at 15% compounded monthly: 15%/12 months = 1.25% per month Interest for 20 years, period of: 20 X 12 = 240 periods Formula to calculate future value: FV = P (1 + R) N Expected future value for investment on Capitaland: $3,000 X (1 +0.0125) 240 = $59, 145 Therefore the expected future value for investing in Capitaland stock fund with the expected interest rate of 15% annually, compounding frequency, monthly is $59,145 for a period of 240 periods with a total
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Guillermo to remain competitive in business, implement a sensitive analysis to evaluate possible alternatives, determine the optimal weighted average cost of capital, discuss the use of multiple valuation in reducing risks, and calculate the net present value of future cash flows for each alternative. Analysis of Different Alternatives The company faces three possible alternatives to remain in business. The First alternative would be to distribute the furniture he sells at rock bottom prices against
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2010 based on company and market data up to 2010. Determination of the stock value will aid in the decision to recommend Walmart stock as an investment to clients. The valuation of stock is based on estimations of various parameters using various prediction models. Several models are available to aid in estimating stock prices and they are utilized herein. The dividend discount model, future dividends and a terminal value, the three-stage approach and use of P/E ratios are all utilized in this analysis
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American InterContinental University FINA310-1301A-02: Professor Michael James March 5, 2013 Abstract This assignment will use the CGM and the CAPM to calculate some information regarding the XYZ stock market. XYZ Stock Market Information Krf=2% XYZ’s beta =1.64 XYZ’s current annual dividend = $.80 XYZ’s 3-year dividend growth rate (g) = 8.2% Industry P/E = $4.87 KS= (Risk Free Rate) + Beta (Market Premium) KS= (0.2) + 1.64 (.075) KS= (0.2) +
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all your work. Each question has a different point value. PROBLEM 1 (2 points) | | | | | | | Find the following values for a lump sum assuming annual compounding: | | a. The future value of $500 invested at 8 percent for one year | | | b. The future value of $500 invested at 8 percent for five years | | | c. The present value of $500 to be received in one year when the opportunity cost rate is 8 percent | d. The present value of $500 to be received in five years when the opportunity
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1. Within a limited partnership context, what are the conditions on a limited partner? A) There is a limit to the amount of capital that a limited partner can contribute, as mandated by law. B) There is a limit to the number of limited partners that the firm may take on as investors. C) The limited partner must remain a low level employee and cannot ever serve in a managerial role in the firm. D) A limited partner may not take any active role in the operation of the business. Points Earned:
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Version A COMM-121 and COMM-221 Introduction to Finance Quiz, Fall 2011 VERSION A Instructions: You have 75 minutes to complete the quiz The quiz is 9 pages with printing on both sides Answer each question in the space provided on the question sheet For multiple choice questions, CLEARLY circle one (and only one) answer You may use a calculator that complies with the blue sticker policy A formula sheet is provided at the end of the quiz Clearly state any assumptions that
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the net present value (NPV) of free cash flow is positive. This criterion is calculated as the present value of future cash flows of the project less the initial investment outlay. It is a determinant of whether to undertake the project. A project with a positive NPV is believed acceptable. The higher the NPV, the better the project. Also, it is a good method to evaluate the project because it takes all the relevant costs in account and gives explicit consideration to the time value of money. Fourth
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FFinance: principles of Finance (part 1) Financial markets and management Valuation of investment Value of investment = value of investment’s cash flows * Concept of present value: value of investment = PV(CF°, CF1, CF2…) Important characteristics of cash flows: * Time: for the same amount of money, now is preferred to tomorrow * Uncertainty: risk and return (1 for sure is preferred to half a chance to get 2) Opportunity cost of capital: Definition: opportunity cost of capital
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more risk than others that could be pursued with the same resources. A common method for evaluating a hurdle rate is to apply the discounted cash flow method to the project, which is used in net present value models. The hurdle rate determines how rapidly the value of the dollar decreases out in time, which, parenthetically, is a significant factor in determining the payback period for the capital project when discounting forecast savings and spending back to present-day terms. Most companies use a
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