decide which are worth undertaking. (Kidwell and Parrino‚ 2009) There are many techniques used in the process of capital budgeting. The most common methods are payback‚ discounted payback period‚ net present value (NPV)‚ internal rate of return (IRR)‚ accounting rate of return (ARR) and modified internal rate of return (MIRR). Payback Period The payback period is defined as the number of years that it will take a project to recover the initial investment of a company. This period can be easily
Premium Net present value
Worldwide Paper Case Study Incorporated in 2001‚ Worldwide Paper Company (WPC) is a corporation which is always focus on providing finest paper products to its clients and stakeholders. Headquartered in UAE‚ WPC’s most sales are distributed from the regions of Middle East‚ Asia‚ Africa and Levant. As a global company nowadays‚ the area of operation of WPC includes paper trading-commodity and conventional grads‚ indenting and custom order-commodity and conventional grades‚ merchanting and stock
Premium Net present value Revenue Inventory
Target Case EXECUTIVE SUMMARY Target Corporation‚ originally Dayton Dry Goods Company‚ was founded in 1902 and headquartered in Minnesota. The first Target store was opened in 1962 with the purpose of providing customers with discounted values. Currently there are 1888 stores in the US and Canada and in 2004 Target Corporation sold all of their subsidiaries in order to focus on the Target stores. Today they are the second largest discount retailer in the world but are in continuous competition
Premium Target Corporation Wal-Mart
structure. However‚ the riskiness of their assets and cash flows are somewhat different‚ resulting in Safeco having a WACC of 10% and Risco a 12% WACC. Safeco is considering Project X‚ which has an IRR of 10.5% and is of the same risk as a typical Safeco project. Risco is considering Project Y‚ which has an IRR of 11.5% and is of the same risk as a typical Risco project.
Premium Finance Risk Investment
Investment Banking Interview Guide Access the Rest of the Interview Guide Investment Banking Interview Guide‚ Advanced LBO Model – Quiz Questions Answers in bold. Table of Contents: • • • Types of Debt and Financing Methods Financial Statement Adjustments and Debt Schedules Calculating Returns Types of Debt and Financing Methods 1. All of the following types of debt are typically “floating-rate” instruments used to finance an LBO EXCEPT: a. Subordinated Notes b. Term Loan A c. Term Loan B d. Revolver
Premium Private equity Debt Leveraged buyout
STUDENT MENTORSHIP PROGRAM (MODULE 5FINANCE) Module 1: Fundamentals of finance By the end of this reading‚ you will understand What the field of Financial is? How Financial Markets work? What different financial products are? What is Finance? Finance is the study of how and under what terms money are allocated between lenders and borrowers. The term finance may incorporate any of the following: o The study of money and other assets o The management and control of those assets o Profiling
Premium Stock Stock market Stock exchange
Methods: Net Present Value (NPV): the present value of the future after-tax cash flow minus the investment outlay made initially. The decision rule for the NPV as follows: invest if NPV> 0‚ do not invest if NPV< 0 Internal Rate of Return (IRR): calculates the interest rate that equates the present value of the future after-tax cash flows equal that investment outlay; then compared to the required rate of return‚ or hurdle rate‚ to determine the viability of the capital projects. The higher
Premium Net present value Internal rate of return Cash flow
Spring 2012 Name Question 1 2 3 4 5 6 7 8 9 10 Late Total Score 0 0 0 0 0 0 0 0 0 0 0 0 Week 1 2 2 3 3 3 4 4 5 5 TVOM‐qualitative Annual Annuity Annual Loan Loan Annuity stocks verses bonds Discounted Payback PW‚ FW‚ AW IRR independent ‐ cost only IRR mutually exclisive TMAN625 Midterm Exam‚ Summer 2012 Name Eric D. Choi Question 1 2 3 4 5 6 7 8 9 10 Late Total Score 0 0 0 0 0 0 0 0 0 0 0 0 Question 1 Score 0 Explain where or when each of the following should
Premium Bond Finance Investment
CHAPTER 7‚ Case #1 BETHESDA MINING To analyze this project‚ we must calculate the incremental cash flows generated by the project. Since net working capital is built up ahead of sales‚ the initial cash flow depends in part on this cash outflow. So‚ we will begin by calculating sales. Each year‚ the company will sell 600‚000 tons under contract‚ and the rest on the spot market. The total sales revenue is the price per ton under contract times 600‚000 tons‚ plus the spot market sales times the
Premium Generally Accepted Accounting Principles Net present value Depreciation
every two years 4.00% Tax 30.00% Project Life 30.00 years First year operations 2011 Comparison of the Models Model 1 Model 2 BOT through VGF BOT through Funding IRR % 10.56 17.34 Govt Grants Cr 2362 NPV (Cr) Cr 4021 6412 Model I( BOT Model Through VGF) gives an IRR of 10.56% when RoE is 12% else the IRR comes to 9.26% (without VGF). 12% RoE is guaranteed by government through VGF. The government may provide lump sum payment or fill in collection gap to achieve 12% RoE. There
Premium 2010 Commonwealth Games Form of government Government