Accounting rate of return Accounting rate of return (also known as simple rate of return) is the ratio of estimated accounting profit of a project to the average investment made in the project. ARR is used in investment appraisal. Formula Accounting Rate of Return is calculated using the following formula: ARR = Average Accounting Profit Average Investment Average accounting profit is the arithmetic mean of accounting income expected to be earned during each year of the project’s life time
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monetary policy rule‚ it will Answer aggressively increase inflation if the interest rate exceeds the target interest rate. aggressively increase interest rates if the inflation rate exceeds the target inflation rate. only slightly increase inflation if the interest rate exceeds the target interest rate. only slightly increase interest rates if the inflation rate exceeds the target inflation rate. During the Christmas shopping season the demand for money increases significantly
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economic life is 5 years. RIC’s marketing vice-president believes that annual sales would be 30‚000 units if the units were priced at $3‚000 each. RIC expects no growth in unit sales‚ and it believes that the unit price will rise by 2 percent each year. c. The engineering department has reported that the project will require additional manufacturing space‚ and RIC currently has an option to purchase an existing building‚ at a cost of $10 million‚ which would meet this need. The building would be bought
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Georgopoulos Student name: Kaiji Lin Student number: 997800535 Assignment 1. Find a recent (August 2011‐ present) money and banking related article in the media (the Economist‚ Globe and Mail‚ National Post‚ New York Times‚ etc.‚)‚ and attempt to explain parts or all of it using the tools we learned in class. Highlight the sentences that you analyze‚ and hand in the article along with your work. Use written and graphical explanations. (approximately 3 double spaced pages) S&P downgrades top US
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approximation of the expected return on debt. The assumptions: 1. Debt is perpetual 2. probability of default is δ in each period. The probability is the same in every period 3. If default occurs‚ bondholders receive ρ fraction of the face (principal) value of the bond plus accrued interest. 4. Bond is sold at par‚ i.e.‚ the bonds initial price equals its principal value. 5. If the bond does not default‚ the bondholders receive the promised coupon payment. 6. Discount rates are constant over time. At
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How to do cost-effectiveness calculations in a nutshell: Noncompeting choice Noncompeting choice cost effectiveness is when you have many possible options to choose from that are NOT mutually exclusive. Noncompeting choice cost effectiveness uses the average cost effectiveness. This means you simply divide the cost of the intervention by the benefit of the intervention. For example: Intervention QALY Gained (~DALY eliminated) Net Cost A 50 $1000 B 3 $300 C 40 $1200 The average
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| Table of Contents Cost of Capital 2 Value of Equity 2 Cost of Equity 2 CAPM Model 2 Dividend Growth Model 3 Value of Debt 3 Cost of Debt 4 WACC (Weighted Average Cost of Capital) 4 Comparison to Joanna Cohen’s Analysis 4 Financial Statement Analysis 5 Nike Inc. 5 Financial Ratios 6 Leverage Ratios 6 Efficiency Ratios 6 Liquidity Ratios 7 Profitability Ratios 7 Valuation Ratios 7 Conclusion 8 Appendix A – Ratio Calculation 9 Leverage Ratios 9 Efficiency Ratios 9 Liquidity Ratios
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1) A $100 deposit today that earns an annual interest rate of 10% is worth how much at the end of two years? Assume all interest received at the end of the first year is reinvested the second year. 2) An investment of $100 today is worth $116.64 at the end of two years if it earns an annual interest rate of 8%. How much interest is earned in the first year and how much in the second year of this investment? 3) Which of the following investments has a larger future value? A $100 investment
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BUSINESS RESEARCH METHODOLOGY BOARD EFFECTIVENESS AND COST OF DEBT by : FARUQ AKURAT 100810251004 ECONOMIC FACULTY JEMBER UNIVERSITY 2011 / 2012 Board Effectiveness and Cost of Debt ABSTRACT Does the board of directors influence cost of debt financing? This study of a sample of Spanish listed companies during the period 2004–2007 provides some evidence about the question. The results suggest that two board attributes – director ownership and board activity – appear to influence
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How are nominal dispositions distinguished from conditional and custodial dispositions? What are some variations of nominal dispositions? How effective are they at reducing recidivism of disposed juveniles? Nominal dispositions- are verbal and or written warnings that are issued to low risk juvenile offenders. They are considered to be the least punitive alternatives Juvenile courts are encourage to use nominal dispositions for the purpose of alerting the juvenile of the seriousness of
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