• kflds'aglvksd
    : Pricing the 2009 IPO Please address the following questions in your write-up. 1. What are the advantages and disadvantages of Rosetta Stone going public? 2. What do you think the current market price is for Rosetta Stone shares? Justify your valuation using both discounted cash flow and comparables...
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  • awdawd
    each investment rule: Does it use cash flows or accounting earnings? Does it consider all cash flows or not? Does it apply a proper discount rate? WPlease compare the advantages and disadvantages of the following investment rules: Net Present Value (NPV), Payback Period, Discounted Payback...
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  • Chapter 9: NPV and other investment criteria
    sufficient to recover its initial cost. Ex: Initial investment = $500 Year Cash Flow 1 $100 2 $200 3 $500 2. Analyze rule: Advantages: Easy to understand Adjusts for uncertainty of later cash flow Biased toward liquidity Disadvantages: Ignoring time value decide to take...
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  • Capital Expenditure Valuation Methods
    correct the disadvantage of the payback period by accounting for the time value of money. To calculate the discounted payback period, a discounted cash flow is used in the calculation. The discounted cash inflow is calculated by dividing actual cash inflow by the present value of each cash inflow. To...
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  • Capital Budgeting
    many managers use a modified version called the discounted payback period. The calculation is similar to that of the original payback period except that the future cash flows are discounted by the cost of capital. (Kidwell & Parrino, 2009) Also, unlike the original payback period, the...
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  • RUBBISH
    , easy to understand Ignores time value of money Rough screening Ignores cash flow after post payback period Focuses on speedy returns - Advantages further explained: - The better investment is the one with the shorter payback period Disadvantages further explained: - Payback period ignores...
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  • Business Finance
    take into account the time value of money which is a serious drawback since it can lead to wrong decisions. A variation of payback method that attempts to remove this drawback is called discounted payback period method. One other disadvantage would be the cash flows that occur after the payback...
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  • Investment Evaluation
    - directors performance is judged by shareholders “return on investment” - takes account of the life of the project. Disadvantages;- - a percentage return does not take into account the actual cash-flow benefits to a company’s liquidity. - Doesn’t take into account the time value of money...
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  • Jetblue Ipo
    traded companies Using information from the case we perceived the IPO pricing of $24-26 was determined by using the comparable multiples approach. Therefore, we will use the discounted cash flows method to determine an introductory price and evaluate whether it is in-line with the current proposed...
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  • Financial Report
    . Advantages 1. DCF is theoretically strong method. 2. DCF considers different factors into calculation. 3. DCF is less biased to accounting errors and manipulations 4. DCF is based on future cash flows rather than past results. Disadvantages 1. Terminal value of the...
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  • Finance
    an investment increases the firm's value Ignores cash flows beyond the payback period Ignores the time value of money Ignores the risk of future cash flows Discounted Payback Period Advantages Considers the time value of money Considers the riskiness of the project's cash flows (through the...
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  • Acca F9
    examples of Relevant Cash flows 5) Why Time Value of Money is Key Concept in investment Appraisal? 6) Assumptions of discounted cash flows 7) How inflation may complicate analysis of Decisions Difference between Specific inflation rate and General inflation rate 9) Advantages and disadvantages of...
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  • Investment Appraisal Techniques
    total return under project Q is $85,000. Conclusion: PBP on its own is not an adequate investment appraisal technique. Advantages: * simple and easy to calculate and understand * Uses cash flows rather than accounting profits * It can be used as screening device as a first stage in...
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  • Define an “Efficient Market” and the Three Forms of Market Efficiency. Explain How Each of the Forms Differs from a Perfect Market. Define Arbitrage and Explain What Kind of Information Is Needed for You to Obtain
    . Discounted Payback Period will convert the cash flow as the present value and compare the discounted break-even point that the project can discounted cash flows payback within a predetermined cutoff. Since the calculating is similar with Payback so they share their advantage and disadvantage...
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  • Accounting Report
    zero. It helps to measure efficiency of the capital investment. The advantages of it are: liquidity is one of the main emphasis as well as the timing of net cash flows, and also this technique gives an accurate percentage return on an investment (Dyson 2010, p.432). The disadvantages are: the rate of...
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  • Capital Budgeting
    . Several evaluation techniques had been developed or assessing economic worth of projects. These techniques can be classified into two categories as follows: 1. Traditional Techniques or Non-discounted cash flow criteria, under which we have two methods: (i) Pay Back Period (PBP), and...
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  • Business Finance
    flow after that period will be totally ignored. Therefore, it would be a disadvantage for Payback period and Discounted Payback Period because the amounts after payback period do matter in some aspects. Only Internal Rate of Return (IRR), Profitability Index (PI) and Net Present Value (NPV) use all cash flow and discount value....
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  • Capital Budgeting
    Capital Budgeting Part I PV= FV / (1+i)^y PV= present value, FV= future value, i= discount rate, and y= time. 1a) If the discount rate is 0%, what is the projects net present value? Year Cash Flow Discount Rate Discounted Cash Flow 0 -$400,000 0...
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  • Sadasdas
    , 2008). Another disadvantage is that this method ignores the timing of the returns; and gives equal weight to all cash flows before the cutoff; this will be addressed when discussing the Discounted Payback method (Lefley, 1996). There has been a significant amount of research done about the use of...
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  • Cash Flow
    methods are formally referred to as the Discounted Future Economic Income methods. * Equity-Approach * Flows to equity approach (FTE) Discount the cash flows available to the holders of equity capital, after allowing for cost of servicing debt capital Advantages: Makes explicit allowance...
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