"Net Present Value" Essays and Research Papers

Net Present Value

Examples Of Net Present Value (NPV), ROI and Payback Analysis Introduction Terms and Definitions Net Present Value - Method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time. Discount Rate - Also known as the hurdle rate or required rate of return, is the rate that a project must achieve in order to be accepted rather...

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Net Present Value and Fiat

Reserve of cash flow hedge will primarily be in relief to economic account in the following exercise. The Group is exposed to consequential risks by the variation of the rates of change, that you/they can influence on its economic result and on the value of the clean patrimony. Particularly: Whereas the societies of the Group sustain costs denominated in different currencies by those of denomination of the respective proceeds, the variation of the rates of change can influence the Result operational...

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Net Present Value

TecOne investors want a 40 percent rate of return on their investment, calculate the venture’s present value. B. Now assume that the Year 6 cash flows are forecasted to be $900,000 in the stepping stone year and are expected to grow at an 8 percent compound annual rate thereafter. Assuming that the investors still want a 40 percent rate of return on their investment, calculate the venture’s present value. C. Now extend Part B one step further. Assume that the required rate of return...

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Net Present Value

time value of money. 3) All projects can have only one value for NPV and one value for IRR. 4) The NPV technique cannot provide information on how acquiring the project will contribute to shareholders’ wealth. Explanation: NPV calculates present value of investment and opportunity cost of capital and IRR takes time value of money and cost of capital into consideration as well. F) Which of the following is false? 1) The profitability index method explicitly considers the time value of money...

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Net Present Value

b) PV = $31.28 Select option a 7. Project A and B have first costs of $10,000 and $18,000, respectively. Project A has net annual benefits of $5,000 during each year of its 5 year useful life, after which it can be replaced identically. Project B has annual benefits of $6600 during each year of its 10 year life. Use present worth analysis, an interest rate of 30% per year and a 10 year analysis period to determine which project to select. Project A PV = $2767 ...

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Net Present Value

times attributed to the nature of a project. Capital inv appraisal of new technologies: Problems, misconceptions and research directions * Specifically, it has been alleged that the traditional appraisal methods of payback, discounted net present value (NPV) and internal rate of return (IRR) undervalues the long-term benefits; that traditional financial appraisals assume a far too static view of future industrial activity, under-rating the effects and pace of technological change; that there...

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Net Present Value and Cash Flow

000) (8,100) Tax cost (2,730) (3,075) (4,590) Net cash flow $6,020 $5,175 $10,710 Discount factor (6%) .943 .890 Present value $6,020 $4,880 $9,532 NPV $20,432 11. a. Year 0 Year 1 Year 2 Year 3 Year 4 Before-tax cash flow $(500,000) $52,500 $47,500 $35,500 $530,500 Tax cost (7,875) (7,125) (5,325) (4,575) After-tax cash flow 44,625 40,375 30,175 525,925 Discount factor (7%) .935 .873 .816 .763 Present value $(500,000) $41,724 $35,247 $24,623 $401,281 NPV...

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Net Present Value, Mergers and Acquisitions

decision-making process. The net present value method is one of the useful methods that help financial managers to maximize shareholders’ wealth. The capital budgeting decision mergers Acquisitions Net Present Value Financial managers are working for the shareholders and their primary goal is profit maximization in order to maximize the wealth of the company and the shareholders. The Capital budgeting decision focuses on the net present value method, the payback...

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Net Present Value and Cash

hypothetical assumption that needed production facilities for the current line of powdered detergents were at 55 percent of capacity and expected to grow at a rate 20 percent a year and maximum production capacity was 100 percent? What would be the present value of this cash flow given the fact that the currently proposed new plant would involve cash outflows of $5 million in three years (assuming that acceptance of the Blast project would not affect the size of the proposed outlay, only the timing, and...

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Net Present Value and Discount Rate

_______________ 1. What is the net present value of a project with the following cash flows if the discount rate is 14 percent?  [pic]     A. -$3,140.43 B. -$929.90 C. $247.181 D. $1,027.67 E. $1,127.08   2. Timothy is considering an investment of $10,000. This investment is supposedly going to provide him with cash inflows of $2,500 in the first year and $6,000 a year for the following 2 years. At a discount rate of zero percent this investment has a net present value (NPV) of _____, but at...

