company is willing to accept before starting a project. It is used in project evaluation to evaluate the amount of return on the project. A common method for evaluating the hurdle rate is apply the discounted cash flow method to the project‚ like net present value. 2. How does Teletech Corporation currently use the hurdle rate? They used it based on the firm’s rating‚ beta‚ cost of capital‚ and they calculated WACC of 9.3% for the whole corporation. 3. What are Rick Phillips’s arguments for the
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the following best illustrates that the management of a firm is adhering to the goal of financial management? A. decrease in the per unit production costs B. increase in the number of shares outstanding C. decrease in the net working capital D. increase in the market value per share 3. Which of the following can help align the behaviour of managers with the goals of shareholders? A. management compensation B. managerial labour markets C. an independent board of directors D. all of the above
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NET PRESENT‚ VALUE‚ MERGERS AND ACQUISTIONS TRIDENT UNIVERSITY INTERNATIONAL AVIE MARIE JOHNSTONE STRATEGIC CORPORATE FINANCE FIN501 MODULE 5 CASE ASSIGNMENT PROFESSOR WALTER WITHAM
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00‚000 by making a down payment of Rs.1‚50‚000 and remainder in equal instalments of Rs. 1‚50‚000 for six years. What is the rate of interest to the firm? 2. a.Explain the mechanism of calculating the present value of cash flows..What is annuity due? How can you calculate the present and future values of an annuity due? Illustrate b.”The increase in the risk-premium of all stocks‚irrespective of their beta is the same when risk aversion increases” Comment with practical examples 3. a.How leverage
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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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is that the offer from Heritage Partners helps Fojtasek to avoid the fear of losing control to the firm and a huge interest expense payment from long term debt that is implied by traditional buy-out and leveraged recapitalizations. Fair market value of the firm: Rm: Prime rate = 9% rf: risk free rate = 7.2% Average Unleveraged beta bu = = .839 Assume that growth rate : g = 2%‚ RPm = 4% ‚ tax rate is 35% Unlevered cost of equity rsu = rf + RPm (bu) = 7.2% + 4%(.839) = 10.56% Operating
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1.Sachin has asked his flat mate Jason for a $500 loan to cover a portion of his rent and utility costs. Sachin proposes repaying the loan with $300 from each of his next two financial aid disbursements‚ the first 4 months from now and the second 12 months from now. Jason’s alternative is to earn 5% annually in his money market account. Assume there is no risk of default‚ and that compounding is monthly. What is the NPV of the loan? (Enter just the number without the $ sign or a comma; round off
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Trident University Module 5- SLP FIN501 Dr. Glenn Tenney Net present Value‚ Mergers and acquisitions When brainstorming on the possible ideas of mergers or acquisitions it was easy at first to automatically think similar corporations within the same market either small or big or even in direct competition. Upon researching and reviewing the required readings I realized there are numerous types of mergers and acquisitions that could and should be considered in the terms of better business
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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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(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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