...Task 1: Assessing loan options for Coca Cola. The company needs to finance $8,000,000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate bonds. Here is some of the information regarding the APRs offered by two well-known commercial banks. Bank APR Number of Times Compounded National First Prime Rate: 3.25% + 7.75%= 11% Monthly Regions Best 12.57% Semiannually 1. Assuming that Coca Cola is considering loans from National First and Regions Best, what are the EARs for these two banks? (15 pts) Bank EAR National First 11.57% Regions Best 12.97% See Excel attachment for calculations 2. Based on your calculations above, which of the two banks would you recommend and why? Explain your rationale. (15 pts) Based on the calculations above I recommend Coca Cola obtain a loan from National First Bank. Although the decision can be based on the APR, the EAR is the most accurate interest rate because it takes into account compounding and expresses the true interest paid on the loan. The EAR for Regions Best Bank is 12.97% while National First Bank has an EAR of 11.57%, because National First Bank has the lower interest rate of the two it is the more logical choice since their loan option will charge less interest for the life of the loan. 3. Coca Cola has decided to take a $6,980,000 loan being offered by Regions Best at 8.4% APR for 7 years. What is the annual payment amount on this loan? Show your calculations...
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...PART I Overview and Background Chapter 1 An Introduction to Multinational Finance True / False 1. 2. MNCs have investment or financial operations in more than one country. ANS: True. Because of globalization in the world's markets, a multinational financial manager is more likely than a domestic financial manager to specialize in finance to the exclusion of other fields of business. ANS: False. The multinational financial manager must be well versed in each of the business disciplines in which the MNC is involved. The domestic financial manager must be knowledgeable in several areas within finance, whereas the multinational financial manager usually specializes in a single area, such as corporate finance, investments, or financial markets. ANS: False. The multinational financial manager is likely to require knowledge of several fields within finance. The investment opportunity set is the set of investments available to the corporation; that is, the set from which the company must select. ANS: True. Types of market efficiency used to describe the performance of financial markets are allocational, operational, and transactional efficiency. ANS: False. Three types of market efficiency are allocational, operational , and informational. An informationally efficient market is one with abundant information. ANS: False. It is a market in which prices fully reflect available information. Allocational efficiency refers to how efficiently a market channels capital toward its most productive...
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...12/9/2012 Chapter 9 The Time Value of Money 1 Chapter 9- Learning Objectives Identify various types of cash flow patterns (streams) that are observed in business. Compute (a) the future values and (b) the present values of different cash flow streams, and explain the results. Compute (a) the return (interest rate) on an investment (loan) and (b) how long it takes to reach a financial goal. Explain the difference between the Annual Percentage Rate (APR) and the Effective Annual Rate (EAR), and explain when each is more appropriate to use. Describe an amortized loan, and compute (a) amortized loan payments and (b) the balance (amount owed) on an amortized loan at a specific point during its life. Principles of Finance 5e, 9 The Time Value of Money © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2 1 12/9/2012 Time Value of Money The principles and computations used to revalue cash payoffs at different times so they are stated in dollars of the same time period The most important concept in finance used in nearly every financial decision Business decisions Personal finance decisions Principles of Finance 5e, 9 The Time Value of Money © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3 Cash Flow Patterns Lump-sum amount – a single...
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...HSMG 699 Assigniment 1 (Submit via SAKAI by Friday, Feb. 5 midnight) Right on homework Corrected on homework Multiple Choice Questions: 1. Which of the following statements about finance, accounting, and financial management is most correct? a. Accounting is of no value in decision making. b. Accounting provides the theory and concepts necessary to help managers make better decisions. c. Financial management involves the measurement, in financial terms, of operational events that affect the resources and financing of an organization. d. The primary role of finance is to plan for, acquire, and use resources to maximize the efficiency and value of the enterprise. Pp slide 22 (Gapenski 2012) e. Financial management is of no value in decision making. 2. Which of the following statements about the role of finance in healthcare organizations is incorrect? a. Over time, the finance function has become increasingly focused on strategic issues, such as joint venture decisions. b. Today, the most critical finance function is cost identification. Should say cost containment pg. 8-9 c. The finance function often supports cost containment efforts and third-party payer contract negotiations. d. The primary activities of the finance function can be summarized by the four Cs: costs, cash, capital, and control. e. In times of high profitability and abundant financial resources, the finance function tends to decline in importance. 3. Which of the following is...
