Case 70 Computer Concepts/CompuTech Merger Analysis QUESTIONS Question 1 Several factors have been proposed as providing a rationale for mergers. Among the more prominent ones are (1) tax considerations, (2) diversification, (3) control, (4) purchase of assets below replacement cost, and (5) synergy. From the standpoint of society, which of these reasons are justifiable? Which are not? Why is such a question relevant to a company like CompuTech, which is considering a specific acquisition
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Usefulness of the Statement of Cash Flows The statement of cash flows reports the cash receipts, cash payments, and the net change in cash resulting from the operating, investing, and financing activities of a company during the period. The information in a statement of cash flows should help investors, creditors, and others assess: ▪ The company’s ability to generate future cash flows. By examining relationships between items in the statement of cash flows, investors and others can better
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maximize firm efficiency. e) maintain steady growth in both sales and net earnings. 4. Accounting concepts for a firm to create value it must: a) have a greater cash inflow from its stockholders than its outflow to them. b) create more cash flow than it uses. c) reduce its investment in fixed assets since fixed assets require the use of cash. d) avoid payments to the government so dividends can be increased. e) avoid the issuance of debt securities Find the week 1 connect problems answers here FIN
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maximize firm efficiency. e) maintain steady growth in both sales and net earnings. 4. Accounting concepts for a firm to create value it must: a) have a greater cash inflow from its stockholders than its outflow to them. b) create more cash flow than it uses. c) reduce its investment in fixed assets since fixed assets require the use of cash. d) avoid payments to the government so dividends can be increased. e) avoid the issuance of debt securities Find the week 1 connect problems answers here FIN
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FINANCE 611: CORPORATE FINANCE FALL 2015 Prof. Jules H. van Binsbergen Office: 2453 Steinberg Hall-Dietrich Hall Email: julesv@wharton.upenn.edu Office hours: By Appointment Course Website: Available on Canvas COURSE DESCRIPTION This course is an in-depth introduction to finance with an emphasis on applications that are vital for corporate managers. We will discuss most of the major financial decisions made by corporate managers both within the firm and in their interactions with investors
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2 | 60 | 49.59 | 0.0551 | 0.1101 | 3 | 1060 | 796.39 | 0.8844 | 2.6531 | Column Sum: | 900.53 | 1.0000 | 2.8238 | = k = rf + β [E(rM) – rf ] - The Market consensus estimate of the appropriate discount rate for a firm’s cash flows ∴ 3b. Constant growth no K – Step 1. Find market capitalization rate using CAPM = 0.04 + 0.75 (0.12 – 0.04) = 0.10 Step 2. V0 = D1k － g = $40.10 － 0.04 = $66.67. growth =g = ROE b, where b = plowback ratio and ROE = the rate at which income was
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Muneer Bawayeh Cash Management Techniques After reading Chapter 16 in our text, I decided to do my write up on something I knew very little about; Cash Management Techniques. This is something that we did not cover in any of my undergraduate level finance classes. This section of the textbook describes how large firms maintain a cash balance in banks and how they are aligned with the sales patterns and trends. “By timing their cash receipts to coincide with their cash outlays, firms can hold their
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Abstract Long-term capital budgeting is the process used by many companies to make substantial term investments, in order to receive the greatest cash flow. A company must first look at an analysis of cash flows and cost and earnings of the project to determine whether to accept or reject a capital budgeting project. The three rules used to make decisions towards capital budgeting; the payback period, net present value (NPV), and internal rate of return (IRR). The Payback Period is the
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Present Worth (PW) Analysis Objective: To evaluate and compare mutually exclusive alternatives based on the equivalent netpresent worth of the lifecycle cash flows for each alternative at a given minimum attractive rate of return (MARR). • The net present worth is computed as Net PW = PW(Revenues) – PW(Costs) • The cash flows include all life-cycle revenues and costs, i.e., all revenues and costs over the service life of the project or investment. • A zero or positive “Net PW” indicates
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education, expenses, loans and payments, income taxes all use this information system that is accounting, (Conrado T. Valix, 2007) Having been defined as such, it is governed by rules and regulations, ensuring that it will provide a quality financial report enabling its decision makers to create intelligent decisions, these rules and regulations are defined Conceptual Framework – the professional and regulatory framework accounting that are concepts used in the preparation and presentation of financial
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