CHAPTER 4 Discounted Cash Flow Valuation What do baseball players Jason Varitek, Mark Teixeira, and C. C. Sabathia have in common? All three athletes signed big contracts in late 2008 or early 2009. The contract values were reported as $10 million, $180 million, and $161.5 million, respectively. But reported figures like these are often misleading. For example, in February 2009, Jason Varitek signed with the Boston Red Sox. His contract called for salaries of $5 million, and a club option of
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Copyright : All rights reserved. No part of this course may be reproduced in any form by any means without prior permission in writing from: 0 BUSINESS FINANCE OUbs002223 January 2014 OUbs002223 Business Finance Table of Contents Unit 1 Agency Issue between shareholders and managers Unit 2 Investment appraisal methods Unit 3 Risks and Return Unit 4 Asset Pricing Models, CAPM & APT Unit 5 Capital Market Efficiency and Stock Market Anomalies
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the various investment proposals in such a manner that the firm achieves maximum increase in its value. The calculation and method prescribes arranging projects in descending order of their profitability based on their average rate of return, the cash payback period, the net present value, the internal rate of return, and selecting the optimal combination. There are six steps in the Capital Rationing process. First is to identify the potential capital investment projects. Second is to establish
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make decisions Financial Reporting * Regulated by the Securities and Exchange Commission (SEC) * SEC does not make the actual rules but has final say * Rules developed by the Financial Accounting Standards Board (FASB) * Identifies areas that need to be fixed * Studies potential solutions * Circulates proposed rules for feedback * Recommends accounting procedures but SEC decides adoption * If adopted becomes part of Generally Accepted
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American Institute of Certified Public Accountants (Rule 203, Rules of Professional Conduct, as amended May 1973 and May 1979). FASB Accounting Standards Codification (Accounting Standards Codification) which represents the source of authoritative standards of accounting and reporting, other than those issued by the SEC, recognized by the FASB to be applied by nongovernmental entities. Some of those standards are; ASC 830-230-55-1 - Statement of Cash Flows for Manufacturing Entity with Foreign Operations
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CHAPTER 3 BA II Plus 2nd . 9 Enter Financial Statements, Cash Flow, and Taxes Balance sheet Income statement Accounting income vs. cash flow MVA and EVA Federal tax system The Annual Report Balance sheet – provides a snapshot of a firm’s financial position at one point in time. Income statement – summarizes a firm’s revenues and expenses over a given period of time. Statement of retained earnings – shows how
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Easy, M = Medium, and T = Tough) True/False Easy: (11.1) Corporate valuation model Answer: b Diff: E 1 . The corporate valuation model cannot be used unless a company doesn’t pay dividends. a. True b. False (11.2) Free cash flows and valuation Answer: a Diff: E 2 . Free cash flows should be discounted at the firm’s weighted average cost of capital to find the value of its operations. a. True b. False (11.3) Value-based management Answer: b Diff: E 3 . Value-based management focuses on sales growth
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Partnerships are relatively easy to establish; however time should be invested in developing the partnership agreement * With more than one owner, the ability to raise funds - Debt vs. Equity may be increased. * The profits from the business flow directly through to the partners' personal tax returns. * Disadvantages: * Business Partners are jointly and individually liable for the actions of the other partners. * Profits must be
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1-30, 2015 B. Basic and consolidated financial statements of Hal Burton Web consulting for the period of 1-30, 2015 1. Income Statement. 2. Statement of financial position 3. Statement of owner’s equity 4. Statement of Cash Flows. 2. A. Requirements of International Accounting Standards (IAS-1) and its comparison with US-GAAP for the presentation of financial statements. B. Supporting examples of financial statements prepared under IFRS and US GAAP References
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Executive Summary This paper shed light on the reasons behind First Farms Corporations’ deficit in its operating cash flows and its decrease in Return on Equity (ROE) despite having a 40% increase in sales and 89% on net income. The objective of the paper is whether the management should recommend pushing through with the planned expansion of the chicken business as well as the feeds business. After having analyzed the financial ratios and SWOT of the company, it has been decided that it is
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