when making investment decisions. d. Statements a and c are correct. e. All of the statements above are correct. Relevant cash flows Answer: c Diff: E . A company is considering a new project. The company’s CFO plans to calculate the project’s NPV by discounting the relevant cash flows (which include the initial up-front costs, the operating cash flows, and the terminal cash flows) at the company’s cost of capital (WACC). Which of the following factors should the CFO include when estimating
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Wang Summary By calculating Net Present Value, Internal rate of return, Accounting rate of return, Profitability Index and payback period in this business analysis, it is demonstrated that weather this project is worth investing money or not. NPV (Table 1) Formula: Note: 1. According to the taxation law, most business expenses can be deductions to reduce the assessable income such as depreciation expense, interest expense, bank fee, rental fee, operation cost, advertising expense
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1 Mathematics for Management Concept Summary Algebra Solving Linear Equations in One Variable Manipulate the equation using Rule 1 so that all the terms involving the variable (call it x) are on one side of the equation and all constants are on the other side. Then use Rule 2 to solve for x. Rule 1: Adding the same quantity to both sides of an equation does not change the set of solutions to that equation. Rule 2: Multiplying or dividing both sides of an equation by the same nonzero number
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Additional Funds Needed (AFN) | (Assets tied to sales / Sales at past year)(Change in Sales) - (Liabilities tied to sales)(Change in Sales) - (Net Income)(Retention Ratio) | AFN for Sustainable Growth | (Assets tied to sales / Sales at past year)(Change in Sales) - (Net Income)(Retention Ratio) | APR (Calculate from EAR) | Nom ( EAR , Number of Compounding Periods) | Average collection period | 365 / Receivables Turnover | Average Daily Float | (Delay per period)(Amount of check) / Number
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flows are nominal, so the discount rate should not be real. In addition, the preliminary engineering is a sunk cost, so the 0.5 million should not be included.  The company evaluates this proposal based on EPS, NPV, IRR, and payback period. After all the adjustments, the project NPV is $9 million with
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debt funding (AA rated), NPV is much higher at $74.8 million with an IRR of 30.24%. The cost of capital in each scenario is strictly the cost of debt (corporate or loan), because the U. Va. is a nonprofit and they do not have an equity cost. Profit margins of both figures exceed the minimum required 5% with the exception for year 1. Under conservative metrics, such as utilization (Attachment 4), NPV is $25.4 million, and in a reduction of commercial payers (Attachment 4A), NPV is $28.4 million. In either
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adjustment is 4 percentage points. What is the risk-adjusted required rate of return for a low-risk project in the yogurt division? a. 6% b. 8% c. 10% d. 12% e. 14% Medium: [MACRS table required] New project NPV Answer: d Diff: M [iii]. Mars Inc. is considering the purchase of a new machine which will reduce manufacturing costs by $5,000 annually. Mars will use the MACRS accelerated method to depreciate the machine, and it expects to sell the machine at
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Analisa Studi Kelayakan Proyek Karaoke Pub Phuket Beach Hotel MMBM 23 Kelompok 2 1. 2. 3. 4. 5. Arfy Frisnanto Bonishita Pinasthiko Pariwondo Erna Suria Darmawan Yosua Taniasurya 0152112011 0152112013 0152112015 0152112009 0152112010 Corporate Finance Wijantini, PhD, ICBRR Mata Kuliah Faculty Member Daftar Isi I. II. 1. 2. 3. 4. 5. 6. III. 1. 2. 3. 4. Pendahuluan .....................................................................................................................
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example illustrate regarding a project’s life, its discounted payback period, and its NPV? a. Payback on this bond is 25 years. You pay $1,000. You receive $40 a year for 25 years, a total of $1,000. b. The bond is not necessarily a bad investment. Payback does not take time value of money into account, nor does it account for cash flows received after the payback period. It is more appropriate to calculate the NPV of an investment. Given the risk level of the bond, is 4% a fair return? If the answer
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Financial Management CASE STUDY 2: OCEAN CARRIERS April 20, 2015 Emily Chen (Ro4749035) / Naree Klungpremchitt (R03749057) Christopher Loo (Ro3749038) / Julien Minard (Ro3749036 Q1: What Factors Drive Average Daily Spot Hire Rates? Average daily spot hire rates are influenced by supply and demand of the vessels. Demand of vessels was determined by market condition. There will be an increase in demand for iron and coal, so as capesize fleets when there is strong economy. All of which
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