a period between a peak and a trough, which does not necessarily always consist of two consecutive quarters of decline in real GDP but a significant decline in economic activity that spreads across the economy and can last from a few months to more than a year. [1] The first recession we are going to explore is The Great Depression which many say started as a recession. Although the economy began to decline in the middle of 1929 and continued to fall until the first few months of 1933, Black Tuesday, (October 29, 1929) was the day the stock market crashed and what many people affiliate to the beginning of...
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...A STUDY ON PROGRESSIVE INCOME TAX A CASE STUDY OF US & BRAZIL ________________________________________ INSTRUCTOR: DALIA EL-EDEL ECON 310-02 TERM PAPER - BY: JIHAD MASHAMOUN 900-08-2910 LARA AZZAM 900-09-3033 LUJANE MULLA 900-10-1019 ABSTRACT There is no doubt that the widening income disparities were a major driving force fueling the recent uprisings within the Middle East. One solution that has been put forth for adoption is the progressive income tax. This paper intends to assess the theoretical bases and popular arguments surrounding this very dynamic topic. The first section provides a brief definition of progressive taxation in contrast with other forms of taxation. It also discusses the most dominant for and against arguments both from a theoretical and an empirical point of view. The second section provides a case study of progressive income taxes in a leading industrial and developed country; the US. The third section provides a comparative study from Brazil; an emerging economy that has recently adopted progressive taxation. Based on the theoretical analysis and the two case studies, the paper concludes by providing policy recommendations that should be implemented in order to complement progressive taxation and gain the best and most balanced results in terms of equality, efficiency and revenues. Finally taxation is only part of the economic equation; proper efficient tax system is only one step forward towards creating equal opportunities through proper...
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...Economic Recommendations August 7, 2012 ECO/372 In December, 2007, an economic downturn began. A recession ensued and by September, 2008, it earned the name of the Great Recession (Yglesias, 2011). The unemployment rate, declining values in the housing market, increasing foreclosures, bankruptcies, the swelling federal debt, increasing food prices, and multiplying fuel prices demanded an economic response through fiscal policy and monetary policy. As a result of those responses, the United States is in a slow recovery phase. An analysis and recommendation of the current economic state includes an observation of the proprietorship of policy interventions. Economic Factors and the Impact on Aggregate Supply and Aggregate Demand Unemployment The current unemployment rate is 8.2% which is essentially unchanged from the previous month of 8.3%. There were 163,000 new jobs added in July. The government reports 9,000 fewer jobs, and the private sector lists an increase of 172,000 on the payroll. In contrast to these figures, the job deficit in comparison to the employment numbers prior to the recession is 9.7 million. At this pace, it will take 10 years to return to full employment. The unemployment rate is shifting the aggregate demand to the left. This is due to less spending power of the consumer. Output will follow shifting short aggregate supply downward. Long aggregate supply remains vertical. Expectations The central bank predicted...
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...Finance has a close relationship to a number of other business disciplines. It is important that we understand why a finance major needs these other skills and abilities. Let's take them one at a time: 1. Economics provides the theory that finance uses. The field of finance is a very new discipline, beginning formally around 1920. Before that, financial problems were referred to as "economic problems" or (even earlier) "problems in political economy." During the 1920s, finance broke away from economics and became a discipline of its own. Think of finance today as being applied economics. In other words, economics provides the theory; finance takes that theory and applies it to real world situations. 2. Accounting is sometimes called "the language of business" and it is certainly true that it is a language that finance practitioners need to be familiar with. Finance majors work with numbers generated by the accounting profession: income statements, balance sheets, cash flow statements, etc. Although finance practitioners don't need to know the intricate details of how these numbers were determined, they do need to know enough accounting to properly use these numbers in an analysis of financial problems. 3. Management provides the communication and organizational skills that all finance personnel need. Finance practitioners spend most of their day interacting with other people, so the ability to work effectively with others is crucial. 4. Marketing skills...
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...This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Asymmetric Information, Corporate Finance, and Investment Volume Author/Editor: R. Glenn Hubbard, editor Volume Publisher: University of Chicago Press, 1990 Volume ISBN: 0-226-35585-3 Volume URL: http://www.nber.org/books/glen90-1 Conference Date: May 5, 1989 Publication Date: January 1990 Chapter Title: Investment, Financial Factors, and Cash Flow: Evidence from U.K. Panel Data Chapter Author: Michael Devereux, Fabio Schiantarelli Chapter URL: http://www.nber.org/chapters/c11476 Chapter pages in book: (p. 279 - 306) 11 Investment, Financial Factors, and Cash Row: Evidence from U.K. Panel Data Michael Devereux and Fabio Schiantarelli 11.1 Introduction Most empirical models of company investment rely on the assumption of perfect capital markets. One implication of this assumption is that, in a world without taxes, firms are indifferent to funding their investment programs from internal or external funds. However, there is a rapidly growing body of literature examining the possible existence of imperfections in capital markets and their effects on firms' financial and real decisions. In this paper we provide some econometric evidence on the impact of financial factors like cash flow, debt, and stock measures of liquidity on the investment decisions of U.K. firms. These variables are introduced via an extension of the Q model of investment, which...
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...challenges for Costco Wholesale Corporation and its competitors. Since many of the stores offer the same products, it may sometimes be very hard for customers to differentiate between retail stores. Even though the economy is recovering from a recession, the retail business is still a mature industry and is improving very steadily. Costco and its competitors are affected by the same political, economic, social, and technological factors, such as taxes, presidential elections, SEC regulations, the economic state of the country, exchange rates, various social characteristics, such as customer age, income and family size, and the growth of e-commerce. All of these external factors have a great influence on how Costco conducts their operations. Costco is a premier leader in the retail industry thanks to their strategic pricing strategy, low cost operating system, and financial stability. Costco is still vulnerable to numerous threats, such as competition, exchange rates fluctuations, increasing labor and healthcare costs, and high exposure to low growth markets. If Costco is to maintain the market share in the retail industry, they should consider the options of offering more customer service in their warehouses, increase online retail sales, and acquire other retail stores for expansion and growth. Finally, if Costco wants to become more competitive and profitable over time, management should implement the recommendation of lowering membership costs and expanding their operations...
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...Gaëtan Nicodème The Debt-Equity Tax Bias: consequences and solutions Taxation and customs union Taxation Papers are written by the staff of the European Commission's Directorate-General for Taxation and Customs Union, or by experts working in association with them. Taxation Papers are intended to increase awareness of the work being done by the staff and to seek comments and suggestions for further analyses. The views expressed in the Taxation Papers are solely those of the authors and do not necessarily reflect the views of the European Commission. Comments and inquiries should be addressed to: TAXUD TAXATION-PAPERS@ec.europa.eu Cover photo made by Milan Pein Despite all our efforts, we have not yet succeeded in identifying the authors and rights holders for some of the images. If you believe that you may be a rights holder, we invite you to contact the Central Audiovisual Library of the European Commission. This paper is available in English only. Europe Direct is a service to help you find answers to your questions about the European Union Freephone number: 00 800 6 7 8 9 10 11 A great deal of additional information on the European Union is available on the Internet. It can be accessed through EUROPA at: http://europa.eu. For information on EU tax policy visit the European Commission's website at: http://ec.europa.eu/taxation_customs/taxation/index_en.htm Do you want to remain informed of EU tax and customs initiatives? Subscribe now...
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