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
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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
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common equity. It has 800 million shares of common stock outstanding. What is winston’s market/ book ratio? Market to book ratio= Market value per share Book value per share Book value per share= Common Equity = $6 billion = $7.50 # shares $800 million Market to-book ratio= Market price per share = $75 = $10.00 Book value per share $7.50 (3-4) Price/Earning Ratio A company has an EPS of $1.50, a cash flow per share of $3.00 and a price /cash
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on optimistic projections of increasing market penetration and a steady growth in average order size. The key driver of the ROI analysis was the market penetration assumption. The allocation of Upfront vs. Ongoing Costs would also affect the IRR value. Finally, the decision horizon also plays an important role in the sensitivity of the IRR, since some of the benefits are long-run benefits. If any of these factors are adjusted, the IRR could become unacceptable. Analysis: • B&K Distributors
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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
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_________________________________ CLASS DAYS/TIME _______________ INSTRUCTOR _________________________ READ THE FOLLOWING DIRECTIONS VERY CAREFULLY. FAILURE TO FOLLOW THESE INSTRUCTIONS WILL ALMOST CERTAINLY RESULT IN YOUR EXAM BEING MISGRADED WHICH WILL ADVERSELY AFFECT YOUR GRADE. IF THERE IS ANYTHING ABOUT THE DIRECTIONS THAT YOU DO NOT UNDERSTAND, ASK YOUR INSTRUCTOR IMMEDIATELY. 1. Fill in your name, student number, and the days and time of the class for which you are registered (for
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TIME VALUE OF MONEY Future Values and Compound Interest Interest is the price paid for the use of borrowed money You have $100 invested in a bank account. Suppose banks are currently paying an interest rate of 6 percent per year on deposits. So after a year, your account will earn interest of $6: Interest = interest rate × initial investment = .06 × $100 = $6 You start the year with $100 and you earn interest of $6, so the value of your investment will grow to $106 by the end of the year:
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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%
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TABLE 4 Present Value of an Ordinary Annuity of $1 1 1 (1 i)n PVA i n/i 1 2 3 4 5 6 7 8 9 10 1.0% 0.99010 1.97040 2.94099 3.90197 4.85343 5.79548 6.72819 7.65168 8.56602 9.47130 1.5% 0.98522 1.95588 2.91220 3.85438 4.78264 5.69719 6.59821 7.48593 8.36052 9.22218 2.0% 0.98039 1.94156 2.88388 3.80773 4.71346 5.60143 6.47199 7.32548 8.16224 8.98259 9.78685 2.5% 0.97561 1.92742 2.85602 3.76197 4.64583 5.50813 6.34939 7.17014 7.97087 8.75206 9.51421 3.0% 0.97087 1.91347 2.82861 3.71710 4.57971 5.41719
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consul that pays $160 annually if the next payment occurs one year from today? The market interest rate is 4.5 percent. 3. Present Value and Multiple Cash Flows Investment X offers to pay you $6,000 per year for nine years, whereas Investment Y offers to pay you $8,500 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 9 percent? If the discount rate is 21 percent? 4. Calculating EAR First National Bank charges 15.1 percent
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