BUSINESS FINANCE FAO: DIRECTORS, NATURALLY FRESH PLC CONTENTS Page(s) 1. Introduction 3 2. Required Rate of Return on Equity 3 3. Beta 3 4. Capital Asset Pricing Model 4 5.1 Limitations of CAPM 4 5.2 The APT Model 4 5.3 The Three-Factor Model 4 5.4 Required Rate of Return using APT or Three-Factor 5 Model 5. Bonds 5 6.5 How bond prices are determined
Words: 2713 - Pages: 11
25/03/2014 Chapter 9 RISK AND THE COST OF CAPITAL Brealey, Myers, and Allen Principles of Corporate Finance Principles Brealey, Myers,Finance of Corporate and Allen 10th Edition 11th Edition Presented by: Nguyen Xuan Thang Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. 9-1 COMPANY AND PROJECT COSTS OF CAPITAL • Firm Value • Sum of value of assets Firm value PV(AB) PV(A) PV(B) 9-2 1 25/03/2014 FIGURE 9.1 COMPANY COST OF CAPITAL • A
Words: 1695 - Pages: 7
Case analysis: Classification of instruments in fair value hierarchy Instrumental 1 In the case, there was a significant decrease in the volume and activity for the instrument because of (1) significant widening of the bid-ask spreads in the markets and the widening continued throughout Q4 2012 (2) a significant decrease in the volume of trades comparing with historical level in Q4 (3) no recent transactions. According to 820-10-35-54-c, it was reasonable to determine that market is not active
Words: 775 - Pages: 4
Calculating and Interpreting Beta Introduction: In 1990, William Sharpe won a Nobel Prize in Economics for his work in developing the Capital Asset Pricing Model (CAPM). Traditionally the CAPM has been the basis for calculating the required return to the shareholder. This figure in turn has been used to calculate the economic value of the stock and the Weighted Average Cost of Capital (WACC) for capital budgeting. In recent years, the CAPM has been attacked as an incomplete model for explaining
Words: 3675 - Pages: 15
valuation models 20 6.3.2 Static valuation models 21 6.3.3 Dynamic valuation models 21 6.3.4 Real option models (ROM) 22 7. CONCLUSION 23 INTRODUCTION Capital, in the business context, refers to any asset that will produce future cash flows. The most well known asset types are tangible in nature. Tangible capital therefore refers to the physical and financial assets of the organization. The value of such assets is disclosed periodically (by publicly listed companies) and can be found
Words: 7066 - Pages: 29
victoria chemical EPPM3644 KEWANGAN KORPORAT DAN PENSTRUKTURAN SET: 3 REPORT OF CASE STUDY: CASE 24 VICTORIA CHEMICALS PLC (A) THE MERSETSIDE PROJECT NAME OF PROFESSOR: DR. LIZA MARWATI BINTI MOHD YUSOFF GROUP MEMBERS: LOH CHAI LING A140178 GOH HOOI SAN A139708 KERK (KEH) YIH JEN A139574 SEMESTER 2, 2013/2014 INTRODUCTION Victoria Chemicals, a major competitor in the worldwide chemicals industry, was a leading producer of polypropylene, a polymer which was known for
Words: 1197 - Pages: 5
following affect the amount of cash in a limited liability company? (i) A write down of the value of the company’s office block. No change to cash. (ii) The amortisation of one of the company’s brands by 20%. No change to cash (iii) A decrease in the level of inventories. This depends on why the decrease has occurred. If a sale for cash - cash will increase. If a sale on credit - no immediate effect but cash will increase if and when customer pays. No effect on cash if inventory has been written
Words: 2826 - Pages: 12
and not intimidated by a superior perception of the leader. It is important to be sure to not convey weaknesses that can deem you inadequate for the job. The example given in the text is a Finance director who discloses he never understood discounted cash flow. This would be a major problem in that his job functions require him to be in an expert in this field and his subordinates may feel he is inadequate to lead. Next a leader must be able to have an intuition of what is going on. Their ability
Words: 519 - Pages: 3
even more damage than missing a technical question. Analysts will spend 80+ hours per week with their co-workers, so proving you are someone they will enjoy being around is more important than proving you know how to work your way through a discounted cash flow model. That does not mean that we suggest you not thoroughly prepare for the technical aspect of the interview as well! Once you get the job, your firm will put you through a rigorous training session. Your company will assume you have little
Words: 590 - Pages: 3
DECISION AND CASH FLOWS A positive net present value (NPV) is a direct estimate of value creation for shareholders and is an operational way of carrying through on the strategy of trying to maximize shareholder wealth. To calculate NPV, however we need to estimate the cash costs and benefits of any decision at hand. In this note we discuss the evaluation of investment proposals. Cash Flows: Basic Concepts The cash flows that we will use in our analysis are incremental after-tax cash flows. The incremental-cash-flow
Words: 6624 - Pages: 27
