there is a possibility that the best option will be to seek an entirely different user type where the Karaoke Pub crowd may alienate 25% of the hotel patrons with young children. This paper seeks to use capital budgeting analysis tools; net present value, internal rate of return, equivalent annual annuity and profitability index to definitively say which project has the best financial viability. The data used to generate the key decision metrics were provided by PBH management and are as follows
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Papa Geo’s Restaurant Budget Proposal For [2014-2019] BUSN-278 [Term] Professor[name] DeVry University ------------------------------------------------- Table of Contents Section | Title | Subsection | Title | Page Number | 1.0 | Executive summary | | | | 2.0 | Sales Forecast | | | | | | 2.1 | Sales Forecast | | | | 2.2 | Methods and Assumptions | | 3.0 | Capital Expenditure Budget | | | | 4.0 | Investment Analysis | | | | | | 4.1 | Cash flows | | | | 4.2 | NPV
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CHAPTER 9 PROJECT FINANCE AND CONTRACT PRICING In the previous chapters, techniques for project planning, scheduling, resources management, and time-cost trade off have been introduced. This chapter will deal with project cash flow to predict the actual flow of money during the contract duration. Also, this chapter will introduce the means for finalizing a contract price. A project's cash flow is basically the difference between the project's income and its expense. The difference between a company's
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Mutually exclusive projects Hook Industries is considering the replacement of 16. one of its old drill presses. Three alternative replacement presses are under consideration. 17. The relevant cash flows associated with each are shown in the following table. 18. The firm’s cost of capital is 15%. Press A Press B Press C Initial investment (CF0) $85,000 $60,000 $130,000 Year (t) Cash inflows (CFt) 1 $18,000 $12,000 $50,000 2
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V O LU M E 1 9 | N U M B E R 2 | S PRING 2007 Journal of APPLIED CORPORATE FINANCE A MO RG A N S TA N L E Y P U B L I C AT I O N In This Issue: Valuation, Capital Budgeting, and Disclosure Enterprise Valuation Roundtable Presented by Ernst & Young 8 Panelists: Richard Ruback, Harvard Business School; Trevor Harris, Morgan Stanley; Aileen Stockburger, Johnson & Johnson; Dino Mauricio, General Electric; Christian Roch, BNP Paribas; Ken Meyers, Siemens Corporation; and Charles Kantor
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Table of Contents Table of Figures 2 Executive summary 3 Introduction 4 Purpose of Report 4 The case in context 4 Case Evaluation 5 Problems Identified and Causes 6 Recommendations 7 Recommended approach 7 Selection Criteria 9 Recommended steps 14 The project evaluation process 14 The project evaluation report 17 Final Conclusion 18 Bibliography 19 Table of Figures Figure 1: Project Evaluation Process (Gray, 2011) 9 Figure 2: Typical cost evaluation and approval cycle
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addresses the methods used to value companies in a merger and acquisitions (M&A) setting. It provides a detailed description of the discounted-cash-flow (DCF) approach and reviews other methods of valuation, such as market multiples of peer firms, book value, liquidation value, replacement cost, market value, and comparable transaction multiples. Discounted-Cash-Flow Method Overview tC The DCF approach in an M&A setting attempts to determine the enterprise value or value of the company, by computing
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capital budgeting practices of large UK companies between 1975 and 1992 Pike (1996) reported a substantial increase in the usage of discounted cash flow (DCF) and risk appraisal techniques. In 1975 32 per cent and 44 per cent respectively used net present value and internal rate of return. The corresponding percentages in 1992 were 74 per cent and 81 per cent. Pike also reported that whereas in 1975 most firms adopted one of two investment appraisal techniques (typically payback and accounting rate of
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However, the remaining market for duffel canvas was small, and it was not clear that additional orders could be obtained once the navy contract was finished. The machinery was custom-built and could be used only for duffel canvas. Its secondhand value at the end of 5
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Why Net Present Value Leads to Better Investment Decisions than Other Criteria Answers to Practice Questions 8. a. [pic] [pic] [pic] b. Payback A = 1 year Payback B = 2 years Payback C = 4 years c. A and B d. [pic] The present value of the cash inflows for Project A never recovers the initial outlay for the project, which is always the case for a negative NPV project. The present values
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