Founded 1991 by Md. Alimullah Miyan 4 Embankment Drive Road‚ Sector 10‚ Uttara Model Town‚ Dhaka 1230‚ Bangladesh Phone: 896 3523-7‚ 01714 014933‚ 892 3469-70‚ 891 8412‚ Fax: 892 2625‚ info@iubat.edu www.iubat.edu College of Business Administration (CBA) Summer 2013 Course outline FIN 302 – Corporate Finance (May 5 –August 21) Instructor and Contact Information Abdullah Al Yousuf Khan MSIT (London)‚ MBA (Dublin)‚ PGD (London) B.Com. (Hon.)‚ M.Com. Finance & Banking (DU) Email:
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3 2.2 Income Statement – Based methods..............................................................................3 2.3 Goodwill –Based methods.............................................................................................4 2.4 Cash flow discounting – Based method ........................................................................4 3. Investment decision process applied for preparing the long term financial plan of Biotechnology S.A ...........................................
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Characteristics and Dividend Policy 15 4.5 Alternatives to Dividend Payments 16 4.6 Optimal Dividend Policy 16 5.0 Valuation 18 5.1 Weighted Average Cost of Capital (WACC) 20 5.2 Estimation of Share Price 23 5.3 Sensitivity Analysis 25 5.4 Comparison between the calculated and actual share price 28 5.5 Investment Decision 28 6.0 References 29 7.0 Appendix 30 1.0 Introduction Company Overview Billabong was formed in Queensland (1973) by a current non executive director Gordon Merchant
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performance and add values to the shareholders. Proposal evaluation (Greystock analysis) The Merseyside Project (MP) is a modernization program for the Merseyside Plant‚ one of two of Victoria Chemicals’ (VC) plants. MP can be said as a conventional cash flow project with an initial cost outlay of GBP 12 million and positive cash inflows for the next 15 years (2008-2022). Evaluation of a capital expenditure includes discounting or non-discounting methods. Victoria Chemicals (VC) uses the discounting methods
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making process. Despite these detailed steps‚ the ultimate decision lies with the entire firm. They engaged in leveraged buyouts (LBOs)‚ growth capital‚ and privatization. In LBOs‚ they use capital structures to find the best combination of price‚ leverage and returns. In order to demonstrate a serious commitment and to achieve a desired rating‚ they decided in a minimum capital structure of at least 25% equity whereas debt is roughly 4 to 5 times EBITDA depending on market conditions. They
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the inheritance. F. Ross Johnson Fair Market Value • Fair Market Value: “…the price at which the asset would trade between two rational individuals‚ each in command of all of the information necessary to value the asset‚ and neither under any pressure to trade.” Rocky Higgins Analysis for Financial Management (p. 318) Capital Budgeting 101 • Step 1: Estimate Discount Rate • Step 2: Project Cash Flows – Cash flows for 1989-98 in tables – Terminal value • Step 3: Compute Net Present Value (NPV)
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2. What is the maximum price they could expect to pay Monmouth‚ based on an analysis of valuation using discounted cash flow‚ calculation of WACC and terminal value determination? 2. Based on the DCF valuation and using a WACC of 8.25% (the beta assumed to be 1‚ the average beta of comparable firms and the coupon rate to be 7.96%‚ the rate for BB rated companies) and a growth rate of 5.5%. The fair price is $40.4 per share for Robertson‚ lower than the $50 offered by Simmons to sell their
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along with the different sale ranges. Keywords: NPV‚ NPV Profile‚ NPV‚ IRR‚ multiple IRRs‚ ranking conflict of NPV vs. IRR‚ payback period‚ profitability index‚ discount rate‚ cost of capital concept‚ cash flow analysis‚ cash flow timeline‚ conventional cash flow stream‚ non-conventional cash flow stream‚ sunk cost‚ opportunity cost‚ independent projects‚ mutually exclusive projects Overview of the Capital Budgeting Process Every business requires some source of funds to maintain operation
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analyze the deal and conclude what terms would be the most profitable for Sierra. The money Arcadian received from Sierra would be used for further financing of the firm’s growth. Chu’s initial analysis involved financial forecasting of equity cash flows. His final steps would be to estimate the terminal value for the
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Internal rate of return • Modified internal rate of return • Equivalent annuity Here in our case‚ we have used Net Present Value or NPV‚ which is estimating the size and timing of all the incremental cash flows from the project. These future cash flows are then discounted to determine their present value. These present values are then summed‚ to get the NPV. The NPV decision rule is to accept all positive NPV projects in an unconstrained environment‚ or if projects are mutually exclusive
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