manager of PizzaPalace, a regional pizza restaurant chain. The company’s EBIT was $50 million last year and is not expected to grow. The firm is currently financed completely with equity, and it has 10 million shares outstanding. When you took your corporate finance course, your instructor stated that most firms’ owners would be financially better off if the firms used some debt. When you suggested this to your new boss, he encouraged you to pursue the idea. As a first step, assume that you obtained
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get βE and Ru 2. Operating FCF Build discounted cash flow model with 5-year explicit forecast period from 1980-1984, as follows: a. Use projected Operating Income from Exhibit 15. b. From Exhibit 13, deduct corporate expenses and depreciation + amortization c. Less corporate taxes at 48% rate to get NOPLAT. d. Add back to NOPLAT the depreciation + amortization figures, less capital expenditure and changes in working capital. This gives the FCF to all capital 3. Calculate RD a. Due
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Pakistan today has a mind-boggling taxation system that defies comprehension of the average citizens and experts alike. In 1990, Karachi Chamber of Commerce and Industry had established that the industry was subjected to 50 direct and indirect taxes but the statement of Senator Ilyas Bilour, President PFCCI at the Businessmen Conference in Islamabad on March 25, 1997 that 37 govt deprtments and agencies were collecting taxes gives a measure of the proliferation of taxes that has taken place in Pakistan
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* PV(CF) = CF/(1+r)t AKA PV = FV/(1+r)t * NPV = PV(CFs) – Investment = -C0 +C1/(1+r)+C2/(1+r)2+C3/(1+r)3+… = ∑(Expected CFt)/(1+r)t – Investment * Perpetuity – pays a fixed amount C per period forever * P(C,r) = C/r requires cash flow to begin NEXT period. If begin now, then PV = C + C/r * Annuity – fixed stream of cash flows that has a final period t * A(C,r,t) = C/r [1-1/(1+r)t] * Growing Perpetuity – G(C,r,g) = C/(r-g) C is initial cash flow, r is discount rate
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RIO Questions (1) I should look at whether the current KS of RIO suggests any bus. Or finc risks (2) Does increase or decrease leverage (if I recommend) affect return or risk RIO is raising (3) Is RIO a high or low Beta company? HOW DOES GFC AFFECT ON RIO? (4) What is the average level of leverage within proxy firms and mining industry? EBIT ($ millions, no taxes) EPS ($) 0 0.2 0.4 0.6 0.8 1 3 2.5 2 1.5 1 0.5 0 – 0.5
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Internal audit’s role in modern corporate governance Thought leadership series Risk and Advisory Services Internal audit’s role in modern corporate governance Recent events have highlighted the critical role of boards of directors in promoting good corporate governance. In particular, boards are being charged with ultimate responsibility for the effectiveness of their organisations’ internal control systems. An effective internal audit function plays a key role in assisting the board
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1. Fundamentals of Loan Analysis 1.1 Objectives and Methods of Loan Analysis Loan analysis is to ensure that loans are made on appropriate terms to clients who can and will pay them back. What analysis is needed and what is the most efficient approach to fulfill that need is primarily determined by the type and nature of the loan. • Objectives of Loan Analysis • To place good and appropriate loans -- can the loan generate income for repayment and will the client repay • Determine
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INTRODUCTION Operating within a complex and highly competitive pharmaceutical industry, the challenges confronting Biovail are intensifying as regulatory agencies release formal allegations of misconduct against four corporate executives and as outstanding lawsuits, widespread scrutiny, and a history of questionable accounting practices are unavoidably coming to a head. Responsible for overcoming its damaged reputation and for moving the company forward, it is imperative that management at Biovail
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EXECUTIVE SUMMARY The following report contains a critical analysis of the capital structure strategy employed by Leighton Holdings Ltd during the Global Financial Crisis (GFC) and also an assessment of optimal capital structure Leighton should use to fund future investments. Examination of the changes of the capital structure of the company over pre-GFC and post-GFC period (2004-2010) reveals a range of considerations were deliberated in the financing decision; these include not only the capital
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your answer. (2 marks) b) Assess PETCO’s corporate citizenship using the four steps of social responsibility in Figure 2.3 on page 39 of the Ferrell, Fraedrich and Ferrell (2011) text. (8 marks) Case 3: a) Briefly explain how the ASX Corporate Governance Principles and Recommendations improve “transparency”. Include examples to support your discussion. (1 mark) b) Use the Connect4 database (available at the CQUniversity library website) to access the Corporate Governance Statement within the annual
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