Net present value (NPV) method is used to decide whether or not a company should take on a new project or acquisition. The formula for NPV is the difference between the present value of a project’s cash inflows and its cash outflows. To calculate the present values the future cash flows are discounted using the time value of money method. For the project to be accepted the NPV should be positive‚ because it means the return is greater than the required rate of return; or zero‚ because that means
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Course Syllabus Modern Finance I and II Modern Finance I Professor Adel Turki‚ Cornerstone E-mail: turki@cornerstone.com Modern Finance II Professor Gordon M. Phillips‚ University of Southern California E-mail: gordon.phillips@marshall.usc.edu Web: http://www.marshall.usc.edu/faculty/directory/gordonphillips Biography: Adel Turki is a senior vice president of Cornerstone Research in Washington D.C. He received his Ph.D. from Stanford University. Dr. Turki heads the firm’s securities practice and
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The IPO of CFAO – MCT 4 – 31 October‚ 2012 st 1 Corporate Finance Prof. Ken L. Bechmann‚ Ph.D. The IPO of CFAO ESSEC & MANNHEIM EMBA‚ Weekend 2013 MCT 4 Johannes Drexler Anton Golubev Fabricio Granados Curzio Scheurer Nataliya Shevchenko Matthias Wörner Mannheim Business School 31st October‚ 2012 The IPO of CFAO – MCT 4 – 31 October‚ 2012 st 2 1. Discuss the performance and financial strategy (capital structure) of CFAO in the 20062008 period. The management of
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Case 1 | Warren Buffet | Group 7 | According to the case‚ there are stock price changes for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement. Also‚ the bid price for PacifiCorp is $9.4 billion. After knowing this announcement‚ Berkshire Hathaway’s Class A shares price went up and make them gained in market value $2.17 billion. In Berkshire and other investors’ point of view‚ After Berkshire takeover PacifiCorp‚ it might have a good development and future
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similar to one used in the analysis. The average hypothetical net inflow of the sequel ($21.57M) is used to figure out the value of the state variable for the real options model. The state variable is the average hypothetical net inflow of the sequel‚ discounted using a WACC of 12.36% back to 1989. Discounting back to 1989 is important because this is the time of the first film’s release. Within several weeks of release‚ the film’s success is known. This starting point value is $13.53M. This state variable
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or simply license her finished recording. The case presents information sufficient to build cash flow forecasts for either investment alternative. The task for the students is to build a valuation model for the two capital investment alternatives‚ whereby they can evaluate the attractiveness of the investment based on net present value (NPV) and the internal rate of return (IRR) of the discounted cash flows (DCF). Further‚ the student will have the opportunity to interpret those results and to test
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making process and Japanese decision making process? US decision making system: US decision makers strongly believe in the investment of those projects which have positive cash flows. They analyze the investment decisions with the help of NPV and IRR. The decision making method has advantage that cash flows are discounted as a result the concept of time value of money is taken into consideration in order to determine the feasibility
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1. EXECUTIVE SUMMARY Stock Pick: Michael Kors (MK) is a global luxury lifestyle brand of consumer products‚ which range from American luxury sportswear to accessories‚ footwear and apparel. The company operates in three business segments – retail‚ wholesale and licensing. MK is traded on the New York Stock Exchange. Although MK was established 30 years ago as a luxury brand‚ its initial public offering was only on December 2011. (MK Annual Report 2013) 2. KEY HIGHLIGHTS Rapid Revenue Growth:
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Contents – Executive summary – Mission and strategy statement – Market analysis – Operations (of the business) – Management and staffing – Financial projections – Contingencies When a business makes a capital investment‚ it incurs a current cash outlay in the expectation of future benefits. Usually‚ these benefits extend beyond one year in the future. Investment is asset such as equipment‚ buildings and land as well as the introduction of a new product‚ a new distribution system‚ or a new
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Asset Pricing (CAPM) or Discounted Cash Flows (DCFM) Model. The organization will have to compare and contrast the Capital Asset Pricing Model with the Discounted Cash Flows Model. The skill of comparing and contrasting financial options will help evaluate and organize the debt/equity mix and dividend policy. The organization must then decide what type of long-term finance alternatives will most likely benefit. Capital Asset Pricing Model and the Discounted Cash Flows Model Capital
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