FIN 3716 Midterm Exam Click Link Below To Buy: http://hwaid.com/shop/fin-3716-midterm-exam/ Q 1 : Activities of a firm which require the spending of cash Q 2 : The sources and uses of cash over a stated period of time are reflected on the 3: Common-size income statement is an accounting statement that expresses all of a firm's expenses as a percentage of 4: Standardizes items on the income statement and balance sheet relative to their values as of a common point in time
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Executive summary Cash Flow Statement and Disclosure are potentially significant means for management to communicate company’s performance and governance to outside investors. Demand for Cash Flow Statement and disclosure arise from information asymmetry and agency problem between owners and management. The 1st chapter of this report is Introduction. It remain Origin of the project and thesis work, Background of the Report, Objective of the report, General objective, Project objective, Scopes,
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Capital Budgeting Introduction A logical prerequisite to the analysis of investment opportunities is the creation of investment opportunities. Unlike the field of investments, where the analyst more or less takes the investment opportunity set as a given, the field of capital budgeting relies on the work of people in the areas of industrial engineering, research and development, and management information systems (among others) for the creation of investment opportunities. As such, it is important
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NPV decision rules in investment are as follows 1. Cash flow is what's relevant Using the formula for calculating the NPV you need to estimate the relevant cash flow. But what is cash flow? Cash flow can be described as the difference between the cash you receive and cash you pay out. Nothing more, nothing less. Be aware that there is a big difference between cash flow and accounting income. Two more aspects need to be considered when estimating cash flow. First, estimate cash flows on after-tax
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and spreadsheets such as Microsoft Excel, but the main formula used to calculate net present value looks like this: Where C0 = Cash outflow at time t=0 Ct = Cash inflow at time t r = The discount rate As Ross (2013) states in his book, a project should be accepted if the NPV is greater than zero and rejected if it is less than zero. This is known as the NPV rule. However, if the NPV is equal to zero, the manager of the company has to decide whether to accept or reject depending on
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present value of an investment by the discounted sum of all cash flows received from the project. The formula for the discounted sum of all cash flows can be rewritten as Net Present Value Alternative Formula When a company or investor takes on a project or investment, it is important to calculate an estimate of how profitable the project or investment will be. In the formula, the -C0 is the initial investment, which is a negative cash flow showing that money is going out as opposed to coming in
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and Net Present Value Professor Gordon Bodnar 2009 © Gordon Bodnar, 2009 Financial Decision Making Finance decision making is about evaluating costs and benefits some complications: measuring cash value of costs and benefits costs and benefits spread out over time uncertainty about the cash value of future costs and benefits financial decision makers depends on other skills to help measuring costs and benefits marketing – revenues based upon market size and advertising economic – price
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technique. It discounts all cash flows at the project cost of capital and then sums these cash flows. Net present is defined mathematically as the present of cash flows less the initial cash outflow. Net present value = ∑t=1n ct(1+k)t-Io Where: Ct- is the cash flow. k- Opportunity cost of capital. Io-Initial cash outflow. n- Useful life of the project. Initial cash outflow is $1,000,000 and the incremental cash flows are: yr1-$ 450, 000, yr2-350
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Handouts for Corporate Finance 1 Capital Budgeting Introduction A logical prerequisite to the analysis of investment opportunities is the creation of investment opportunities. Unlike the field of investments, where the analyst more or less takes the investment opportunity set as a given, the field of capital budgeting relies on the work of people in the areas of industrial engineering, research and development, and management information systems (among others) for the creation of investment
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been brought to several items that require closer examination. A common “red flag” to questionable accounting has been found within Wal-Mart’s statement of cash flows and income statement. There is an increasing gap between the company’s reported income and the cash flow from operating activities. In the year 2008 reported income and cash flow from operating activities differed by $484 million. However the difference increased a considerable $2,249 and $4,183 billion in the years 2009 and 2010 respectively
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