------------------------------------------------- Diamond Chemicals: The Merseyside and Rotterdam Projects Valuation and Recommendation | Table of Contents Executive Summary2 Problem Statement & Issues3 Analysis of Merseyside & Rotterdam3 The Merseyside Proposal & Analysis3 Static NPV4 Option to Switch to Japanese or German Technology4 The Rotterdam Proposal & Analysis5 Static NPV5 Option to Switch to German Technology5 Qualitative Considerations6 Recommendation7 Appendix I – Black-Scholes
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Question 1 | | 0.25 / 0.25 points | APV = NPV (without expansion option) + Value of the expansion option. | | 1) True | | | 2) False | Question 2 | | 0.25 / 0.25 points | The owner of a professional sports franchise, looking to get a new stadium, would benefit from a put option if the deal falls through. | | 1) True | | | 2) False | Question 3 | | 0.25 / 0.25 points | If you write a put option, you acquire the right to buy stock at a fixed strike price. | | 1) True |
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Abdul Corporation is expanding rapidly and currently needs to retain all its earnings, hence, it does not pay dividends. However, investors expect Abdul Corporation to begin paying dividends, beginning with a dividend of $1.00 coming 3 years from today. The dividend should grow rapidly at a rate of 50% per year during year 4 and 5; but after year 5, growth should be a constant 8% per year. If the required return on Abdul is 14%, what is the value of the stock today? Expected dividends: D3 = 1
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INTRODUCTION ATLAM ATLAM is a maritime industry that created to need to train prepare Malaysians for the maritime industry and establishment of Akademi Teknikal Laut Malaysia (ATLAM) on 15 August 1981. It was then subsequently privatised on 1 January 1997. Its vision was to be a leader in maritime education and training, while its mission was to facilitate value added learning via a conducive environment and provide excellent service to its clients. The academy located in Melaka and Terengganu
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contract. In addition, the necessary investment would double HPL debit and significantly increase its financial leverage. Consequently, any financial distress form the client would seriously jeopardize HPL´s financial stability. Project Forecasts A NPV analysis based on HPL´s Manufacturing Manager and CFO has been performed Cash Flow The following projected cash flow has been assembled based on the available information. Current Net Operating Profit After Tax Plus: Depreciation Less: Change in working
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Capital Budgeting Comparison The capital budget team was created to determine which existing other corporation would be the best choice to acquire. The total amount of funds that can be used is $250,000, which either Corporation A or Corporation B can be purchased but not both. Before acquiring another group to implement with the exist organization, a detailed analysis of data is to be done. An example of this is when ServiceMaster acquired Certified Systems Inc. or CSI, which was America’s ninth
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produce the desired results, the sales and marketing might still improve and compensate. Market expansion towards eastward- The eastern market has a great appetite for frozen dairy products. Although competition from other manufactures exists, the IRR is 21%. With an initial investment of 20 million, the market has the potential to generate large revenue of 37.5 million over the years. Despite being a risky proposition, the returns from this project, if successful, are very lucrative. Strategic acquisitions-
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to create value for shareholders at Worldwide Paper Company. The valuation method for the project is forecasting the future free cash flows generated from the project and calculating its net present value (NPV). This project has a positive NPV of $936,147, and an internal rate of return (IRR) at 11.44% which is larger than the company’s weighted average cost of capital (WACC) at 9.85%. Consequently, the investment is expected to be able to maximize shareholders’ wealth by generating positive future
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Business Descriptions In 1993, Brown launched Small World Music in Nashville, Tennessee with husband Gary West and then went on to create Compass Records in 1995. Compass Records is a small, independent artist-run company that established their niche in musical genres such as folk, roots, and Celtic. In the context of the 2-billion dollar music recording industry, Compass Records has low market share in comparison to the multi-national corporations dominating the business. Brown was formally
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Table of Contents Definition of capital budgeting 2 The Major Capital Budgeting Techniques 4 Payback Period 4 Internal Rate of Return 7 Factors Influencing Capital Budgeting 7 Need For Capital Budgeting 7 Capital budgeting project 8 References 9 Definition of capital budgeting Capital budgeting is the planning process used to determine whether an organization's long term investments such as new machinery, replacement machinery, new plants, new products, and research
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