forms of business organization. 4. Corporations have the ability to raise larger sums of capital than the other forms of business organization. Objective: Explain how financial markets work in the United States. 2. Which of the following is NOT an advantage of a private placement (as compared to a public offering)? 1. Greater financing flexibility 2. Lower flotation costs 3. Lower interest costs 4. Quicker availability of funds Objective: Assess the role of ethics and compliance
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profitable operations every year since 1932‚ and held approximately a 60-65% market share by 1984. Sales had been increasing annually at about a 7% compound rate‚ and the return on average invested capital was about 20%. The cost structure of the company was 100% equity‚ owned solely by Mr. Case. The capital budget was the leftover earnings generated from internal operations minus the amount Mr. Case wished to withdrawal as income (dividends) for the year. Also‚ the seasonal accumulation
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500 per month (฿2‚152‚000/year). The Phuket Hotel is responsible for the repair and maintenance of the facilities (i.e. toilets‚ elevators) and has prorated this cost over the next 4 years to be an additional ฿10‚000 per year for Planet Karaoke. The total revenue over the next 4 years is estimated to be ฿8‚404‚000. The projected capital expenditure for the hotel is between ฿770‚000 and ฿1‚000‚000. We will assume this expenditure is ฿885‚000. It is predicted that unwelcome guests at the Planet Karaoke
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Board of Directors Boeing is currently operating with the majority market share of the commercial sector of aircraft manufacturing. Frank Shrontz‚ our CEO‚ has recently stated his goal to increase the company’s return on equity from its current average of 12%. The following summary will delve into the most appealing project for the future of this firm: the 777 aircraft. The purpose of this new product is to maintain our competitive advantage in commercial airline production by completing a family
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AF 3313 2011-12 Sem 2 Written Assignment Name: Shi Yu ID: 10821504d Tutor: Ho Ming Lawrence FUNG Q1: Definition of efficient market: The efficient market is defined as a market where competition among investors should work to eliminate all positive-NPV trading opportunities or‚ equivalently‚ that securities with equivalent risk should have the same expected return based on their future cash flows‚ given all information that is available to investors. Definition of arbitrage: It is
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Valuation models Discounted cash flow models: Dividend discount Free cash flow to the firm Residual income Multiples-based valuation: Price-earnings Value-EBITDA Value-EBIT Value-Sales Price-Book value Equity valuation In conjunction with the valuation of Coles Group‚ contained in “Excel03 Equity valuation” Real options valuation Equity markets price shares above the present value of expected future cash flows‚ due to the presence of embedded options not captured by DCF analysis Real
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downturn to the already-risky airline industry. However‚ JetBlue was still able to deliver good performance despite the circumstances. It offered the lowest cost per available-seat-mile of any major US airlines. In order to support JetBlue’s growth plan and offset portfolio losses by its venture-capital investors‚ JetBlue wished to raise capital through initial public offering (IPO). The purpose of this report is to determine the appropriate JetBlue’s IPO price given the available data. The report
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Cash-flow-based valuation. With this method‚ the value of a firm’s equity is equal to the net present of future cash flow discounted with the weighted average cost of capital (WACC) minus debt. As we don’t have access to data’s in the case‚ we will presume data’s based on research. Future cash flows: $1850 million (cash flow received in 2004) * 562‚ 5% of average estimated future cash flow per year (based on the evolution of the cash flow between 2002 and 2004) = $10.406 million of future cash flow
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OBJECTIVES Upon completion of this chapter‚ you will be able to: 1. understand the role of the manager in adding value to the firm. 2. develop an understanding of the investor’s requirements for return on invested capital. 3. relate the estimation of cash flows‚ cost of capital‚ risk‚ and investment to the responsibility of adding value. 4. relate the use of the net present value (NPV) discounted cash flow technique to the adding value imperative of all managers. 5. apply the concepts
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Investment Decision-which real assets the firm should acquire.Choose positive and greatest NPV.value through CF Financing Decision- how to raise money needed for a firm’s investments in real assets. Choose capital structure to minimize cost of capital‚ maximize value of the firm. value through the cost of capital Valuation adjustments- Time‚ Risk‚ Inflation‚ LiquidityTruncated cash flows: (Time) receive $CFt each period until time T. Constant discount rate 10%. Investment of $100 in time 0. CFs of $22 in
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