CHAPTER 2 Integrative Problem Donna Jamison was recently hired as a financial analyst by Computron Industries‚ a manufacturer of electronic components. Her first task was to conduct a financial analysis of the firm covering the last two years. To begin‚ she gathered the following financial statements and other data. Balance Sheets 2010 2009 Assets Cash $ 52‚000 $ 57‚600 Accounts receivable 402‚000 351‚200 Inventories 836‚000 715‚200 Total current assets $1‚290‚000 $1
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N04 HL P1 Q5 Payback Calculation Year Machine A $ Machine B $ 1 45‚000 25‚000 Part of 2 20‚000 (0.57 of 35‚000) 35‚000 Part of 3 - 25‚000 (0.45 of 55‚000) Investment 65‚000 85‚000 1 + 0.57 = 1.57 (Machine A has payback period of 1.57 years) 2 + 0.45 = 2.45 (Machine B has payback period of 2.45 years) Accounting Rate of Return Calculation Machine A $ Machine B $ Net Return 155‚000 205‚000 Total Return-Investment 155‚000 – 65‚000 = 90‚000 205‚000 – 85‚000 = 120‚000
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**What is NPV?** a) If the value of NPV is greater than 0‚ then the project is a go! In other words‚ it’s profitable and worth the risk. b) If the value of NPV is less than 0‚ then the project isn’t worth the risk and is a no-go. So NPV takes risk and reward into consideration‚ which is why we use it in the world of corporate finance and capital budgeting. **Example** In order for us to calculate NPV‚ let’s use the following example. Suppose we’d like to make 10% profit on a 3
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investment for the proposed web portal project? The ROI Analysis concluded an Internal Rate of Return (IRR) of 44% (see Exhibit 14A). The IRR is larger than 12% required and it has a positive NPV. Based on the information the project can be acceptable and can be a good investment. The high IRR from the analysis hinges on optimistic projections of increasing market penetration and a steady growth in average order size. The key driver of the ROI analysis was the market penetration assumption. The
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before-tax required rate of return for Deer Valley is 14%. Compute the before-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to support your answer. 2. Assume that the after-tax required rate of return for Deer Valley is 8%‚ the income tax rate is 40%‚ and the MACRS recovery period is 10 years. Compute the after-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the
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The Mona Lisa‚ is it just a piece of artwork‚ or one of the best pieces of artwork in the history of art? The Mona Lisa was painted in the early 16th century by one of the most widely known artist at that time‚ Leonardo Da Vinci. It is said that the painting is a portrait of Lisa Gherardini the wife of Francesco Del Giocondo‚ but also could be portrayed as Da Vinci himself in female form. Researchers claim that Da Vinci used mathematical equations to create the painting such as‚ the golden triangle
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Lisa Ho was born in 1963 in Albury on the boarder of Victoria and New South Wales. From the young age of 4 she was already making patterns out of newspaper and sewing with the help of her grandmother who was a tailor. By the age of 10 she had her own sewing machine and was making things for herself and her four sisters nearly every day. She graduated from Sydney Technical College in 1981. After working for another company for a year she decided to start her own line. Along with many other fashion
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The Mona Lisa The Mona Lisa by Leonardo da Vinci was painted in Florence between 1503 and 1505. The painting is of Monna Lisa‚ the wife of Francesco del Giocondo‚ which is why the painting is also referred to as La Gioconda . Leonardo never actually gave the portrait to Francesco and instead kept it for himself. There have been many speculations of deeper meaning of the Mona Lisa. Some believe the painting is a female version of the artist himself‚ others believe the painting contains hidden images
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Mona Lisa stems from a description by Renaissance art historian Giorgio Vasari‚ who wrote "Leonardo undertook to paint‚ for Francesco del Giocondo‚ the portrait of Mona Lisa‚ his wife."[5][6] Mona in Italian is a polite form of address originating as ma donna —similar to Ma’am‚ Madam‚ or my lady in English. This became madonna‚ and its contraction mona. The title of the painting‚ though traditionally spelled "Mona" (as used by Vasari[5])‚ is also commonly spelled in modern Italian as Monna Lisa‚ but
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most people would discard‚ it is quite an enigma as to why the world has been obsessed with the “Mona Lisa” for over 500 years. In “Ways of Seeing” John Berger‚ an art historian and novelist (only a tiny sample of the different ways I could title this Renaissance man)‚ offers his readers a way into understanding the moment captured in paintings‚ especially mysterious paintings like the “Mona Lisa.” He suggests that viewers ask questions about and to the painting as way into entering into a sort of
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