Question 1 (5 points) In a world with no frictions (i.e.‚ taxes‚ etc.)‚ having debt is always better because it increases the value of the firm/projet. Your Answer | Score | Explanation | False | 5.00 | Correct. You understand the irrelevance of financing. | Total | 5.00/5.00 | | Question Explanation | | | Fundamental question about value creation. | Question 2 (5) the return of equity is equal to the return on debt of a project/firm Your Answer | Score | Explanation | Never true
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UBU Number: | 11033772 | Lecturer: | Cyril Antony | Module Name: | Decision Support Systems | Batch # | 410 | | | \ Report 1. What is the Net Present Value of the garage’s cash flow with and without the platform? Net present Value of the Garage’s cash flow with Platform: NPV = £ 173‚614 Net present Value of the Garage’s cash flow with Platform: NPV = £ 38‚047 i. Should the garage manager buy the platform? Garage manager should buy the platform because‚ the productivity
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2. Which one of the following statements is correct? A. The future value of an annuity is unaffected by the amount of each annuity payment. B. The present value of an annuity is unaffected by the number of the annuity payments. C. The present value of an annuity increases when the interest rate decreases. D. The present value of an annuity increases when the interest rate increases. E. The future value of an annuity increases when the interest rate decreases. 4. A debenture is: A. long-term debt
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for a fee. We have compared the two options to determine which marketing strategy would be in the best interest of Glaxo Italia in terms of net present value‚ rather than the IRR or payback period used previously. We have decided that co-marketing with another company would be the best option for Glaxo Italia as it has the higher net present value. Forecasting and Analysis We have decided to extend the forecasts to 2010 because although it is difficult to predict beyond 6 years‚ the typical
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-PF + FV /(1+r) PV = FV/(1+r) or PV = C1/1-r + C2/(1-r)2 + .. + CT/(1-r)T Rate of return: R=(Vf-Vi)/Vf Rate r compounded m times a year: FV = C(1+r/m)mt 10% semiannually = 10.25% annually‚ Hence 10.25 is said to be the Effective Annual Yield (EAY) 1+EAY = (1+r/m)mt Assignment 2 Perpetuity The value of D received each year‚ forever: PV = D/r Annuity The value of D received each year for T years: PV = (D/r)*[1 – 1/(1+r)T] Growing Perpetuity PV = D/(R-g) R: the cost of capital‚ interest
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institutions offer a sabbatical policy. Every seven years a professor is given a year free of teaching and other administrative responsibilities at full pay. For a professor earning $70‚000 per year who works for a total of 42 years‚ what is the present value of the amount she will earn while on sabbatical if the interest rate is 6% (EAR)? Timeline: |0 |7 |14 | | | |42 | | | | | |
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is usual for bonds not to be issue at face value. Bonds will only be issued at face value if the rate demanded by bond holders (the market rate) is the same as the rate shown on the bonds (called the coupon rate). You should remember that‚ regardless of what the bond holder pay for the bond‚ the will receive the face value on maturity; and the interest payment the bond holder receive will be the coupon rate on the bond multiplied by the face value (regardless of the price paid for the bond)
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investment returns. INDICATIVE CONTENT Introduction Firm’s goals and objectives. Time value of money. Valuation of Securities Shares and bonds. Cost of Capital Definition and component of cost of capital. Introduction to weighted average cost of capital. AF3313 (2).doc 1 (Updated in Jan 08) Capital Investment Techniques Payback. Accounting rate of returns. Internal rate of returns. Net present value. Comparisons of
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The Eli Broad College of Business Michigan State University FI 311 FINANCIAL MANAGEMENT Fall Semester 2013 Class Meetings: Lecture: 9:40-11:00 a.m. Tues. and Thurs. or 11:20-12:40 p.m. Tues. and Thurs. Room: N100 BCC YOU MUST ATTEND THE SECTION FOR WHICH YOU ARE REGISTERED. Laptops‚ tablets and cell phones may not be used while in class. Professor: Mrs. Elizabeth Booth Office: 337 Eppley Center Office Hours: Tues/Thurs 1:00-2:30 Phone: 353-4820 (direct line and
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for success in the marketplace? Does the company rely primarily on a customer intimacy‚ operations excellence‚ or product leadership customer value proposition? What evidence supports your conclusion? FedEx’s strategy for success in the market place relies on a combination of customer intimacy‚ operational excellence and product leadership customer value proposition. Evidence of customer intimacy and operational excellence is found in FedEx’s 2005Form 10-K which states “to provide our customers
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