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Net Present Value and Discount Rate

(60,000) 1 18,000 19,000 2 15,000 17,000 3 18,000 19,000 4 16,000 14,000 5 19,000 15,000 6 14,000 13,000 Evaluate the above proposals according to: 1. Pay Back Period. 2. Accounting Rate of Return (ARR) 3. Net present value method (NPV) Proposal A is better than B, because ARR and NPV are higher than Proposal B 2. There are two Proposals. Proposal A and Proposal B. Proposal A costs $ 80,000 and Proposal B costs $ 100,000. The...

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Net Present Value and B. Internal Rate

A project's average net income divided by its average book value is referred to as the project's average: A. net present value. B. internal rate of return. C. accounting return. D. profitability index. E. payback period. The internal rate of return is defined as the: A. maximum rate of return a firm expects to earn on a project. B. rate of return a project will generate if the project in financed solely with internal funds. C. discount rate that equates the net cash inflows of a project...

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Net Present Value and Correct Answer

that inflow are reinvested at 80 percent of the internal rate of return This is a correct answer It is the difference in the reinvestment assumptions that can be significant in determining when to use the present value or internal rate of return methods. Under the net present value method, cash flows are assumed to be reinvested at the firm's weighted average cost of capital Points earned on this question: 1 Question 2 (Worth 1 points) A project has initial costs of $3,000 and subsequent...

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Present Value

Essay. Net Present value is the difference between an investment’s market value and its cost. For an example, you invest 100 dollars (Cost) into a lemonade stand but you receive 50 dollars (Market Value) of cash inflow. Another would be you buy a house for 50,000(Cost) But you sell it for 75,000(Market Value). Your net present value An Investment should be accepted if the net present value is positive and it should be rejected if the net present value is negative. Net present value uses the...

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Net Present Value and Ocean Carriers

new vessel in present value terms? Compared to the book value of the ship of $39M, what can you conclude about the effect of the installment payments? 3. Should Ms. Linn purchase the capesize carrier? Assume that it is going to be sold for scrap after 15 years. [Hint: Construct the Free Cash Flows of the project.] 4. Does your conclusion in (3) change if you instead assume that Ocean Carriers operates the capesize for the full life of 25 years before selling it for scrap value (grown by inflation)...

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Chapter 7— Net Present Value and Other Investment

managers Chapter 7— Net Present Value and Other Investment Question 1 : List the methods that a firm can use to evaluate a potential investment. There are discounted and non-discounted cash-flow capital budgeting criteria to evaluate proposed investments. They are 1) Net present value: NPV is a discounted cash flow technique, which is the difference between an investment’s market value and its cost. NPV = Present value of cash inflow- Present value of cash outflow The...

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Net Present Value and Materials Price Variance

$2) – (4,500 × $2) = $1,000 U 4. Stiner Company’s total materials variance is      A) $2,000 U.      B) $2,000 F.      C) $2,100 U.      D) $2,100 F. = $1,000 + $1,000 = $2,000 U 5. Which of the following will increase the net present value of a project?      A) An increase in the initial investment.      B) A decrease in annual cash inflows.      C) An increase in the discount rate.      D) A decrease in the discount rate. 6. Which of the following is true?      A) The...

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Net Present Value and Washington State University

Washington State University Finance 325 Practice Problems 1. What is the net present value of a project with the following cash flows and a required return of 12 percent? Year 0 1 2 3 Cash Flow -$28,900 $12,450 $19,630 $ 2,750 2. What is the net present value of a project that has an initial cash outflow of $12,670 and the following cash inflows? The required return is 11.5 percent. Year 1 2 3 4 Cash Inflows $4,375 $ 0 $8,750 $4,100 3. A project will produce cash inflows of $1,750...

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Finance: Net Present Value and the Written Assignment

making the project more favorable because the higher the project internal rate of return it’s more desirable because it makes the net present value for all-cash flow projects equaling zero. The business decision that George made what's important to him because he loves the business that he did wanted to grow the company and all me for the long term time value of money that he invested for the capital budgeting investment. “The pitfalls of the IRR technique pointed out by some theoretical...

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Net Present Value

Net present value In finance, the net present value (NPV) or net present worth (NPW) of a time series of cash flows, both incoming and outgoing, is defined as the sum of the present values (PVs) of the individual cash flows. In case when all future cash flows are incoming (such as coupons and principal of a bond) and the only outflow of cash is the purchase price, the NPV is simply the PV of future cash flows minus the purchase price (which is its own PV). NPV is a central tool in discounted cash...

