1. What is the present value of the following uneven cash flow stream −$50, $100, $75, and $50 at the end of Years 0 through 3? The appropriate interest rate is 10%, compounded annually. In order to calculate the present value of uneven cash fellow, I would like to identify what is the present value for uneven cash flow means? Although the return or the payment of these cash flow is usually regular, the amounts in most cases is different from period to other period .when we need to determine
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Brief Introduction Indian River Citrus Company is a leading producer of fresh, frozen, and made-from-concentrate citrus drinks. Currently, the company has three projects which are introduction of a new product known as lite orange juice; two mutually exclusive projects, Project S and Project L; and a fleet of delivery trucks with an engineering life of three years. All projects have its advantages and drawbacks. Hence, capital budgeting for each project is made for decision-making purpose. Benefits
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in Damodaran (2006). Damodaran (2006) argues that the value of a stock is the discounted present value of the future free cash flow to equity discounted at the cost of equity. We combine the free cash flow to equity model with the super-normal growth model to determine the current value of Coca-Cola. At the time of this paper, we determined a value of Coca-Cola at $161 billion using the free cash flow to equity model, and the actual market value of Coca-Cola was $150 billion. Keywords: Coca-Cola;
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| Macy’s Inc. Valuation Report | | Table of Contents Objective 2 External Sources of Information 2 Company Identification 2 History 3 Executive Management 3 Financial Overview 4 Stock Classes and Ownership 5 Market Data and Analysis 5 Overview of Valuation Approach and Method 7 Valuation Results 9 Appendix A 10 Appendix B 11 Macy’s Valuation Report Objective Our objective is to estimate the Free Cash Flow (FCF) value of Macy’s Inc. as of July 24, 2011 (date of
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techniques to assist in providing the best recommendation to the company. I also recommend the present value calculations as part of the recommendation that base on a capital budget evaluation technique. Guillermo Furniture Store has located in a very well-known vacation spot in Sonora, Mexico and an excellent supply of timber. It provides Guillermo Navallez the ability to produce a wide variety of tables and chairs. Guillermo Navallez could price the handcrafted products at a slight premium for
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if the investment will add to or detract from the value of the firm. There are several determining factors in evaluating an investment. These include project free cash flow versus accounting profits, incremental cash flows, net present value, and internal rate of return. Caledonia Products is deciding whether to undertake a new investment project. The firm must determine the cash flows for the life of the project, calculate the net present value and the internal rate of return, and decide whether
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with all equity financing. The borrowing rate is 8% and Raj Corporation will borrow $300000 for the project. The debt must be repaid in two equal instalments. Assume that debt tax-shields have a net value of $0.30 per dollar of interest paid. Calculate the project’s APV. 3. The following table shows the price of a sample of US treasury strips in March 2009. Each strips make a single payment of $1000 at maturity. Maturity | Price (%) | March 2010 | 99.423 | March 2011 | 97.546 | March
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Return (IRR), Net Present Value (NPV), Payback Method, Discounted Payback Method, Accounting Rate of Return, and Profitability Index. The most frequently used alternative capital budget methods, IRR, NPV and Payback Method, were used to evaluate this project. The Payback Method is not a useful method in its own right, but may have been unwisely used by Lockheed management in deciding on the Tri Star project, and so is discussed here. Based upon Lockheed’s numbers at 210 units (see Table A attached),
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countries within Latin America, which were Argentina, Brazil and Chile. These countries used different currencies and their exchange rates fluctuated seriously in the history. Using US dollar became an effective method to measure the quantity and value generated in different countries. On the other hand, using US dollar followed a more global standard and view that made foreign investors understand better. As Brasil Investimentos conducted this valuation for a sale or restructuring purpose, it is
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Case 15-5 Trouble at the Resort Resort Co. (the “Company”) is a private company that operates luxury hotel properties. As of December 31, 2010, Resort Co. had $432 million in uncollateralized term loans (the “Original Debt”) outstanding with two lenders, Bank A ($129.6 million) and Bank B ($302.4 million). Note that these are not participating loans. Further, issuance costs associated with the Original Debt in the amount of $3 million remained unamortized as of December 31, 2010 ($900,000
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