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 the
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conventional cash flows currently being evaluated by SDA. Which of the statements are true? Expected cash flows (number of years from today) | Cost of capital | 0 | 1 | 2 | 3 | 4 | | -60,000 | 28,000 | 18,000 | 35,000 | 9,000 | 14.0% | Statement 1: SDA would accept the project based on the project’s payback period and the payback rule if the payback threshold is 2.25 years Statement 2: SDA would accept the project based on the project’s discounted payback period and the discounted payback rule
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50% • 3.79% 5. What are the acceptance criteria for NPV? • If the NPV is less that $0, accept the project. • If the NPV is greater than $0, accept the project. • If the IRR is equal to 0%, reject the project. • If the NPV is equal to the discounted payback, accept the project. University of Phoenix Final Exam Study Guide FIN 575 Final Exam 6. The risk response plan answers what question? • What can be done if risk occurs? What is the backup plan? • What are project costs? • There
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2008 CFA Level 1 － Mock Exam 1 （AM）模考试题 Q1-5 Question 1 Accepting an incentive offered by a client to a portfolio manager, such as a free vacation or a cash bonus, to reward good performance in a future period is: A) a violation of the Standards. B) not a violation of the Standards as long as client confidentiality is maintained. C) a violation of the Standards unless the manager gets written consent from her employer. D) not a violation of the Standards as long as the manager
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in which the initial cash outflow of an investment is expected to be recovered from the cash inflows generated by the investment. It is one of the simplest investment appraisal techniques. Formula The formula to calculate payback period of a project depends on whether the cash flow per period from the project is even or uneven. In case they are even, the formula to calculate payback period is: Payback Period = | Initial Investment | | Cash Inflow per Period | When cash inflows are uneven,
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forecast for LL requested by bank (Finance) Our 2011 cash flow forecast assumes that the union will accept LL’s revised offer in June and the strike was only for April, 2010 which will not affect fiscal 2011 since the offer would be retroactive to April 30, 2010. Our forecast also assumes that MRL’s cash flows are excluded. Our calculations are in APPENDIX. It shows that cash flow for 2011 is forecasted to be $8,646,000. Furthermore, cash flow is expected to decrease steadily in 2012 and beyond
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.......................................................... 3 Question 1 ................................................................................................................................... 3 Operational Cash-Flows ………………………………………………………………………………………………6 Free Cash-Flows ………………………………………………………………………………………………………… 7 Net Present Value ……………………………………………………………………………………………………… 7 Internal Rate of Return ………………………………………………………………………………………………. 7 Profitability Index………………………………………………………………………………………………………
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the organization to have more opportunities for projects and or investments which can increase the value of the organization. Cash flow is a very important especially to have a high and strong cash flow because this helps the organization build value. Poor cash flow can restrict organizations from new projects and handling their debt to creditors properly. If the poor cash flow were to continue with creditors this could eventually lead to bankruptcy for the organization. Capital budgeting is a way
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project. It is calculated as payback period = cost of project / annual cash inflows. 3. Describe the Internal Rate of Return (IRR) method for determining a capital budgeting project's desirability. What is the acceptance benchmark when using IRR? The internal rate of return (IRR) is a rate of return used in capital budgeting to measure and compare the profitability of investments. It is also called the discounted cash flow rate of return (DCFROR) or simply the rate of return (ROR). In the context
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order to make a comparison and choose just one or a few. It is the process in which a business determines whether projects such as building a new plant or investing in a long-term venture are worth pursuing. Oftentimes, a prospective project's lifetime cash inflows and outflows are assessed in order to determine whether the returns generated meet a sufficient target benchmark. Ideally, businesses should pursue all projects and opportunities that enhance shareholder value. However, because the amount of
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