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Present Value

 Net present Value, Mergers and acquisitions Abstract Main objective of undertaking this to report was learn about NPV present value (NPV) method to make capital budgeting decision(Google NEW Project) and success factors involved in mergers and acquisitions(Google-Groupon Case). Answers to the Assignments Part I: Google should go ahead with the new project. Part-II: Google’s acquisition of Groupon would have been win -win situation for both corporations Now I will discuss both...

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Net Present Value and Software Project Management

Economical assessment 4. Objectives assessment 5. Risk assessment 8. The is the difference between the total cost and the total income of a project over its lifetime. This includes both direct as well as indirect costs. 1. Payback 2. Net profit 3. Net present value 4. Cash flow 5. All of the above -4- INF3708/201 The table below gives the estimated cash flow for three different projects (in rands R). use the table to answer question 9 – 19. Year 0 1 2 3 4 5 6 Project 1 - R 175 000 + R 15...

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Overall Net Present

should build or not build the new generator. The Present Value of the expected costs is $47.146 million dollars. Calculations are listed below: Year Cost x PVIF (I, N) = Present Value 1 25 PVIF(8,1) (.926) = 23.15 2 28 PVIF(8,2) (.857) = 23.996 Total PV = 47.146 The Present Value of the expected after-tax cash profits are $47.235 million dollars. Calculations are listed below: Year Cash Inflow x Interest Factor = Present Value 3 6 .794 4.764 4 7 .735 5.145 5 8 .681...

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Net Present Value and Free Cash Flow

1. Given the proposed financing plan, describe your approach (qualitatively) to value AirThread. Should Ms. Zhang use WACC, APV or some combination thereof? Explain. (2 points) * From the statement of AirThread case, we know that American Cable Communication want to raise capital by Leveraged Buyout (LBO) approach. This means ACC will finance money though equity and debt to buy AirThread and pay the debt by the cash flows or assets of AirThread. * In another word, it’s a highly levered transaction...

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Net Present Value and Optimum Credit Policy

Master of Business Administration - MBA Semester 2 MB 0045 FINANCIAL MANAGEMENT Name: Manybhushan Tiwary Roll : 1205003226 Q1. What are the goals of financial management? A1. The experts in the field of finance believe that if the market value of the firm’s equity is maximized; the goal of the financial management is attained. There are two versions of the goals of the financial Management: Profit Maximization and Wealth maximization. Profit maximization: This is a goal wherein, the returns...

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Finance: Net Present Value and Options Principle Objective

corporate finance. 3. Which of the following correctly completes the next sentence? The value of any asset is the present value of all future a. 0 profits it is expected to provide b. 0 revenue it is expected to provide c. 0 net working capital it is expected to provide d. 0 cash flows it is expected to provide Objective: Compare and contrast the market value of an asset or liability from the book value. 4. Original maturity refers to a. 0 a technical accounting term that encompasses the...

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Net Present Value and Salvage Value

------------------------------------------------- FINC5001 Capital Market and Corporate Finance ------------------------------------------------- Workshop 5 – Capital Budgeting II 1. Basic Concepts Review a) In applying Net Present Value, what factors do we include, and what factors do we ignore? Use cash flows not accounting income Ignore * sunk costs * financing costs Include * opportunity costs * side effects * working capital * taxation * inflation ...

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Present Value and Capital Budgeting

Part I A. Present Value with Discount rate of 7% = 15000/(1+7%) = 15000/1.07 = $14,018.69 Present Value with Discount rate of 4% = 15000/(1+4%) = 15000/1.04 = $14,423.08 B. Account A - Present Value with Discount rate of 6% = 6500/(1+6%) = 6500/1.06 = $6,132.08 Account B - Present Value with Discount rate of 6% = 12600/(1+6%)^2 = 12600/1.1236 = $11,213.96 C. Present Value of Gold Mine 7% = 4900000/1.07 + 61,000,000/(1.07)^2 + 85,000,000/(1.07)^3 = 45,794,392.52 + 61,000,000/1.1449 + 85...

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Net Present Value and Initial Cash Outlay

 Week 5 – Homework Answers P8-1. Suppose that a 30-year U.S. Treasury bond offers a 4% coupon rate, paid semiannually. The market price of the bond is $1,000, equal to its par value. a. What is the payback period for this bond? b. With such a long payback period, is the bond a bad investment? c. What is the discounted payback period for the bond assuming its 4% coupon rate is the required return? What general principle does this example illustrate regarding a project’s life, its discounted...

