SEELKE RE: DECISION ON CAPE SIZE CARRIER PRIORITY: Ms Mary Linn, After careful cash flow analysis and a discount rate (WACC) of 9%, commissioning a capsize carrier for 25 years is the only appropriate option for our firm. However, if the discount were instead 10%, both options would fail the NPV test by yielding negative results. I make this recommendation after thorough analysis of estimated cash flow and with the desire that our required 15-year life span will be amended. With
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Question 7-1 Why is the income approach to value often difficult to use on a single family residential appraisal? Typically, the income approach is difficult to use because the sale of single family, rental properties are rare in the area. Question 7-2 What are the differences between the cost and sales comparison approaches to appraising property? When using the market approach, the appraiser estimates the value of a property by comparing the selling prices of properties
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Q2: Relevant Cash Flows. The new product line sales are: 23,000 * $19,000 = $437,000,000 Boost in sales of the existing motor homes, since the new product line will be introduced: 2,600 * $73,000 = $189,800,000 – relevant. Reduced sales of its luxury motor coach sales due to the new product line, thus: 850 * $115,000 = $97,750,000 – relevant. The annual sales figure to use in evaluating this project: Net sales = $437,000,000 + $189,800,000 – $97,750,000 Net sales = $529,050,000 Q9: Calculating
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another o Be able to explain why this is necessary o Continuous compounding is NOT covered • Aligning cash flows (Big, ugly nasty problems like Jordan Ch 6, Q 57 “Bilbo” or Jaffe Ch 4, Q 52) o For example, a generic set-up might look like: ▪ FV(A) + FVA(B) = PVA (C) + PV(D) when the equals sign “occurs” at the time when the cash flows change direction (i.e. at the time of retirement, or the start of college). o Examples 4.22 – 4.25 (pages 242-244)
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checks and completes the monthly bank reconciliation. The accountant also interviews and approves of all the new hires. The accountant is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant has recently started using pre-numbered invoices and wants to buy an indelible ink machine to print their checks. The president is waiting to hear from you if
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differences means that his cashflow forecast may not be an accurate overview of cash inflow in his area. As well as this, the predictions are made for a city-centre salon, which will have a higher level of sales than a town-centre one. + Tom had vast experience in that area of business + He was able to make changes to his business depending on the forecast to prevent any difficulties. + The forecast gave an indication of cash - Toms business aims are different to Josuas - Figures provided by Joshuas
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rights beyond cashing a check from John G Talcott? I understand that John Talcott established check cashing privileges by signing a store card, consisting of his social security number and other information, but in the end they are just supposed to cash the check and not gain any other privileges or information. When the $10,000 check came up for cashing, did the Any Kind owner and authority act in good faith? Good faith is “absence of knowledge of any facts in or problems; (pure heart and empty
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checks and completes the monthly bank reconciliation. The accountant also interviews and approves of all the new hires. The accountant is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant has recently started using pre-numbered invoices and wants to buy an indelible ink machine to print their checks. The president is waiting to hear from you if
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Assumption……………………………………………………. 16 16 17 Financial Plan………………..………………………………………………. 17 Financial Statements……………………………………………………... 18 Financial Ratios……………………………………………………... 18 Capital Budgeting…………………………………………………… 19 Income Statement…………………………………………………… 20 Balance Sheet……………………………………………………….. 21 CHLOROPHYLL RESTAURANT BUSINESS PLAN b Statement of Cash Flow…………………………………………….. Financing – Installment Plan…………………………………………….. 22 22 Conclusion…………………………………………………………………….. 23 Appendix………………………………………………………………………
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Lecture Handouts for Chapter 5 Chapter 5 is covered in lectures 31 and 32. Risk and Return The return from an investment is the change in market price, plus any cash payments received due to ownership, divided by the beginning price. The risk of a security can be viewed as the variability of returns from those that are expected. Measurement of Risk The expected return is simply a weighted average of the possible returns, with the weights being the probabilities of occurrence. The conventional
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