Products Integrative Problem Question 1 Caledonia should focus on project free cash flows as opposed to accounting profits earned because free cash lows show the value of the projects. Caledonia needs to isolate the project independent from regular company financials to understand how the project will contribute value to the business. Accounting profits earned will take into account the entire business and it will not isolate the project. A good example is dry cleaners that decide to open up a second
Words: 968 - Pages: 4
firm uses a constant WACC in determining the value of capital budgeting projects rather than using the security market line. The firm will tend to _____________________. A) accept profitable, low risk projects and reject unprofitable, high risk projects B) accept profitable, low risk projects and accept unprofitable, high risk projects C) reject unprofitable, high risk projects D) become more risky over time E) accept profitable, low risk projects 2. Delta, Inc. follows a flexible short-term financing
Words: 2207 - Pages: 9
QUIZ NO. 1 – DECENTRALIZATION, BALANCED SCORECARD and TRANSFER PRICING PART 1-MC THEORIES (1.5 POINT EACH) 1. Graduating, Inc., uses an accounting system that charges costs to the manager who has been delegated the authority to make the decisions incurring the costs. For example, if the sales manager accepts a rush order that will result in higher-than-normal manufacturing costs, these additional costs are charged to the sales manager because the authority to accept or decline the rush order
Words: 9841 - Pages: 40
Introduction to Financial Management Q#1 Business finance includes determining which long-term assets a firm should purchase. A) True B) False Q#2 The board of directors has the power to act on behalf of the shareholders to hire and fire the operating managers of the firm. In a legal sense, the directors are "principals" and the shareholders are "agents." A) True B) False Q#3 In capital budgeting, the financial manager tries to identify investment opportunities that will increase the value of the firm
Words: 14965 - Pages: 60
start your own business and be your own boss. You decide to carry out research on which business to engage in and how to raise the required finance. You are required to start a new business as a sole trader, or partnership or company with start-up capital of at least £100,000 - £1 million. Using supportive materials like books, websites, etc., and give a feedback of the findings on P1.1, P1.2, P1.3, P2.1, P2.2, P2.3 and P2.4. Answers without application to a specific business or appropriate examples
Words: 1476 - Pages: 6
on the change in distance. If the changes in trade pattern longer the shipping distance, the demand for capsizes would increase, then the daily hire will increase respectively. Q2: Should Ms. Linn Purchase the $39M Capesize? Based on the given assumption options, Ms. Linn should only purchase the capsize vessel through the Hong Kong office, with a recommendation to extend the company’s policy of operating life of the vessels from
Words: 7281 - Pages: 30
specialty chemical company in US, is considering the purchase of a sodium chlorate plant located in Collinsville, Alabama. The Collinsville plant is now managed by American Chemical Corporation (American), one of largest diversified chemical companies in US. Acquisition of the Collinsville plant fit well with Dixon’s strategy of supplying chemicals to paper and pulp industry. Dixon and American had reached an agreement of $12 million purchase price to acquire the Collinsville plant’s net asset
Words: 1129 - Pages: 5
Owners and managers use financial statements to make important long-term business decisions. For example: whether or not to continue or discontinue part of its business, to make or purchase certain materials, or to acquire or rent/lease certain equipment in the production of its goods. Prospective investors use financial statements to perform financial analysis, which is a key component in making investment decisions. A lending institution will examine the financial health of a person or organization
Words: 1138 - Pages: 5
policies/ regulatory body | | 6 | Costing | | 7 | Price discrimination (Cross Subsidy) | | | Recommendations | | 1. Objective and Scope: 2. Introduction: Definitions: In order to assist understanding of this project scope and the resulting analysis, it is useful to define some terms: Tariff refers to a pricing option or pricing plan that includes a valid combination or set of pricing components. Price is cost/value per unit or item. Prices are usually
Words: 5179 - Pages: 21
8FINA 301 Capital Budgeting Exercises Nicholas Bush Capital Budgeting Exercise 1 You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $1500 initially, and then $400 per year in maintenance costs. Machine B costs $2000 initially, has a life of three years, and requires $300 in annual maintenance costs. Either machine must
Words: 600 - Pages: 3
