Accounting Rate of Return (ARR) ARR provides a quick estimate of a project’s worth over its useful life. ARR is derived by finding profits before taxes and interest. ARR is an accounting method used for purposes of comparison. The major drawbacks of ARR are that it uses profit rather than cash flows‚ and it does not account for the time value of money. ARR is most often used internally when selecting projects. It can also be used to measure the performance of projects and subsidiaries within
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Brian De Palma‚ is a Hollywood director‚ who is famous for creating and directing horror films. De Palma has directed some of the most controversial and best known horror films of all time‚ taking inspiration from Alfred Hitchcock. Brian De Palma directed the movie Carrie‚ inspired by the book by Stephen King‚ which is about a young woman who is denied society’s freedoms because her religious mother does not let her indulge in things because they may be a sign from God. When Carrie gets her period
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CHAPTER 5: INTRODUCTION TO RISK‚ RETURN‚ AND THE HISTORICAL RECORD PROBLEM SETS 1. The Fisher equation predicts that the nominal rate will equal the equilibrium real rate plus the expected inflation rate. Hence‚ if the inflation rate increases from 3% to 5% while there is no change in the real rate‚ then the nominal rate will increase by 2%. On the other hand‚ it is possible that an increase in the expected inflation rate would be accompanied by a change in the real rate of interest. While
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Level needed is [pic] b. What would be Collins’s incremental after-tax return on investment? 80‚000 – 7‚200 = 72‚800-4‚000-62‚400=6‚450-1‚920= $4‚480 which is equal to 28 percent. c. Should Collins liberalize credit if a 15 percent after-tax return on investment is required? Assume Collins also needs to increase its level of inventory to support new sales and that inventory turnover is four times. Yes‚ the actual return was higher than the requirement. d. What would be the total incremental
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Feminist Reading of Hardy’s The Return of the Native Most of Hardy’s novels or better to say all of them are considered to be modern. In fact‚ one can notice so many features of modern novels in his fiction. By referring to Robert Schweik’s article (1994) pertaining to the idea that Hardy has influenced so many modern novelists such as D.H. Lawrence‚ one of the key critics of Hardy novels‚ chiefly in the notion of feminine and treatment of women which is one of the distinguishing features
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Good Are Private Equity Returns? This article by Robert Conroy and Robert Harris researches the historical successfulness of investments in firms from the private sector as opposed to investments in firms traded publicly. The article begins by referencing how private equity investment has grown from what they believe is a correlation to huge management fees‚ reduced transparency and concern over job loss. More institutions are taking this path in search of higher returns and diversification.
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P8-1 a) Expected Rate of Return $ $ $ Y 55‚000 6‚800 55‚000 X Previous Market Value Cash Flow Current Market Value X 20‚000 $ 1‚500 $ 21‚000 $ Y 12.50% 12.36% X: rt = (Ct + P rt = ($1‚50 rt = 0.125 = b) Both investments are equally risky. Keel should recommend Investment X because it has a Pt - Pt-1) / (Pt-1) Y: rt = (Ct + Pt - Pt-1) / (Pt-1) 0 + $21‚000 - $20‚000) / ($20‚000) rt = ($6‚800 + $55‚000 - $55‚000) / ($55‚00 = 12.5%
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Explain how the law of diminishing returns and returns to scale affect a firm’s cost of production (20 Marks) The law of diminishing returns exist when increasing quantities of a variable input are combined with a fixed input‚ which eventually leads to the marginal product and the average product of that variable input will decline. Diminishing returns can affect a firms cost of production negatively in the short run. An example of this is that a business had 2 factors of production; Capital‚ which
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Nguyen Duc Thuan ID: 1349672 FIN 3331 – Risk & Return Assignment 1. Answers: The expected return of this stock is: E[RJ] = 0.2(12%) + 0.35(18%) + 0.3(-10%) + 0.15(10%) = 7.2% The standard deviation is: 2J = 0.2(0.12 – 0.072)2 + 0.35(0.18 – 0.072)2 + 0.3(-0.1 – 0.072)2 + 0.15(0.1 – 0.072)2 = 0.0135 J = = 11.63% 2. Answers: The average return and standard deviation of Large co. stock return is: Sum of Large co. stock = -14.69 – 26.47 + 37.23 + 23.93 – 7.16 + 6.57 = 19.41 Mean = Sum/N
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000 1.1047 155‚218.6 0.10 12 1 10.47% 3. Hughes Co. is growing quickly. Dividends are expected to grow at a 25 percent rate for the next three years‚ with the growth rate falling off to a constant 7 percent after that. If the required rate of return is 12%‚ and the company has just paid a $2.40 dividend‚ what is the current share price? 1 2 3 4 3 1.12 3.75 1.12 2.40 1.25 3 3 1.25 3.75 3.75 1.25 4.69 4.69 1.07 5.02 5.02 0.12 0.07 1 1.12 80.5 4.69 1.12 4. The Morgan Corporation has two different
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