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Net Present Value IRR And The

Net Present Value, IRR, and the Payback Period Infomercial Entertainment, Inc. In the good of days—before cable TV, fax machines, and multimedia personal computers—the phrase,"…and now a word from our sponsor…”usually meant just that, Television commercials were continued to thirty-and sixty—second messages, grouped together to occupy only two or three minutes of viewing time. Occasionally, if you stayed up late enough sitting in front of the tube, you'd see thirty minute segments on riveting topics...

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Stryker: Net Present Value and Capital Budgeting Process

flow targets and maintain Stryker’s 20% growth benchmark. To what extent have they been shaped by elements of corporate finance theory? They are heavily influenced by corporate finance theory All submissions are required to show the net present value (NPV), internal rate of return (IRR) and payback period. They need to highlight the project’s anticipated outgoing cash flow and earnings effects on the company and describe specific risks that could affect the projects abitily to deliver projects...

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Memorandum: Net Present Value and Apex Investment Partners

expect an IPO valuation at 3.67 times revenues, producing gross proceeds of $764m with a present value of $116m (using our 60% discount rate). Assuming that Accessline meets this revenue target, and that no future funding is required, Apex will take a slight loss on its required rate of return, barring the voluntary distribution of the dividend from the board of directors, on which we are not offered a seat. The present price per share at such an exit would be approximately $7.84. However, given Accessline’s...

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Future Value and Present Value

. To find the PVA, we use the equation: PVA = C({1 – [1/(1 + r)]t } / r ) PVA = $60,000{[1 – (1/1.0825)9 ] / .0825} PVA = $370,947.84 The present value of the revenue is greater than the cost, so your company can afford the equipment. 7. Here we need to find the FVA. The equation to find the FVA is: FVA = C{[(1 + r)t – 1] / r} FVA for 20 years = $3,000[(1.08520 – 1) / .085] FVA for 20 years = $145,131.04 FVA for 40 years = $3,000[(1.08540 – 1) / .085] FVA for 40...

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Please compare the advantages and disadvantages of the following investment rules: Net Present Value (NPV), Payback Period and Discounted Payback Period

Net present value is defined as the total present value (PV) of a time series of cash flows. It is a standard method for using the time value of moneyto appraise long-term projects. Used for capital budgeting, and widely throughout economics, it measures the excess or shortfall of cash flows, in present value terms, once financing charges are met. The advantages of the NPV are following; first, it tells whether the investment will increase the firm’s value. Also, it considers all the cash flows...

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Finance: Net Present Value and Rate

Time Value of Money Exercise 1. If you invest $1000 today at an interest rate of 10% per year, how much will you have 20 years from now, assuming no withdrawals in interim? 2. a. If you invest $100 every year from the next 20 years starting one year from today and you earn interest of 10% per year, how much will you have at the end of the 20 years? b. How much must you invest each year if you want to have $50000 at the end of the 20 years? 3. What is the present value of the following...

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Adjusted Present Valu

Adjusted Present Value Adjusted present value is an investment appraisal technique similar to net present value method. However, instead of using weighted average cost of capital as the discount rate, ungeared cost of equity is used to discount the cash flows from a project and there is an adjustment for the tax shield provided by related debt capital. Formula Adjusted Present Value = PV of Cash Flows using Ungeared Cost of Equity + Present Value of Tax Shield Where PV stands for 'present value'...

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Internal Rate of Return (IRR) and Net Present Value (NPV) are both powerful tools used in business to determine whether or not to invest in a particular project; both methods have its pros and cons.

Internal Rate of Return (IRR) and Net Present Value (NPV) are both powerful tools used in business to determine whether or not to invest in a particular project; both methods have its pros and cons. If given a choice I would choose NPV, because of the potential to anticipate profitability. As it is assumed that the objective of a firm is to create as much shareholder wealth as possible for its owners through the efficient use of resources, the preferred method in determining whether or not to invest...

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Chicago Value Company Case

the inputs into 1) the net initial investment outlay at year 0, the initial investment $200,000 which include taxes and delivery, and the cost to install the equipment $12,500. The total net cost $212,500. 2) The depreciation tax savings in each year of the projects economic life, this will show how much the tax savings will be depreciated each year using the MACRS method 3) the projects incremental cash flows? This shows the company profit for each of the eight years. Net Cost MACRS Tax Rate...

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The Difference Between The Present Value Of Cash I

The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project. 现金流入的现值和现金流出的现值之间的差额。 NPV是用在资本预算分析的投资或项目的盈利能力。 The net present value of a project is the present value of current and future benefit minus the present value of current and future costs. 一个项目的净现值是当前和未来的收益减去当前和未来成本的现值的现值。 Payback Period allows investors to assess the risk of an investment attributable to the length...

