from now. If the required return is 9 percent‚ what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever? 2. Calculating Annuity Cash Flows. If you put up $25‚000 today in exchange for a 7.9 percent‚ 12year annuity‚ what will the annual cash flow be? 3. Calculating Perpetuity Values. Dawa Financial is trying to sell you an investment policy that will pay you and your heirs $35‚000 per year forever. If the required rate of return on this
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depreciation expense is $30‚000. Assuming a company tax rate of 30%‚ the firm’s cash flow from operations is: (A) $840‚000 (B) $180‚000 (C) $135‚000 (D) $75‚000 4. Given an effective annual interest rate of 14 per cent‚ the present value of a perpetuity consisting of yearly payments of $25‚000 starting immediately is‚ rounded to the nearest dollar (A) (B) $203‚571 (C) $178‚571 (D) 5. $232‚071 $156‚641 If the present value of a perpetual income stream
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Unlevered cost of equity rsu = rf + RPm (bu) = 7.2% + 4%(.839) = 10.56% Operating cash flow using base case projections: 1995 1996 1997 1998 1999 Cash Flow 7‚772 9‚233 9‚807 10‚292 10‚513 Interest Expenses 3‚587 3‚042 2‚324 1‚507 599 Interest * Tax rate 1255.45 1064.7 813.4 527.45 209.65 TV1999 = 10513 + (10513*1.02)/(10.56%-2% ) = $135.81 Million Vunlevered = Net present value of future operating cash flow = $ 110.9 million. The firm cost of debt: Rd = 9% + 1.5% = 10.5% V taxshield=
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version of its hotel stand. The investment cost is expected to be 72 million dollars and will return 13.50 million dollars for 5 years in net cash flows. The ratio of debt to equity is 1 to 1. The cost of equity is 13%‚ the cost of debt is 9%‚ and the tax rate is 34%. What is the NPV of the project? (10 points) WACC = .5*13+.5*9*(1-.34) = 9.47% PMT = 13‚500‚000‚ i=9.47%‚ n=5‚ PV = ?; NPV = PV – 72‚000‚000 = -20‚123‚870.16 4. TXI Corporation is a holding company with four main subsidiaries. The
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that lived through the Great Depression. Regardless of the industry‚ currency is in short supply. Capital‚ worth‚ and the company’s value‚ is the challenge. Cash flow is extremely important for administrators at this perplexing time in history; alterations to this cash flow issue require a inflexible level of explanation‚ especially as the cash amount of the adaptation increases. This brutal state of mind is in conflict with the understanding that coincides with decisions made in the current health
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LEADERSHIP AND MANAGEMENT An important difference Five Types of Power 1. Legitimate Power • 2. Reward Power • 3. Ability to punish for noncompliance Referent Power • 5. Ability to approve raises Coercive Power • 4. They are the boss Ability to gain the respect of employees Expert Power • • Genuine knowledge to gain credibility Employees share the job expertise to evaluate their leader Management Management Power Legitimate Reward Coercive Accomplish Daily Tasks
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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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C) What do you think is the real cause for the cash flow problem at cyclone? What actions can be taken to improve the situation? Comment on Rangi’s management of the factory. The real causes for the cash flow problem at cyclone are: • No perfect planning to distribute goods /provisions • Failure to establish human resource strategies. • Misusage of wealth during the cyclone • Negligence & irresponsibility of top level management. • Unsatisfactory workplace. Remedies to be done for improvement of
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Week 6 Assignment: Candela Corporation Case Rebecca Mouser ACC/230 Financial Reporting: Peeking Under the Financial Hood November 4‚ 2012 Instructor Nathan McDaniel Week 6 Assignment: Candela Corporation Case Assignment: Candela Corporation Case Resource: Ch. 4 of Understanding Financial Statements * Compose a 500- to 750-word paper responding to questions 1 and 2 of the Candela Corporation Case on p. 146 (Ch. 4). * Format your paper according to APA standards. * Post your
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FIN/200 Week 7 Checkpoint Trade credit is the most popular form of short term financing‚ figures show that over 40 percent of businesses use this form. Trade is also known as accounts payable. This form of short term financing happens when manufacturers or suppliers provide goods or services upfront to companies with the expectation of getting payment within 30 to 60 days from time of delivery. Usually suppliers
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