enough to have accrued cash value‚ yes‚ you can cash it in. But‚ it might be wiser to borrow against it instead or look into other options. Cashing it in means you are cancelling the policy. If this is your only life insurance policy‚ it means you no longer have life insurance coverage. Whole Life and Cash Value Although there are different kinds of whole life‚ they all accrue a cash value. This makes them different from term insurance. The cash value of whole life is cash you can potentially access
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Weighted Average Cost of Capital (WACC) Calculations The weighted average cost of capital (WACC) is the discount rate used in the discounted cash flow analysis. Usually‚ the WACC is the weighted average of the cost of debt (Kd) and the cost of equity (Ke)‚ since debt and equity are the most common sources of funds for the companies. In general‚ the formula for WACC is the following: As implied by the formula itself‚ if a company does not have interest-bearing debts‚ then its WACC would equal
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assignment I will be writing notes to accompany the cash flow forecast. I will be explaining to Sharma and Ryan why a business in general might experience cash flow problems‚ why this can cause difficulties and any potential dangers I can see specific to SIGNature’s cash flow forecast. What is a cash flow and the purpose of it? A cash flow is a measure o the money coming into the business and the money going out of the business on a regular basis. A cash flow forecast predicts in advance what the inflows
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Case 08-1 Go With the Flow‚ Inc. Go With the Flow‚ Incorporated (“Company”) designs‚ manufactures‚ and sells a broad range of mobile network products and systems and communication devices‚ including mobile‚ cordless and corded telephones. The Company’s primary sources of liquidity are internally generated cash flows‚ the Company’s debt and revolving credit facilities‚ and the sale of trade accounts receivables. The Company’s liquidity and capital requirements are primarily a function
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The Future of the Store Retailing is described to be any action in which a product and/or service is being sold to the ultimate consumer. Simply stated‚ but the execution of the retail strategy is what will make the product and/or service a success. I believe‚ that the biggest change over traditional retail is the advancement in technology in today’s world. With that being said‚ the future of the store has many changes to come and advancements to make. I feel that by the year 2020 the consumer
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Statement of Cash Flows What is the purpose of the statement of cash flows? What information does it provide? Explain why statements of cash flows are important when assessing the financial strength of an organization. The following paper will discuss the purpose of the statements of cash flows and will analyze the importance of the information when assessing an organization’s financial strength. An organization needs to rely in different approaches to analyze performance and data to manage the
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Cost of equity 1. Formula Risk Free Rate + (Market Premium x Overall Company Beta) 2. Each part a. Risk free rate (10-year T-bill) i. bond rating chosen * interest rate * b. Market premium c. Beta i. Appropriate Discount Rate (WACC) 1. Formula Weight of Debt x After-Tax Cost of Debt) + (Debt to Equity x Cost of Equity) 2. WACC (important – why is it important for the company‚ Tesca‚ to know this?) 3. Each part (optional) a. Weigh of debt b. After-tax cost of debt c. Debt to equity d. Cost of
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CHAPTER 4 DISCOUNTED CASH FLOW VALUATION Solutions to Questions and Problems 10. To find the future value with continuous compounding‚ we use the equation: FV = PVeRt a. b. c. d. FV = $1‚000e.12(5) FV = $1‚000e.10(3) FV = $1‚000e.05(10) FV = $1‚000e.07(8) = $1‚822.12 = $1‚349.86 = $1‚648.72 = $1‚750.67 23. We need to find the annuity payment in retirement. Our retirement savings ends at the same time the retirement withdrawals begin‚ so the PV of the retirement withdrawals will be the FV of
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finance the purchase with Financing Alternative #1 (debt and equity financing from an investment firm) or Alternative #2 (all debt financing from a bank). The financing alternatives are discussed on page 4 of the case. You should do the discounted cash flow valuation of the deal using Adjusted Present Value. The question is “What is Pinkerton worth to CPP (Wathen’s sole proprietorship)?” The value of Pinkerton to CPP is made up of three parts: 1. the value of Pinkerton as a stand-alone firm
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Essay. Net Present value is the difference between an investment’s market value and its cost. For an example‚ you invest 100 dollars (Cost) into a lemonade stand but you receive 50 dollars (Market Value) of cash inflow. Another would be you buy a house for 50‚000(Cost) But you sell it for 75‚000(Market Value). Your net present value An Investment should be accepted if the net present value is positive and it should be rejected if the net present value is negative. Net present value uses the
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