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Time Value of Money

– Time Value of Money We earn money to spend it and we save money to spend it in the future. However, for most people spending money in the present time is more desirable since the future is unknown. We can gratify the desire to spend money today rather than in the future by knowing the basic law in finance – time value of money. This means that a dollar today is worth more than a dollar at some time in the future. Unfortunately, people very often want to buy things at the present time which...

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Time Value of Money

Time Value of Money Resource: Ch. 12, 12-A, & 12-C of Health Care Finance Part I: Complete the following table by inserting your responses to the questions. Cite any sources you use. |Define the time value of money. |The time value of money is the value of money figuring in a given amount of interest earned over a given | | |amount of time. The time value of money is the central concept in finance theory. The value of a dollar...

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Value Proposition

Value Proposition Your value proposition can equip you with the following benefits to your business: * Create a strong differential between you and your competitors * Increase not only the quantity but the quality of prospective leads * Gain market share in your targeted segments * Assist you in enhancing tools that will help you close more business * Improve your operation efficiency iPod vs. Other MP3 Players - As early as 1996 MP3 players were available to the public for...

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time value money

TIME VALUE OF MONEY The aim of this paper is to learn about time-value-of-money to make optimal decisions as manger must understand the relationship between a dollars present today and a dollar in the future. Time value of money Today’s financial managers often have to compare cash payments that occur on different dates. To make optimal decisions, the manager must understand the relationship between a dollar today [present value] and a dollar in the future [future value]. The time value of...

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Economic Value Added

above meaning of economic profit- Stern Stewart & Co. recognised that management’s goal should be to maximise the market value of company but also that this could not be done in isolation from the capital invested in the company. Thus, management should aim to maximise the difference between the market value and the invested capital (debt + equity); this is known as market value added or MVA. However, higher MVA is the result of management action and not a tool in itself. SIMILAR TO DCF where the...

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Free Cash Flow and Total Value

to estimate the terminal value. Finally, regarding the valuation of non-operating investments in equity affiliates, due to limited data, market multiple approach would be better to use. 2 – Valuation of AirThread Regarding the estimation of the long-term growth rate, Ms. Zhang knows that the long-term growth rate would be a function of the company’s return on capital (ROC) and reinvestment rate. According to the definition given in the case, ROC is defined as net operating profits after...

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Economic Value Added Model

SLOVENSKA USING OF THE ECONOMIC VALUE ADDED MODEL FOR VALUATION OF A COMPANY Doc. Ing. Eva Kislingerová, CSc. Prague University of Economics Introduction There is possibility to use, with respect to the object of valuation, several methods for valuation of a company in practice. One of the most important and highly used group of methods are yield methods. They are usually called Discounted Cash Flows (DCF) methods. Value of a company is derived from present value of future incomes connected with...

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Stock and Market Value

overall value of the firm, it should use debt to finance the $100 million purchase. Since interest payments are tax deductible, debt in the firm’s capital structure will decrease the firm’s taxable income, creating a tax shield that will increase the overall value of the firm. 2. Since Stephenson is an all-equity firm with 15 million shares of common stock outstanding, worth $32.50 per share, the market value of the firm is: Market value of equity = $32.50(15,000,000) Market value of equity...

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Hertz: Depreciation and Present Value

Hertz purchases the fleet from GM for $325,000, and Hertz is able to issue $200,000 of five year, 8% debt in order to finance the project. All principal will be repaid in one balloon payment at the end of the fifth year. What is the Adjusted Present Value (APV) of the project? 17.1 a. The maximum price that Hertz should be willing to pay for the fleet of cars with all-equity funding is the price that makes the NPV of the transaction equal to zero. NPV = -Purchase Price + PV[(1- TC...

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Customer Value Marketing

based on the study of “Customer Value Marketing” starts with introduction section. We have mentioned the contents of the study in objectives of the report section. The methodology section deals with the means of preparation of this report and the processes that we have followed. Then the report describes the theoretical aspects of the study in the literature review. This section mainly consists of brief description about different important topics about customer value marketing. Finally in the last...

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Should Gpi Present an Asset for Prepaid Pension Costs in Its U.S. Financial Statements for Faithful Representation of This Situation?

