Corporate Finance Case 1 1. To calculate the present value of future cash flow in 2013‚ we first calculate the free cash flow between 2014-2020: Table 1: Free cash flow of 2014-2020 (in $million) After-tax profits Depreciation Gross investment in fixed assets Investment in net working capital Free cash flow 2014 2015 2016 2017 2018 2019 2020 5.25 2.40 5.70 3.10 3.00 3.12 3.40 3.17 4.35 3.26 6.00 3.44 7.60 3.68 (4.26) (10.50) (3.34) (3.65) (4.18) (5.37) (6.28) (1.39) (0.60)
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Danielle Company purchased equipment and incurred the following costs. 2. Depreciation is a process of: 3. Micah Bartlett Company purchased equipment on January 1‚ 2010‚ at a total invoice cost of $400‚000. The equipment has an estimated salvage value of $10‚000 and an estimated useful life of 5 years. The amount of accumulated depreciation at December 31‚ 2011‚ if the straight-line method of depreciation is used‚ is: 4. Ann Torbert purchased a truck for $11‚000 on January 1
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CONFIDENTIAL AC/SEP 2011/AIS280/CAC230 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE COURSE CODE EXAMINATION TIME COMPUTERIZED ACCOUNTING/ COMPUTERISED ACCOUNTING AIS280/CAC230 SEPTEMBER 2011 3 HOURS INSTRUCTIONS TO CANDIDATES 1. This question paper consists of four (4) parts : PART A (20 Questions) PART B (3 Questions) PART C (3 Questions) PART D (2 Questions) 2. Answer ALL questions from all four (4) parts : i) Answer PART A in the Objective Answer Sheet. ii) Answer PART B‚ C and D in the
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A Guide to Earnings and Financial Reporting Quality A Guide to Earnings and Financial Reporting Quality Quality of reported financial information is a critical element in evaluating financial statement data. The higher the quality of financial reporting‚ the more useful the information is for business decision making. 5-2 A Guide to Earnings and Financial Reporting Quality There are a number of areas on the earnings statement that provide management with opportunities for influencing the
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rate of return on their investment of capital in the proposed new bank‚ are they likely to proceed with their charter application given the above estimates? 2. Do problem 1 under the following assumptions: a tax rate of 30% and straight line depreciation of physical assets. 3. Hampton Savings Bank is considering the establishment of a new branch office at the corner of Queen Street and Victoria Boulevard. The savings association’s economics department projects annual operating revenues of $1
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expected to provide services to the company for a number of years. Except for land‚ plant assets decline in value over their useful lives. Plant assets are usually subject to depreciation. Depreciation methods are not covered in detail in this paper. The book value of plant assets is the cost of the asset less accumulated depreciation. This amount is not an indication of the market value of the asset‚ which may be much higher than the book value in most cases. The difference between the market and book
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Learning Team contains: Team Problems Prepare solutions to the following problems from the text: 1) Chapter 11: P11-10 (Comprehensive Depreciation Computations) Sheryl Crow Corporation‚ a manufacturer of steel products‚ began operations on October 1‚ 2006. The accounting department of Crow has started the fixed-asset and depreciation schedule presented on page 563. You have been asked to assist in completing this schedule. In addition to ascertaining that the data already on
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Chapter 20 Accounting Changes and Error Corrections True / False Questions 1. Most‚ but not all‚ changes in accounting principle are reported using the retrospective approach. True False 2. Prior years’ financial statements are restated when the prospective approach is used. True False 3. The after-tax cumulative effect on income is no longer required for changes in accounting principles. True False 4. Most changes in accounting principle require
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PYROLYSIS PLANT PROPOSED FINANCIAL ASPECTS ( 2 ton conversion per day--3 batches of 8 hours each‚ Assumption : 26 working days per month ) A. FIXED CAPITAL (i) Land and Building Deposit for 2250sqft 550‚000.00 Total 550‚000.00 (ii) Machinery & Equipment SI.No. Description Qty. Rate (Rs.) Value (Rs.) 1 2 tons conv. Machine 1 6‚820‚000.00 6‚820‚000.00 2 Office Furniture 10‚000.00 Taxes‚ licensing expenses‚ trasnportation
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Dealing with Operating Leases in Valuation Aswath Damodaran Stern School of Business 44 West Fourth Street New York‚ NY 10012 adamodar@stern.nyu.edu Abstract Most firm valuation models start with the after-tax operating income as a measure of the operating income on a firm and reduce it by the reinvestment rate to arrive at the free cash flow to the firm. Implicitly‚ we assume that the operating expenses do not include any financing expenses (such as interest expense on debt). While this assumption
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