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...Numeracy Advancing Education in Quantitative Literacy Volume 7 | Issue 1 Article 8 1-2-2014 Review of Financial Intelligence for Entrepreneurs: What You Really Need to Know about the Numbers by Karen Berman and Joe Knight, with John Case. H. L. Vacher University of South Florida, vacher@usf.edu Recommended Citation Vacher, H. L. (2014) "Review of Financial Intelligence for Entrepreneurs: What You Really Need to Know about the Numbers by Karen Berman and Joe Knight, with John Case.," Numeracy: Vol. 7: Iss. 1, Article 8. DOI: http://dx.doi.org/10.5038/1936-4660.7.1.8 Available at: http://scholarcommons.usf.edu/numeracy/vol7/iss1/art8 Authors retain copyright of their material under a Creative Commons Non-Commercial Attribution 4.0 License. Review of Financial Intelligence for Entrepreneurs: What You Really Need to Know about the Numbers by Karen Berman and Joe Knight, with John Case. Abstract Berman, Karen and Knight, Joe, with John Case. Financial Intelligence for Entrepreneurs: What You Really Need to Know about the Numbers, (Boston MA: Harvard Business Press, 2008). 285 pp. ISBN 978-1-4221-1915-0. From “The art of finance (and why it matters)” (Part One) through “Creating a financially intelligent company” (Part Eight), Financial Intelligence for Entrepreneurs is an engaging explanation and appreciation of financial statements and financial ratios. Short, easily digested chapters; just-in-time boxes to introduce terminology; easy, direct, in-text calculations...
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...2014 Case Study #1 Bowden Brake Service Problem/Issue Statement Should local finance institutions lend the money to Jim to expand his business? The owner, Jim Bowden, has been denied by the local finance institutions for loan in order to expand his business. Executive Summary *Assumptions were made and are presented in Appendix A* The owner, Jim Bowden owns a brake service shop. His business specialized in fixing car brakes and possible other repairs. Jim is seeking to expand his business, the owner had fill out financial form in the local finance institutions. Jim appeared to be very furious at the local finance institutions. As it turns out, all the finance institutions turned down his request for loan. Since his requests were turned down, Jim is unable to expand his business. The local finance institutions had recommended for the owner to look into ratio analysis. The problem is, both the bookkeeper and accountant are on vacation during the time of need. Jim is clueless about ratio analysis and is frustrated. There is a Human Resource Manager who was hired several months ago. This HR Manager had some training in managerial finance. The HR Manager offered to help the owner figure out the finance. At first, the owner felt skeptical because he did not think HR would know anything about finance. When the HR Manger discovered Jim needed a ratio analysis, both the owner and HR discussed agreements. An agreement was made for the HR Manager to be part of management team...
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...Programme Description Duration / Mode of Programme Students may enrol on a full-time or part-time basis. Full-time students must enrol for a minimum of 9-12 credit hours per semester. Part-time students may register for 6 credit hours each semester. The duration of studies for both full-time and part-time students is as follows: Status | Minimum | Normal | Maximum | Part time | 2 academic years | 4 academic years | 5 academic years | Full time | 1 1/2 academic years | 2 academic years | 3 academic years | 28 credit hours of coursework + 12 credit hours of dissertation Entry Requirements Programme Structure The Masters in Accounting programme comprises of 28 credit hours of coursework (10 courses) and 12 credit hours of dissertation. Core Courses Course Code | Course Name | ACC 6610 | Financial Accounting And Reporting | ACC 6620 | Managerial Accounting | ACC 6630 | Accounting Theory And Policy | ACC 6640 | Islamic Worldview And Accounting Ethics | ACC 6810 | Islamic Accounting And Finance | ACC 6820 | Accounting Research Methods | ACC 6650 | Introduction to Library Search & Academic Writing | ACC 6660 | Literature Review | | | Elective Courses Course Code | Course Name | ACC 6830 | Accounting For Islamic Institutions | ACC 6840 | Issues In Auditing | ACC 6850 | Issues In Taxation | ACC 6860 | Issues In Public Sector Accounting | A candidate shall be required to pass all the courses with at least a "B" grade and...