GPI I. Issue: Should GPI present an asset for prepaid pension costs in its U.S. financial statements for faithful representation of this situation? II. GAAP List: 715-10-15-6: For purposes of preparing financial statements in accordance with U.S. GAAP, to the extent that those arrangements are in substance similar to pension or other postretirement benefit plans in the United States, they are subject to the provisions of this Topic, includes no special provisions applicable. 715-30-55-65:...

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Time Value of Money

Time Value of Money The time value of money (TVM) or, discounted present value, is one of the basic concepts of finance and was developed by Leonardo Fibonacci in 1202. The time value of money (TVM) is based on the premise that one will prefer to receive a certain amount of money today than the same amount in the future, all else equal. As a result, when one deposits money in a bank account, one demands (and earns) interest. Money received today is more valuable than money received in the future...

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Time Value of Money

Time Value of Money Time value of money is an amount of money available today can be safely invested to accumulate to a larger amount in the future. Present value- an amount of money available today. Future amount-amount receivable/payable at a future date Relationship Between Present Values and Present Values The difference between present value and future amount is the interest that is included in the future amount. It depends on two factors: 1. Rate of interest at which present value...

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Time Value of Money

Time Value of Money Practice Problems − Solutions Dr. Stanley D. Longhofer 1) Jim makes a deposit of $12,000 in a bank account. The deposit is to earn interest annually at the rate of 9 percent for seven years. a) How much will Jim have on deposit at the end of seven years? P/Y = 1, N = 7, I = 9, PV = 12,000, PMT = 0 ⇒ FV = $21,936.47 b) Assuming the deposit earned a 9 percent rate of interest compounded quarterly, how much would he have at the end of seven years? P/Y = 4, N = 7 × 4 = 28 ⇒ FV =...

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Customer Lifetime Value

Customer Lifetime Value (SMALL BOOK 167-177) * Customer lifetime value (CLV), is the net present value of the cash flows attributed to the relationship with a customer. * The use of customer lifetime value as a marketing metric tends to place greater emphasis on customer service and long-term customer satisfaction, rather than on maximizing short-term sales. * Two approaches to CLV: * Disaggregate (“spreadsheet”)– Complex and cumbersome, but allows you to build in any assumptions...

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Time Value of Money Paper

Time value of money ("TVM") is defined as the idea that money available at the present time is worth more than the same amount in the future, due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. TVM is also often referred to as "present discounted value" (Answers Corporation, 2006). TVM concepts help people like managers or investors understand the benefits and the future cash...

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Finance Basics for Managers: Time Value of Money Problems

FIN2110 Finance Basics for Managers Fall 2011 Time Value of Money Problems Calculating Future Values Assume you deposit $10,000 today in an account that pays 6% interest. How much will you have in five years? = $10,000 (FVIF of 6%, 5years) = $10,000 * 1.3382 = $13,382 Calculating Present Values Suppose you have just celebrated your 19th birthday. A rich uncle has set up a trust fund for you that will pay you $150,000 when you turn 30. If the relevant discount...

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Concept of Present Value

CONCEPT OF PRESENT VALUE SO IMPORTANT FOR CORPORATE FINANCE? The importance of concept of present value to the world of corporate finance is that present value calculations are widely used in business and economics to provide a means to compare cash flows at different times. Present Value’s definition and simplistic formula used for normal purchases, the concept’s importance to corporate finance and why present value is the very first topic taught in finance classes explain that present value is an...

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Time Value of Money

one of the most important concepts is the Time Value of Money (TVM). Time Value of Money concepts helps a manager or investors understand the benefits and the future cash flow to help justify the initial cost of the project or investment. Many of the assets businesses and individuals own are financed with money borrowed from others, so the understanding of TVM is crucial to making good buying decisions. To recognize how annuities affect the time value of money, managers need to consider the factors...

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Net Present Value

year and reported the following information. The company had current assets of $153,413, net fixed assets of $ 412,331, and other assets of $83,552. The firm also has current liabilities worth $65,314, long-term debt of $178,334, and common stock of $162,000. How much retained earnings does the firm have? a. $ 405,648 b. $243,648 c. $167,918 d. $573,566 6.) Tre-Bien Bakeries generated net income of $233,412 this year. At year end, the company had accounts receivables of $47,199...

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ACC212

In comparing two investment alternatives, the difference between the net present values of the two alternatives obtained using the total cost approach will be the same as the net present value obtained using the incremental cost approach. True False 2. If two projects require the same amount of investment, then the preference ranking computed using either the project profitability index or the net present value will be the same. True False 3. In preference decisions, the...

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