Finance II Corporate Finance Investment Selection Criteria and NPV Corporate Finance: Raise cash in financial market, invest into firm's ops, have the result of investment, reinvest or give dividents. Accounting Notions: Types of Financial Statements: -Balance Sheet: Asset = Liabilities + Stockholders' equity Net Working Capital = Current Assets – Current Liabilities . It is the capital needed to keep the company running. Earnings differs from cash flows. In the latter, you must
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Instructor Guide CORPORATE FINANCE COURSE NUMBER: MBA591 [pic] Jones International University®, Ltd. 1.800.811.JONES (5663) http://www.jonesinternational.edu ©2008 Jones International University®, Ltd. All rights reserved. 9697 East Mineral Avenue, Englewood, Colorado 80112, USA This workbook and all accompanying audio-visual material, manuals and software (collectively, the "Materials") are
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correct? (Points : 5) If a project with normal cash flows has an IRR greater than the WACC, the project must also have a positive NPV. If Project A's IRR exceeds Project B’s, then A must have the higher NPV. A project’s MIRR can never exceed its IRR. If a project with normal cash flows has an IRR less than the WACC, the project must have a positive NPV. If the NPV is negative, the IRR must also be negative. | 3. (TCO D) Church Inc. is presently enjoying
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the account be if the discount rate is only 4%? NPV at 7% $15,000/1.07=$14,018.69 NPV at 4% $15,000/1.07=$14,423.08 B. Suppose you have two bank accounts, one called Account A and another Account B. Account A will be worth $6,500.00 in one year. Account B will be worth $12,600.00 in two years. Both accounts earn 6% interest. What is the present value of each of these accounts? Account A NPV $6,500.00/1 year = $6,132.08 Account B NPV $12,600/2 year =$11,213.96 C. Suppose you just
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REGD NO . I12EMDL4128 Financial Management Section-A Part one Answer :- Q.no. 1. a Q.no. 2. c Q.no. 3. b Q.no. 4. a Q.no. 5. c Q.no. 6. b Q.no. 7. d Q.no. 8. a Q.no. 9. b Q.no. 10. a Part – 2 Ans. 1. Annuity is fixed sum of money paid every year in at any other fixed interval shorter than a year. This annuity may be by way of return of some principal plus interest payment of against money invested or by way of payment of other dues such
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CHAPTER 2 – Solutions to Assignment Problems Assignment 2.1: a. b. Net profit margin = net income/net sales = 118,290/452,510 = 26.14% c. Accumulated depreciation = 212,820 + 12,510 = $225,330. Assignment 2.2: a. b. Assume for this problem that the number given for Net income is actually Net income available to common stockholders (that is, reported Net income minus preferred dividends). Thus, Annual addition to Retained earnings = Net income available to common stockholders
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TECHNIQUES OF CAPITAL BUDGETING 1.(a) NPV of the project at a discount rate of 14%. = - 1,000,000 + 100,000 + 200,000 ---------- ------------ (1.14) (1.14)2 + 300,000 + 600,000 + 300,000 ----------- ---------- ---------- (1.14)3 (1.14)4 (1.14)5
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Case 10:Phuket Beach Hotel VALUING MUTUALLY EXCLUSIVE CAPITAL PROJECTS Case Overview Planet Karaoke Pub Project Lives Monthly rental (5% increment for 3rd and 4th year) 4 years 170, 000 (THB) 770, 000 to 1, 000, 000 (THB) 55, 000 (THB) Up front renovation cost (Depreciated over the life of project - straight line method with zero salvage value) Overhead expenses Repair and maintenance cost 10, 000 (THB) / year Case Overview Beach Karaoke Pub Project Lives Up front investment
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in strategy formulation. Further, organizational goals are often expressed in financial terms, for example, to achieve a particular level of return on investment. 4. Both NPV and IRR are discounted cash flow techniques (recognizing the time value of money) used for evaluating capital investment proposals. The NPV method uses a discount rate (usually, the firm’s cost
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JET2 Task 3 A. Competition Bikes, Inc. (CBI) currently finds itself in a position in which it can feasibly expand its business. As such, the company has identified Canada as a potential market into which it may expand and has further identified Canadian Biking, Inc. (CABI) as a potential avenue of expansion. Specifically, CBI is investigating whether it should merge with CABI or instead purchase the company. This report will analyze the company’s various options with regard to such an expansion
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