Assignment A Q1.What is stock split‚ What are its advantages? Ans) A corporate action in which a company divides its existing shares into multiple shares. Although the number of shares outstanding increases by a specific multiple‚ the total dollar value of the shares remains the same compared to pre-split amounts‚ because the split did not add any real value. A stock split is usually done by companies that have seen their share price increase to levels that are either too high or are beyond the
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15% Tax rate 33.3% Capital Structure 50% debt and 50% equity Shares outstanding 2.5 million Long-real growth rate 2% Long-term inflation rate 2% Debt outstanding $1‚500‚000 and excess cash $500‚000 Forecasted gross profit margin 25% Current year free cash flow (FCF) $2 million LSC’s 5-year forecasted FCF growth rates 10% next year‚ 15% next two years‚ and 12% the following two years Projected synergy: Revenue enhancement of 4.8 million/year from more volume (immediate
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the recently submitted leasing contract proposal‚ Ocean Carriers would have to purchase a new ship. The purchasing of a new ship is a considerable investment. We have analyzed whether or not Ocean Carriers should make this investment using Free Cash Flow and Net Present Value (NPV) analysis. Given the details of the contract‚ the forecasted daily time charter rates‚ and the costs data; we have concluded that Ocean Carriers should not accept the proposal and purchase a new ship if the company’s plan
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Four Tests for Successful Acquisitions lot of academic research shows that the odds of making an acquisition work are not high. Should companies just forget about M&A‚ and focus exclusively on innovation and organic growth? Maybe not‚ at least in some cases. Careful thinking about what it means for an acquisition to succeed‚ coupled with an analysis of why deals fail‚ can lead to some practical advice for managers‚ thus helping them to develop a more refined view. More specifically‚ in order
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of the Group related to the management of the risk of change foresee‚ as a rule‚ the coverage of the future commercial flows that you/they will have bookkeeping demonstration within 12 months and of the orders acquired (or committed in progress) to put aside from their expiration. It is reasonable to believe that the relative effect of coverage suspended in the Reserve of cash flow hedge will primarily be in relief to economic account in the following exercise. The Group is exposed to consequential
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It uses net present value of | |future cash flows discounted at the appropriate cost of capital and compares it with initial investment and to see whether it | |is a positive net present value. If the present value is less than the initial investment then the project is rejected. That | |is the net present value is dependent on future cash flows. | |In a deterministic model the cash flows are forecasted as a single figure and scenarios
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thereafter Assuming working capital increases proportionally with revenue increase‚ thus 9% until year 2019‚ and 4% thereafter Assuming CAPEX grows by 4% annually Terminal value is computed after year 2020 Valuation using the WACC method‚ and assume the cost of capital = 10.25% Valuation using the WACC method Please refer to exhibit DCF Analysis in attached excel file. Results shown in exhibit DCF Analysis‚ with an NPV of 142.2166 million and 9.29 million outstanding shares‚ we compute the
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I. Introduction Tottenham Hotspur Football Club is an English football club that founded in 1882 and located in Tottenham‚ London. Tottenham has been playing in the English Premier League and was one of the oldest teams ever played in the Premiership. Tottenham was the first English football club to achieve the League and FA Cub Double by winning the competitions in the 1960-61 season. Tottenham’s history shows a successful career with the trophies for the past six decades. Tottenham own a home
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optimum goal and therefore‚ this approach analyzes the high EPS based on an expected range of earnings before income taxes (EBIT). 2. Valuation: Determines impact of debt use on shareholder’s value by determining the level of debt at which the benefits of increased debt no longer outweigh the increased risks and expenses associated with financing (Wenk‚ 2012) 3. Cash Flow: Analyzes a firm’s debt capacity by using the weighted average of cost of capital (WACC). The WACC is a calculation of a firm’s cost
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per share‚ (2) its payback period‚ (3) net present value of free cash flow and (4) internal rate of return. The firm uses such a complicated scheme to evaluate capital-expenditure proposals because: (1) Impact on earnings per share evaluates how the project is going to affect shareholders’ wealth of the company. (2) Payback period evaluates how long the project is going to take to reach break-even point. (3) NPV of free cash flow evaluates the dollar contribution of the project to shareholders
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