Mercury Athletic Footwear Case Assignment Questions: 1. Is Mercury a good target for AGI? Discuss strategic fit of brands‚ products‚ customers‚ and distribution. Identify specific sources of value. Discuss AGI’s strengths/weaknesses compared with other bidders. I think Mercury is a good target for AGI: The brands--the AGI brands and logos are associated with a lifestyle that was prosperous‚ active and fashion-conscious. The Mercury brands are athletic and casual footwear. The products--AGI focused
Premium Discounted cash flow Weighted average cost of capital Free cash flow
techniques such as • Accounting rate of return • Net present value • Profitability index • 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
Premium Net present value Discounted cash flow Internal rate of return
profitability of projects. 9-4 Net present value computes the present value of all relevant cash flows associated with a project. For conventional cash flow‚ NPV takes the present value of all cash inflows over years 1 through n and subtracts from that the initial investment at time zero. The formula for the net present value of a project with conventional cash flows is: NPV = present value of cash inflows - initial investment 9-5 Acceptance criterion for the net present value method is if NPV >
Premium Net present value
significantly. The anticipated cash flows for the project are as follows: Year 1 $1‚100‚000 Year 2 $1‚450‚000 Year 3 $1‚300‚000 Year 4 $950‚000 You have now been tasked with providing a recommendation for the project based on the results of a Net Present Value Analysis. Assuming that the required rate of return is 15% and the initial cost of the machine is $3‚000‚000. 1. What is the project’s IRR? (10 pts) Using the financial calculations in Microsoft Excel‚ the IRR is 22%. 2. What is the project’s
Premium Net present value Investment
development projects are worth pursuing. It is budget for major capital‚ or investment‚ expenditures.[1] Many formal methods are used in capital budgeting‚ including the techniques such as * Accounting rate of return * Payback period * Net present value * Profitability index * Internal rate of return * Modified internal rate of return * Equivalent annuity * Real options valuation These methods use the incremental cash flows from each potential investment‚ or project. Techniques
Premium Net present value Internal rate of return
suggested approach. Value the economic benefits associated with a decision to eliminate the exploration and development activities of the Gulf Oil Corporation. A key question is how Socal can justify a huge premium over market value to acquire Gulf. A key objective is to understand the shareholder value implications of a corporate strategy built around investing huge amounts of capital in activities that promise largely negative net present values. Place a specific value on Gulf’s strategy of
Premium Net present value T. Boone Pickens
model with the weighted factors chosen according to some common criteria (with TELOS‚ CPM‚ etc) 1. Focus on Broad Organisational Needs • It is often difficult to provide strong justification for many IT projects‚ but everyone agrees they have a high value. “It is better to measure gold roughly than to count pennies precisely” • Three important criteria for projects: – There is a need for the project. – There are funds available for the project. – There is a strong will to make the project succeed.
Premium Project management Net present value
School of Management Blekinge Institute of Technology THE IMPORTANCE OF THE PAYBACK METHOD IN CAPITAL BUDGETING DECISION. By Alaba Femi‚ AWOMEWE & Oludele Olawale‚ OGUNDELE Supervisor: Anders Hederstierna Thesis for the Master’s degree in Business Administration Fall/Spring 2008 THE IMPORTANCE OF THE PAYBACK METHOD IN CAPITAL BUDGETING DECISION. By Alaba Femi‚ AWOMEWE & Oludele Olawale‚ OGUNDELE A thesis submitted in partial fulfillment of the requirements for the degree
Premium Net present value Capital budgeting Discounted cash flow
Tools Variance Analysis | | When actual material costs are different than total standard costs determine the cause. Variance Analysis | | When actual material costs are different than total standard costs determine the cause. Contribution Margin Analysis | Management has received a special order. How will profitability be impacted if the order is accepted? | Contribution Margin Analysis | Management has received a special order. How will profitability be impacted if
Premium Net present value Internal rate of return Investment
Budgeting I. Net Amount of Investment Acquisition cost Add: Additional working capital involved Total less Cash inflow arising from sale of old asset being replaced (net of taxes) Avoidable costs (net of taxes) Net Investment ============ Illustrative Problems: 1. The management of Brown Metal Fabricators plans to replace a forming machine that was acquired several years ago at a cost of P450‚000. The machine has been depreciated to its salvage value of P50‚000. A
Premium Net present value Internal rate of return