Thoai Nguyen, Vincent Cho Deluxe- Capital Structure Deluxe’s Background: Deluxe is a company found in 1915 and is a pioneer in the check printing business. In 2000, Deluxe it promotes new technology, eFund, to partially replace the declining checking printing market. Problems : The revenue of core business, check printing, is going down due to the decline of demand, and the increase of competition. So, the management believes that Deluxe needs good capital structure to achieve both tax advantage
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First of all, we understand that ever since you assumed the post, you have adopted the policy of financing your business with a strictly low amount of debt. With all due respect, we would like to present our analysis of your current capital structure in order to give some insights that might cause you to reconsider this policy and to delve into the possibility of adopting a better one. Our in-depth examination of the issue at hand led our team to propose a capital structure of 70% debt as the optimal
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providing adequate liquidity for the effective running of the bank. This aim is achieved through the following objectives: 1. Attract and maintain a High Quality Portfolio of Assets 2. Efficiently manage its assets to ensure liquidity 3. Finance the needs of Corporate, medium and small scale as well as individual clients. 4. Join syndicates with other banks and financial institutions. The importance of these objectives is to ensure that clients who borrow from the bank have the ability to repay
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Mudaraba-based Investment and Finance by A.L.M. Abdul Gafoor* In any economy, private investment occurs in two different ways: active investment, where one or more persons put their own capital into a project, manage it themselves and enjoy the fruits of their labour and capital themselves; and passive investment, where the investor provides the capital and receives a return but takes no further part in the project. Broadly speaking, a passive investor has three options: one, buy shares
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Bruner: Case Studies in Finance: Managing for Corporate Value Creation, 4/e IV. Capital Budgeting and Resource Allocation 17. The Investment Detective © The McGraw−Hill Companies, 2003 CASE 17 The Investment Detective The essence of capital budgeting and resource allocation is a search for good investments in which to place the firm’s capital. The process can be simple when viewed in purely mechanical terms, but a number of subtle issues can obscure the best investment choices.
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Learnings from Article Review – Finance Function in a Global Corporation As companies globalize, they face new financial challenges. Here, the major challenge faced by the Global CEO is giving companies a powerful mechanism for arbitrage across national financial markets as capital markets open up within them. CFO has to balance the traditional question with new questions which arises due to the globalization. By exploiting their internal capital markets, CFO can create value in 3 functions:
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They are: 1. Net Income Approach 2. Net Operating Income Approach 3. Modigliani-Miller (MM) Approach and 4. Traditional Approach Generally, the capital structure theories have the following assumptions: 1. There are no corporate taxes (this assumption has been removed later). 2. The firms use only 2 sources of financing namely perpetual debts ad equity shares 3. The firms pay 100% of the earnings as dividend. This means that the dividend pay-out ratio is 100% and
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Question 1: A, The risk free rate used to calculate the cost of equity of Midland company is the 30-year yield to maturity for US Treasury Bonds: Rf = 4.98%. The company has long term projects for the future; it’s relevant to use a long-term risk free rate. The equity market risk premium is 5% that the company already used in 2006 and obtained after research and consultation with professionals. On Exhibit 6, the respondents’ risk premium of three surveys showed that the range is about 2% to
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Tire City, Inc. is a rapidly growing retail distributor of automotive tires in the northeastern United States. The stores held adequate inventory, on hand, to service all immediate customer demand. The bulk of the company’s inventory was managed at an outside warehouse which was easily serviced by the warehouse. The orders were usually serviced with in a 24 hour period. The company was able to maintain such happy customers since they had fast service and competitive prices. During the previous
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Running head: PROBLEM SOLUTION: LESTER ELECTRONICS Problem Solution: Lester Electronics University of Phoenix Problem Solution: Lester Electronics Lester Electronics is at a turning point in the business world. Bernard Lester has found that they cannot continue to manage the business as has previously been done in the past. The changes in the industry and the possible loss of their largest vendor, Shang-wa, are two of the main challenges facing Lester. One is growth, which represents an
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