Chapter 8 Valuation of Company Shares: Earnings Based Methods The objectives of this chapter are to present the earnings based methods of share valuation, to critically appraise the available empirical evidence, and to provide examples of the problems, issues and limitations of share valuation. Chapter Outline • Overview of the relationship between earnings and value. • Compounding versus Discounting • Long Event Windows and Discounted/Compounded
Words: 4439 - Pages: 18
Chapter 8 Interest Rates 1. What is the interest rate, and how is it determined? • Price that equates the demand for and the supply of loanable funds; The interest rate is the yearly price charged by a lender to a borrower in order for the borrower to obtain a loan. This is usually expressed as a percentage of the total amount loaned. • Figure 8-1 shows how interest is determined; supply versus demand 2. Describe how interest rates may adjust to an unanticipated increase
Words: 964 - Pages: 4
The time value of money: The underlying principle is that a dollar worth today is worth more than a dollar in the future simply because, we can invest that dollar and earn a return on it. When financial managers make key operating decisions, it is certainly important for them to worry about the time value of money simply to understand the worth of a financial decision made by them. It is actually a key metric for the discounted cash-flows model which allows organizations to declare the value of an
Words: 540 - Pages: 3
You have been asked to support analysis of acquisition decisions involving net present value analysis. 1. You are analyzing the net present value of a project over a 16 year period. Based on the rates in the textbook, what is the actual discount rate you would use given that your analysis must consider the effects of inflation/deflation? In analyzing the pet present value of a project over a 16 year period, the inflation rate must be included in the computation of the discount rate to be used
Words: 284 - Pages: 2
The Language of Real Estate Terms You Should Know * PV- Present Value The value of a single $ amount discounted back to the present * NPV- Net Present Value- Similar to PV only uses multiple values and discounts them back to the present * NOI- Net Operating Income * EBITDA - Earnings Before Interest Taxes Depreciation and Amortization * DCF - Discounted Cash Flow * Triple Net Lease – (aka NNN lease) a lease in which tenant pays a pro rata share of common area maintenance
Words: 1693 - Pages: 7
(3-1) Days sales outstanding Green Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year? Days of Sales Outstanding DSO= Receivables Average sales per day 20 days = Receivables Average sales per day Receivables= 20 days *$20,000 Receivables= $400,000 (3-2) Debt Ratio Vigo vacations has an equity multiplier of 2.5 .The company’s assets are financed with some
Words: 1542 - Pages: 7
Introduction: JDA Consulting performs research and an ROI analysis in order to evaluate a proposed web portal for B&K Distributors. Specifically, research reveals the following benefits of implementing an Internet portal: - Increased penetration of customer base - Enhanced customer order frequency - Increased average order size - Reduction in transaction cost per order The forecasted ROI (calculated in our Excel worksheet) would help determine whether the web portal project
Words: 457 - Pages: 2
FIN 534 Complete Course Week 1 to Week 11 Download Answer Below http://workbank247.com/q/fin-534-complete-course-week-1-to-week-11-discussi/7837 FIN534 Week 1 Discussion * From the e-Activity, examine ethical behavior within firms in relation to financial management. Provide two (2) examples of companies that have been guilty of ethics-based malfeasance related to financial management and determine why their comeuppance was deserved. * From the scenario, recommend two (2) actions that
Words: 4711 - Pages: 19
Edwin Porusingazi Monash I.D -22853766 Date - 04/25/2014 Brief profile of Adobe Systems Adobe Systems, Inc. is a software company, which provides digital marketing and digital media solutions. It offers a line of software and services used by creative professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, delivering, measuring, optimizing and engaging with compelling content and experiences across multiple operating systems
Words: 2289 - Pages: 10
Chapter 5 1- You want to find the time value of the annuity below at end of year 3 (t=3). What should you calculate? A) PV of a 4 year annuity due B) FV of a 4 year annuity due C) FV of a 3 year annuity due D) FV of a 4 year ordinary annuity E) FV of a 3 year ordinary annuity 0 1 2 3 4 2- Moe is looking at an annuity that makes five $10,000 payments with the first annuity payment occurring 11 years from today. What is the present value of this annuity if Moe’s interest rate is 9%
Words: 869 - Pages: 4
