The AES Company operated with informal‚ ad hoc style of management: there ware no staff functions or corporate departments and almost all traditional management functions were devolved to workers at plant level. Its rationale lied on decentralization‚ empowerment‚ team-based organization‚ incentive compensation‚ job security‚ and some controversial policies and practices. The company committed itself to integrity‚ fairness‚ fun‚ and social responsibility. AES treats all their employees as responsible
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AREC 550 homework 7 Globalizing the Cost of Capital Budgeting at AES Chia yun ‚Tsai(Debbie) 2013/3/22 The reason why Rob Venerus used the cost of capital concept to improve upon what AES had used in the past for a discount rate is because the old model always used the same discount rate for the model. However‚ with electricity generating businesses around the world‚ the old model started to cause some problems. In the past‚ AES used the same cost of capital for all of its capital budgeting‚ but
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probabilities in terms of real events? If AES adopts this type of budgeting model‚ it will be unlikely for the management as well as shareholders to pursue the project with high risks in developing countries‚ such as the one in Pakistan. According to the chart in the answer of Question NO.2‚ we can clearly observe that all of the developing countries have very high WACCs. In other words‚ given the high discount rates and associated risks‚ it is very possible for AES to do its business in the country with
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9-204-109 REV: OCTOBER 23‚ 2006 MIHIR DESAI Globalizing the Cost of Capital and Capital Budgeting at AES In June 2003‚ Rob Venerus‚ director of the newly created Corporate Analysis & Planning group at The AES Corporation‚ thumbed through the five-inch stack of financial results from subsidiaries and considered the breadth and scale of AES. In the 12 years since it had gone public‚ AES had become a leading independent supplier of electricity in the world with more than $33 billion in assets
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1. On one half a page review what does our traditional finance framework and the CAPM model‚ for example‚ have to say about risk? What is it? How is it approached? The traditional finance framework uses discounted expected future cash flow to determine the NPV of the project. The amount of the opportunity cost is based on a relation between the risk and return of some sort of investment. People are rational and adverse to risk and need incentive to accept risk. The incentive in finance comes in
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GLOBALIZING THE COST OF CAPITAL AND CAPITAL BUDGETING AT AES 1. How would you evaluate the capital budgeting method used historically by AES? 2. If you implemented the methodology suggested by Venerus‚ what would be the range of discount rates one would use around the world? 3. Does this make sense as a way to do capital budgeting? 4. How big a value difference does this new approach make to the Pakistan project? 5. How do these cost of capital modifications translate into changed probabilities
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of Capital and Capital Budgeting at AES (Case Analysis) AES Corporation AES was founded by Roger Stan and Dennis Bakke in 1981 after the Public Utility Regulation Policy Act (PURPA)‚ which created a market for independent power producer. In 1980s‚ the company experienced rapid growth in United States and went into public in 1991. From early 1990s‚ AES began to explore offshore markets and made remarkable success. In the 12 years since it went public‚ AES has hold more than $33 billion assets
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basic difference between DES and AES is that in DES plaintext block is divided into two halves before the main algorithm starts whereas‚ in AES the entire block is processed to obtain the ciphertext. Let us discuss some more differences between DES and AES with the help of the comparison chart shown below. Comparison Chart BASIS FOR COMPARISON DES (DATA ENCRYPTION STANDARD) AES (ADVANCED ENCRYPTION STANDARD) Basic In DES the data block is divided into two halves. In AES the entire data block is processed
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International Journal of Engineering Research & Technology (IJERT) ISSN: 2278-0181 Vol. 3 Issue 4‚ April - 2014 Evaluation of DES‚ TDES‚ AES‚ Blowfish and Two fish Encryption Algorithm: Based on Space Complexity MD Asif Mushtaque Harsh Dhiman M.Tech(CS&E) School of Computing Science and Engineering Galgotias University‚ Greater Noida‚ U.P . M.Tech(CS&E) School of Computing Science and Engineering Galgotias University‚ Greater Noida‚ U.P. Shahnawaz Hussain Shivangi Maheshwari
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If Venerus implements the suggested methodology‚ what would be the range of discount rates that AES would use around the world? * 12% discount rate was used for all projects * Venerus felt that this model worked fairly well * In 1990s this model of capital budgeting was exported to projects overseas * model became increasingly strained with the expansions in Brazil and Argentina * because hedging key exposures such as regulatory or currency risk was not feasible
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