Authors: Philip Larson American Chemical Corporation I prepared my answers by myself before discussing the case with anyone else. I only consulted other members of this class and this work is my own. In particular, I consulted Matt Thompson. 1) Do the circumstances surrounding the sale of the Collinsville plant play any role in your willingness to buy the assets? If so, how, if not, why not? On
Words: 2418 - Pages: 10
Ginny’s Restaurant: An Introduction to Capital Investment Valuation 1) Present Consumption = C0 + C1/(1+0.06)1 Future Consumption = C0*(1+0.06)1 + C1 |Present Consumption (Wealth) |$4,830,188.68 | |Future Consumption |$5,120,000.00 | Virginia’s current wealth is $4.83 million. She can spend and consume that amount today. She can spend and consume $5.12 million one year from today if she consumes nothing today. 2) |Amounts are
Words: 839 - Pages: 4
TYPE OF BUSINESS The type of business we will be engaged in is that of a private limited company. NATURE OF BUSINESS The nature is to produce brand name quality motor cars. To provide the society with the various motor cars they need for transportation. OBEJECTIVES FOR THE BUSINESS The objectives for the business are to produce motor vehicle of high quality, to gain financial independence and also to gain a profit.
Words: 1234 - Pages: 5
Calculation of cost of debt by using IRR method : Formula : B0=I*t=1n11+rd t +M*11+2dn=I*PVIFA r d,n+M*PVIFrd,n B0=Value of the bond at time zero I= annual interest paid in dollars n=number of years to maturity m=par value in dollars rd=required return on bond B0=$956 Coupon Rate =13.5% I= coupon payment=13.5%*1000 = 135 Year to maturity =n=25 years Par value =1000 A trial –and – error technique: At the first consider rd=7.58%equal to method one and B0=$956 I= coupon payment=$135
Words: 333 - Pages: 2
demand for labor if K and L are subsititutes * Substitution and scale effect- increase in w increase production and increases steel price, cut back on steel and less need for worker * Scale effect: increase in R decreases both demand for capital and labor Neoclassical economics: * Methodological indivudalism: * Rational choice: * Maximize * Answers: who is the decision maker, what goals are, what constraints * Equalibirum * Pareto efficient: cannot increase
Words: 621 - Pages: 3
high returns to capital at low levels of capital * When capital stock is low, huge positive returns to capital but this is not true at very high levels of capital. * Less and less returns at high level of capital * Growth comes naturally from perfect competitive markets * There is no need to do anything. If you are on the left hand side of k*, the economy will grow. * True only for perfect competitive markets meaning * If needed human capital is available at
Words: 1900 - Pages: 8
growth is 12%, per annum Pg 4, HBS 9-280-102 Plant Life is 10 years Pg 1, Assessed work Sheet Plant Salvage Value is zero Pg 1, Assessed work Sheet EBIT is flat after 1984 Pg 1, Assessed work Sheet Capital Expenditures: $600,000 per annum after 1984 Pg 1, Assessed work Sheet Net Working Capital Remains flat after 1984 Pg 1, Assessed work Sheet Definition of “Flat” Pg 4 http://www.imf.org/external/pubs/ft/wp/2006/wp06218.pdf 6.5% is the Equity Risk Premium Slide 21, Risk and Return, class notes-
Words: 542 - Pages: 3
bbls =5400 bbls EMPTY=5400/600=9 hr. 9+7:00P.M. =4:00A.M. BIN INVENTORY=3200 bbls (12-7)= 5 (450/75)=6 5*6=30trucks TRUCK INVENTORY=30*75=2250 bbls 4. What are the possible capital investments considered by NCC? One of the possible capital investments considered by NCC was to buy some new equipment. NCC’s overtime costs were out of control and the growers were upset that their trucks and drivers had to spend so much time waiting to unload process fruit
Words: 753 - Pages: 4
point in annual unit sales of the new product if Martinez Company uses Capital Intensive Method and Labor Intensive Method is described in the following table below. The Martinez Company should use the Capital-intensive manufacturing method if the goal is to produce more product. Therefore, this method is associated with production in high levels and this method adapts to change better than the labor intensive method. Capital intensive production requires more machinery, equipment and sophisticated
Words: 355 - Pages: 2
of capital is 2% per year? Should Marian take it?NPV = \frac{4000}{1.02}+\frac{4000}{1.02^{2}}+\frac{4000}{1.02^{3}}-\frac{5000}{1.02^{2}}-1000 = 5,729.69 Since the NPV>0 , Marian should take it. 2. (7) Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years and your cash flows from the contract would be $5 million per year. Your upfront setup costs to be ready to produce the part would be $8 million. Your cost of capital for
Words: 767 - Pages: 4
