Net present value In finance‚ the net present value (NPV) or net present worth (NPW) of a time series of cash flows‚ both incoming and outgoing‚ is defined as the sum of the present values (PVs) of the individual cash flows. In case when all future cash flows are incoming (such as coupons and principal of a bond) and the only outflow of cash is the purchase price‚ the NPV is simply the PV of future cash flows minus the purchase price (which is its own PV). NPV is a central tool in discounted cash
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Assignment “Net Promoter Score: a strong indicator of loyalty and growth?” 2 Table of Content Page Introduction…………………………………………………………………………3 1 Main advantages of the NPS……………………………………………...4 1.1 1.2 1.3 2 Simple and understandable – the calculation of the NPS……...4 Simple categorization of the customer groups - …………………. application of the NPS……………………………………………...5 Motivating Change - customer-focused management by NPS...6 Main disadvantages of the NPS ................................
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Make a series of 12 payments of $1‚200 at the beginning of each of the next 12 years (first payment being made today) b) Make a single lump-sum payment today of 10‚000 and receive coverage for the next 12 years If you had investment opportunities offering an 8% annual return‚ which alternative would you prefer? a) PV = $9‚766.66 b) PV = $10‚000 Select option a 5. A leading broker has advertised money multiplier certificates that will triple your money in 9 years; that is if
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m. sole proprietorship n. partnership o. corporation p. limited liability partnership 5.) Maddux‚ Inc.‚ has completed its fiscal year and reported the following information. The company had current assets of $153‚413‚ net fixed assets of $ 412‚331‚ and other assets of $83‚552. The firm also has current liabilities worth $65‚314‚ long-term debt of $178‚334‚ and common
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TecOne investors want a 40 percent rate of return on their investment‚ calculate the venture’s present value. B. Now assume that the Year 6 cash flows are forecasted to be $900‚000 in the stepping stone year and are expected to grow at an 8 percent compound annual rate thereafter. Assuming that the investors still want a 40 percent rate of return on their investment‚ calculate the venture’s present value. C. Now extend Part B one step further. Assume that the required rate of return
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times attributed to the nature of a project. Capital inv appraisal of new technologies: Problems‚ misconceptions and research directions * Specifically‚ it has been alleged that the traditional appraisal methods of payback‚ discounted net present value (NPV) and internal rate of return (IRR) undervalues the long-term benefits; that traditional financial appraisals assume a far too static view of future industrial activity‚ under-rating the effects and pace of technological change; that there
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limited liability‚ ease of transferability‚ ability to raise capital‚ and unlimited life. 2. Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long- term profits. Presumably‚ the current stock value reflects the risk‚ timing‚ and magnitude of all future cash flows‚ both short-term and long-term. If this is correct‚ then the statement is false. 3. Could a company’s cash
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Net Present Value/Present Value Index The management team at Savage Corporation is evaluating two alternative capital investment opportunities. The first alternative‚ modernizing the company’s current machinery‚ costs $45‚000. Management estimates the modernization project will reduce annual net cash outflows by $12‚500 per year for the next five years. The second alternative‚ purchasing a new machine‚ costs $56‚500. The new machine is expected to have a five-year useful life and a $4‚000
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Corporate Finance ------------------------------------------------- Workshop 5 – Capital Budgeting II 1. Basic Concepts Review a) In applying Net Present Value‚ what factors do we include‚ and what factors do we ignore? Use cash flows not accounting income Ignore * sunk costs * financing costs Include * opportunity costs * side effects * working capital * taxation * inflation 2. Practice Questions a) After spending $3 million on research‚
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base case projections for a potential acquisition of Mercury Athletic‚ we have concluded that this is a positive net present value project‚ and that AGI should proceed with the acquisition. Under Mr. Liedtke’s operating assumptions‚ we calculate the value of Mercury’s discounted cash flows to be $624.446 million‚ and the acquisition price to be $156.643 million‚ yielding a net present value of $467‚804 for AGI. Our calculations indicate that this project becomes even more attractive financially when
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