12/9/2012 Chapter 9 The Time Value of Money 1 Chapter 9- Learning Objectives Identify various types of cash flow patterns (streams) that are observed in business. Compute (a) the future values and (b) the present values of different cash flow streams, and explain the results. Compute (a) the return (interest rate) on an investment (loan) and (b) how long it takes to reach a financial goal. Explain the difference between the Annual Percentage Rate (APR) and the Effective Annual Rate
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MEMO Date: August 13, 2013 To: Thomas Carroll, CEO From: Jose R. Pizarro Jaimin Modi George Triarchou Monica Balbuena Shuyuan Qiu RE: Mercury Athletic valuation and acquisition recommendations We believe that Mercury is an appropriate target for AGI since an acquisition can be an excellent growth opportunity. First, through the acquisition AGI can take the advantages of some existing synergies. Acquiring Mercury would expand AGI’s business size and consequently
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subsided in the late 1990’s, Brazil was once again viewed as an attractive location for foreign investment, with forecasts predicting the nation’s economy would be the sixth largest in the world by 2015. For Wiley and its industry in particular, Brazil presents a large growth opportunity given its influence in the Latin / South American economy and the region’s projected growth rate of three to four percent in the coming years. Other advantages of locating operations in Brazil include: 1) The country’s
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Road, Quetta. Tel: (081) 2831623, 2831702 Fax: (081) 2831922 helpdesk-qta@smeda.org.pk Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost December, 2013 Pre-Feasibility Study Montessori School TABLE OF CONTENTS 1. DISCLAIMER........................................................................................................................................... 3 2. PURPOSE OF THE DOCUMENT .................................................
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Question 1: Capital Budgeting (12 + 4 + 4 = 20 marks) | | Forgone Rent | Fitout | Equipment | Operating Expense | Advertising | Revenue | Net Cash Flow | Time Factor | Present Value | Y0 | | -150,000 | -120,000 | | | | -270000 | 1 | -270000 | Y1 | -60,000 | | | -180,000 | -40,000 | 400,000 | 120000 | 0.917 | 110040 | Y2 | -60,000 | | | -180,000 | -40,000 | 400,000 | 120000 | 0.842 | 101040 | Y3 | -60,000 | | 36,000 | -180,000 | -40,000 | 400,000 | 156000 | 0.772 | 120432
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Disadvantages | Personal Savings | No cost | None | | Easy, cheap | Risk of Loss | Friends & Family | Usually good rate or none | Very flexible | | Flexible, best value | Can create friction | Home Mortgages - Traditional or Seconds | 7-9%8-14% on equity loans | Very long and flexible | 80-100% + of home equity value | Cheapest, longest term | Your house is at risk in the event of non-payment | Suppliers | Free | 30 days +/- | | Inexpensive, unsecured | Short term | Venture capital
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and robust transportation systems to ensure that the global transportation and delivery service reaches the customer is of the highest standard. The marketing challenge for the company is to position its product and services as a high-quality, high value alternative to other transportation and international express and logistic brands that exists. Figure #1 below outlines the process and highlights the major activities at each stage. Figure 1: Overview of DHL Service delivery’s Production Process
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PV of CFs Tax Affected EBIT #NAME? #NAME? #NAME? #NAME? #NAME? 10 Use Terminal Multiple Against Terminal Year EBITDA To Calculate Terminal Value and its PV 11 Derive The Enterprise Value Tax Affected EBIT #NAME? #NAME? #NAME? #NAME? #NAME? Construct A Sensitivity Analysis Using Excel's Data Table Function
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Same Project Rankings? 164 Capital Budgeting Principle: Ignore Sunk Costs and Consider Only Marginal Cash Flows 168 Capital Budgeting Principle: Don’t Forget the Effects of Taxes—Sally and Dave’s Condo Investment 169 Capital Budgeting and Salvage Values 176 Capital Budgeting Principle: Don’t Forget the Cost of Foregone Opportunities 180 In-House Copying or Outsourcing? A Mini-case Illustrating Foregone Opportunity Costs 181 Accelerated Depreciation 184 Conclusion 185 Exercises 186 158 0195301501_158-192_ch7
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------------------------------------------------- 1. Discount Models Why FCFF Discount Model? DDM would not be a suitable model because JBH paid dividends which are significantly greater than or lower than FCFE to the firm between 2006 and 2010 thereby underestimating or overestimating the value of JBH (dividends less than 80% of FCFE or greater than 110% FCFE) . The debt to equity ratio has been volatile declining from 82.90% in 2003 to 23.73% in 2010 with a spike of 120.96% in 2006. Estimating future debt issues and repayments will prove
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