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...24/09/2013 Finance d’entreprise • André BŒUF • Cours de Finance Avancée M2 • IDRAC LYON Finance d’entreprise • Le Bilan Comptable selon le Plan Comptable 1999 : • Il renonce à une présentation caractérisée par une liquidité croissante des postes d’actif et d’exigibilité croissante des postes de passif, • il introduit une conception fonctionnelle du bilan. • L’entreprise devient un portefeuille d’emplois et de ressources. Finance d’entreprise • Toutefois il reste marqué fortement par l’utilisation de règles fiscales • Elles conduisent à privilégier une vision juridique et patrimoniale; • il ne permet donc pas de donner de l’entreprise une image économique plus fidèle de la réalité • . D’où la nécessité de passer du bilan comptable au bilan financier. 1 24/09/2013 Le bilan comptable • ACTIF = ce que possède l’entreprise • Actif immobilisé • Immobilisations incorporelles, corporelles et financières • Actif circulant • Divers stocks, créances clients, autres créances d’exploitation • Actif disponible • SICAV, parts de fonds commun de placement, disponibilités Finance d’entreprise • Les immobilisations • Immobilisations incorporelles • • • • • • Frais d’établissement Fonds de commerce Droit au bail Brevets, marques Frais de développement Logiciels Finance d’entreprise • Les immobilisations corporelles • • • • • • Terrains Constructions Agencements et installations Matériels et véhicules Mobilier de bureau Immobilisations en cours 2 ...
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...COURSE DESCRIPTION Introduces the concepts of finance. Reviews the basic tools and their use for making financial decisions. Explains how to measure and compare risks across investment opportunities. Analyzes how the firm chooses the set of securities it will issue to raise capital from investors as well as how the firm’s capital structure is formed. Examines how the choice of capital structure affects the value of the firm. Presents valuation and integrate risk, return and the firm’s choice of capital structure. INSTRUCTIONAL MATERIALS Required Resources Brigham, E. F., & Ehrhardt, M. C. (2014). Financial management (14th ed.). Mason, OH: South-Western Cengage Learning. Supplemental Resources MBA Primer Note: The MBA Primer is designed to help students with little or no educational background in business to prepare for the rigors of an MBA program. The MBA Primer is also a useful tool for students who have the business background but might need a refresher. It is a way to help you prepare for the types of activities and concepts that will be covered in the MBA program, so you can feel more comfortable and confident as you progress into higher level courses. Students are emailed an access code for this product when they purchase MBA Primer from the Strayer Bookstore, accessible through iCampus. CNN Money. (2013). General format. Retrieved from http://money.cnn.com/ Criniti, A. (2013). The necessity of finance. Philadelphia, PA: Criniti Publishing Company. ...
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...1. Module Name: Introductory Econometrics Code: P12205 Credits: 10 Semester: Spring 2011/12 Delivery: 16 one-hour lectures + 4 one-hour workshops Aims: The main aims of this module are: to introduce students to the principles, uses and interpretation of regression analysis most commonly employed in applied economics; to provide participants with sufficient knowledge of regression methods to critically evaluate and interpret empirical research. On completion of this module students should be able to: demonstrate understanding of the assumptions and properties underlying regression analysis and the principle of ‘least squares’; interpret and manipulate the coefficients of multiple regression and performance criteria; conduct diagnostic checking of the validity of regression equations coefficients; appreciate the problems of misspecification, multicollinearity, heteroscedasticity and autocorrelation. Content: 1. Simple Regression Analysis 2. Multiple Regression Analysis 3. Dummy Variables 4. Heteroscedasticity 5. Autocorrelation Main Textbook: Dougherty, C. (2011). Introduction to Econometrics, 4th edition, Oxford. 2. Module Name: Computational Finance Code: P12614 Credits: 10 Semester: Spring 2011/12 Programme classes: 12 1-2 hour lectures/workshops Aims: The module aims to describe and analyse the general finance topics and introduces students to implement basic computational approaches to financial problems using Microsoft Excel. It stresses...
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...A finance lease or capital lease is a type of lease. It is a commercial arrangement where: the lessee (customer or borrower) will select an asset (equipment, vehicle, software); the lessor (finance company) will purchase that asset; the lessee will have use of that asset during the lease; the lessee will pay a series of rentals or installments for the use of that asset; the lessor will recover a large part or all of the cost of the asset plus earn interest from the rentals paid by the lessee; the lessee has the option to acquire ownership of the asset (e.g. paying the last rental, or bargain option purchase price); The finance company is the legal owner of the asset during duration of the lease. However the lessee has control over the asset providing them the benefits and risks of (economic) ownership.[1] Treatment in India : Finance lease is the one in which risk and rewards incidental to the ownership of the leased asset is transferred to lesee but not the actual ownershipship. Thus in case of finance lease lease we can say that notional ownership is passed to the lesee. Treatment in the United States Under US accounting standards, a finance (capital) lease is a lease which meets at least one of the following criteria: ownership of the asset is transferred to the lessee at the end of the lease term; the lease contains a bargain purchase option to buy the equipment at less than fair market value; the lease term equals or exceeds 75% of the asset's estimated useful...
