Table of Contents Section Pg Contents 1 Introduction 2 Background 3 Methods 4 Comparison and modification 7 Conclusion 9 References 10 Introduction With the development of business‚ more and more techniques have been widely used into companies
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old press has a remaining economic life of 5 years. It can be sold today to net $420‚000 before taxes; if it is retained‚ it can be sold to net $150‚000 before taxes at the end of 5 years. Press A – This highly automated press can be purchased for $830‚000 and will require $40‚000 in installation costs. It will be depreciated under MACRS using a 5-year recovery period. At the end of 5 years‚ the machine can be sold to net $400‚000 before taxes. If this machine is acquired‚ it is anticipated that the
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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. Required rate of return 15% Year Cash Flow 0 $ (3‚000‚000) 1 $ 1‚100‚000 2 $ 1‚450‚000 3 $ 1‚300‚000 4 $ 950‚000 1. What is the project’s IRR? (10 pts) = 22.38% 2. What is the project’s NPV? (15 pts) = $450‚867.00 Computation of Net Present Value Year Cash Flow Present Factor @ 15% Present Value 1 $ 1‚100‚000 0.8696 $ 956‚522
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the idea of wealth maximization.This involves increasing the Earning per shareof the shareholders and to maximize the net present worth. Wealth is equal to the the difference between gross presentworth of some decision or course of action and theinvestment required to achieve the expected benefits. Gross present worth involves the capitalised value of the expected benefits.This value is discounted a some rate‚thisrate depends on the certainty or uncertainty factor of the expected benefits. The Wealth
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CGA-CANADA ADVANCED CORPORATE FINANCE [FN2] EXAMINATION June 2011 Marks Notes: 1. Questions 1 and 2 are multiple choice. For these questions‚ select the best answer for each of the unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example‚ if the best answer for item (a) is (1)‚ write (a)(1) in your examination booklet. If more than one answer is given for an item‚ that item will not be marked. Incorrect answers will be marked as zero
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Yonsei University Graduate School of Business Corporate Finance Harvard Business Case Investment Analysis and Tri Star Lockheed 1. (A) The payback is 35‚000/5‚000= 7 years Computation of the NPV : 15 NPV= -35‚000 + Σ 5‚000 / ( 1 + 12%)^ 15 i=1 NPV = $- 947. 67 Computation of the IRR : 15 0= -35‚000 + Σ 5‚000 / ( 1 + IRR)^ 15 i=1
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ACCT505 Part B Capital Budgeting problem Data: Cost of new equipment Expected life of equipment in years Disposal value in 5 years Life production - number of cans Annual production or purchase needs Initial training costs Number of workers needed Annual hours to be worked per employee Earnings per hour for employees Annual health benefits per employee Other annual benefits per employee-% of wages Cost of raw materials per can Other variable production costs per can Costs to purchase cans - per can
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internet 4.6 million landline telephone Expected consolidated revenue of $30.9 billion (2007) Expected Net Income of $2.6 billion (2007) AirThread Connections One of the largest regional wireless companies in the United States Service more than 200 markets in 5 geographical regions Firms network covers 80 million people Expected revenue of $3.9 billion (2007) Expected Net income of $400 million (2007) Wireless Communications Market Intensely competitive AirThread competed directly
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Chapter #19‚ Quizz Quizz‚ Chapter 19 1.Calculate the weighted-average cost of capital (WACC) for Federated Junkyards of America‚ using the following information: • Debt: $75‚000‚000 book value outstanding. The debt is trading at 90 percent of par. The yield to maturity is 9 percent. • Equity: 2‚500‚000 shares selling at $42 per share. Assume the expected rate of return on Federated’s stock is 18 percent. • Taxes: Federated’s marginal tax rate is Tc = .35 What are the key assumptions
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1. THE INVESTMENT DETECTIVE This case presents the cash flows of eight unidentified investments‚ all of equal initial investment size. The student’s task is to rank the projects. The first objective of the case is to examine critically the principal capital-budgeting criteria. A second objective is to consider the problem that arises when net present value (NPV) and internal rate of return (IRR) disagree as to the ranking of two mutually exclusive projects. Finally‚ the case is a vehicle for introducing
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