| $10,000.00 | Capital Expenditure on Patent | | ($250,000.00) | | | | Net Cash Used for Investing | | ($945,000.00) | | | | Cash Flow From Financing | | | Increased Loan | | $2,340,000.00 | Increased Stock | | $480,000.00 | Payment of Dividends | | ($345,000.00) | | | | Net Cash Received for Financing | | $2,475,000.00 | | | | Total Change in
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profit of the owners of the firm. But net profit increases only if the expected rate of return on the asset exceeds the rate of interest - According to market value maximization an asset is worth acquiring if it increases the value of the owners equity i.e. if it adds more to the market value of the firm then the costs of its acquisition. At a micro – economic level a world of certainty has little descriptive value. A risk factor should be taken into account when pricing capital. Profit maximization
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PROJECT FINANCING AND INTERNATIONAL MARKETS ASSIGNMENT 1 GROUP 1 PRESENTATION A TERM PAPER WRITTEN BY: 1. Joash Gombe 2. Carren Oyolla L50/70100/2013 3. Julius Owade 4. Lillian Dullo 5. Diana osuri 6. Willy Mugenzi Lecturer: Dr. Nyonje UNIT: LDP 602: PROJECT FINANCING Assignment submitted in partial fulfillment for the award of Masters Degree in Project Planning and Management of the University of Nairobi
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Before calculating the cost of capital I'll calculate cost of equity and cost of dept and capital structure for ENCANA: 1 Cost of Debt: ENCANA cost of debt included cost on short term debt , long term debt and publicity traded interest amount 1.1 Short term Debt: Short term obligations (Ex.1) = $ 1425 million Interest Rate (Ex.1) = 3.52% Total amount for short term debt interest = 1425 × 3.52% = 50.16 million 1.2 Long term Debt: Other long term liabilities (Ex.1) = $1278 Interest rate
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Liquidity Ratios- Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts. Current Ratio-The ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable
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structure (30% debt and 70% equity). Cape Chemical’s weighted average cost of capital (WACC) is 15%. Cape Chemical’s optimum target capital structure theory, used by Clarkson, is considered a systematic approach to funding business activities. Furthermore, the traditional capital structure theory aims to minimize WACC, while also maximizing the firm’s value. As a result, Clarkson chose the capital structure which would yield a lower WACC for Cape Chemical. This produced a lower cost of debt capital and
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------------------------------------------------- MULTIPLE-CHOICE QUESTIONS CHAPTER 6 1. The person who takes the risk of starting and managing a business to make a profit is called a(n): A. entrepreneur B. venture capitalist C. capitalistic adventurer D. franchiser ------------------------------------------------- E. ultra capitalist 2. Andy Yocom saw prime advertising space on the flags on the golf course. He reasoned that any marketing messages would get prominent attention
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shows a decline in the return on owners’ equity. This has got the portfolio people worried. An analysis has to be made of the way the company has achieved its return on equity over the last 10 years. The focus should especially be on the 1993-1994 period and the quality of the returns on equity of 1985 and 1994 should be compared, as well as other key financial ratios. By doing these financial analysis we hope to find out why the return on shareholders’ equity is varying in time. {draw:frame} {draw:frame}
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D, CPA Topic Outline: * The Financial Planning Process * Cash Planning: Cash Budgets * Profit Planning: Pro Forma Statements * Preparing the Pro Forma Income Statement * Preparing the pro Forma Balance Sheet * Debt/Interest Planning Problem * The Percentage of Sales Method-A Formula Approah References: Principles of Managerial Finance By Lawrence Gittman Practical Financial Management By William R. Lasher Financial Planning Projecting a company’s
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2. Growth stage from FY1978 onwards where the firm started generating positive OI The financing for the startup phase was performed predominantly through common stock as expected, followed by debt financing. During this stage, MCI had grossly under-estimated its cash requirements to support its build-out strategy which had led to the technical default. This had forced the firm to raise equity financing in an emergency mode, allowing it to survive. During the growth stage (triggered by the
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