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...“Situations that would normally lead to a lease being classified as a finance lease include the following: • the lease term is for the major part of the economic life of the asset, even if title is not transferred • at the inception of the lease, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset” The Lessee would lease the equipment for three years and the useful life for the equipment was four years. As a result, the lease term was 75% (exhibit 1) of the economic life of the asset. Moreover, the present value of the annual payments would be $263,716 and the fair value of asset was only $265,000. The present value of the minimum lease payment would be 99.5% (exhibit 1) of the fair value of the leased asset. These situations would satisfy the requirement of IAS 17 to determine the lease as a finance lease. Next, we will look at the senior accountant’s work. The senior accountant’s analysis was correct because he/she determined the lease as a finance lease based on the fact that the lease term was for the major part of the economic life of the asset. However, in order to calculate the lease asset and obligation the senior accounting used the incremental borrowing rate. IAS 17, paragraph 20 requires that: “The following principles should be applied in the financial statements of lessees: • at commencement of the lease term, finance leases should be recorded as an asset and a liability at the lower of...
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...FITTskills: International Trade Finance Sixth Edition Course Objectives • Define and discuss the “Four Pillars” of trade finance— payment facilitation, risk management, financing and the provision of information related to a transaction • Describe the impact of technology on trade finance • Describe the major products and services related to trade finance, including the role and requirement of each party to a transaction • Discuss the importance of export credit agencies and international financial institutions in international trade • Describe the importance of adequate planning relative to the financial aspects of international trade 10/20/2015 TF 1-2 An Introduction to Trade Finance The bottom line of global business Dollars and cents of import and export • Some complexity in arranging payment cross-border, while assuring delivery of goods as agreed • Evolution: partly technology, partly changing global practices • Effective financing solutions key to competitiveness and profitability • Due diligence • Gradual shift from paper-based to Internet-based efinance • Financing timelines: Short term—up to 2 years Medium term—2 to 7 years Long term—7+ years, extending 15-20 years TF Ch 1-4 The four pillars of trade finance 1. Payment 2. Risk Mitigation 3. Financing 4. Information TF Ch 1-5 A business of relationships • Domestic vs...
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...How Campaign Finance Affects Electoral Outcomes (Name) (Subject) (Nature of Work) I. Introduction An electoral candidate can win an election if he has plenty of campaign finances. This seems to be the common wisdom that people believe in when it comes to the electoral success of candidates. However, such a statement is not easily verifiable. In fact, there are several factors involved in the determination of whether or not there is a correlation between the campaign finances used by candidates and the probability of winning due to these funds. It has been the contention of majority that for a candidate to get a seat or win the presidency, it is important that he spend lavishly. If this is the case, then incumbents, who are generally the ones equipped with the biggest campaign funds, have edge over challengers. It is also an assurance to potential challengers that if they manage to put up campaign funds, whether from contributors or from their own pockets, they are already assured of a win in the elections. With the government structure the United States have, generalizing for all sectors of the government, particularly during the electoral races, will be quite complex. Moreover, though it is very easy to make assumptions, such arguments could start crumbling once empirical studies of various experts on the subject of political science come to light. Factors such as policy decisions, party affiliations, popularity, etc. play a role in the...
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...Determining Financial Viability Accounting and finance are closely related to a certain extent in which both deal with the financial aspects of a company. Accounting and finance work together in creating “a company’s budget or working capital analysis” (Wise-Geek, 2012, p. 1). Accounting involves recording of an organizations operations of a business as well as showing the information in the outline profit and loss accounts, which demonstrates the gain or loss of the organizations throughout the year. In addition, accounting includes provisions of a balance sheet replicating the monetary positions of a business at a specific time period. It should provide clear and precise figures about the proprietary and financial condition in a specific entity. Finance is a wider view and uses information, which is obtainable in the accounting area such as “profit and loss, balance sheet, and cash flow statement” (Parikh, 2011, p. 1) to decide upon financially linked judgments, for instance how to increase funds for upcoming plans of a business. These statements provide a valuable amount of information for a company. The statistics retained in these statements assists financial directors with analyzing past performance as well as future inclinations of a business. Both accounting and finance must be used together to make effective decisions for a company therefore, finance uses past statistics from the accounting aspect to formulate future decisions. In order to determine financial viability...
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