shouldn’t go for it. (B) Based on the perpetuity formula we can compute the PV in this case : Computation of the PV : PV= Cash flow per year/ cost of capital) =4‚500 / 0.12 = $37‚500 Computation of the NPV : Is this essay helpful? Join OPPapers to read more and access more than 470‚000 just like it! GET BETTER GRADES NPV= -Initial investment + PV = -35‚000 + 37‚500 NPV=$2‚500 Rainbow products could buy this machine with the service contract if they intent
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INVESTMENT APPRAISAL One of the key areas of long-term decision-making that firms must tackle is that of investment - the need to commit funds by purchasing land‚ buildings‚ machinery and so on‚ in anticipation of being able to earn an income greater than the funds committed. In order to handle these decisions‚ firms have to make an assessment of the size of the outflows and inflows of funds‚ the lifespan of the investment‚ the degree of risk attached and the cost of obtaining funds. The main stages
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Gay Option In the article “The Gay Option”‚ Stephanie Fairyngton argues that it is wrong to think about homosexuality as deviations from nature’s norm. She understands that it is easy for people to think about homosexuality as an illness rather than a person’s choice. The main reason for this is that it is hard to understand people who choose this challenging state of beings. Because society has a stereotype of heterosexuality as somehow better choice than homosexuality‚ they would think that person
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The Arab Israeli conflict. The Arab/Israeli conflict is a conflict between the Arabs and the Jews over a small piece of land known as the holy land which is an area in the Middle East of the Arab world. The Arabs call the land Palestine‚ the Jews call it Israel but both religions have strong religious links with the land. There is conflict between the two religions because they both believe that the land belongs to them. it all started back in 135 AD when the Jews were expelled
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Assignment: Cash Flow Preparation JoBeth Murphy University Of Phoenix June 12‚ 2010 Complete problems 19‚ 21‚ & 27 on pp. 50 – 53 of Foundations of Financial Management. Identify whether each of the following items increases or decreases cash flow: * Increase in accounts receivable - decrease * Increase in notes payable - decreases * Depreciation expense - increases * Increase in investments - decreases * Decrease in accounts payable - decrease * Decrease
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Long term financing The long term financing is necessary for all kinds of business entities irrespective of their size or statue. This is a form of financing that is provided for a period of more than a year. Uses of long term financing: are used in separate ways by different types of business entities. Business entities that are not corporations are only to use long term financing for the purpose of debt but corporations can also use the long term financing for both debt and equity purposes
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I. INTRODUCTION Statement of Cash Flow (Cash Flow Statement) describes the changes in the cash position of a company during specific period of time. In business as in personal finance‚ cash flows are essential to solvency. Solvency can be described as the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity. Cash flow is crucial to an entity’s survival. Having ample cash on hand will ensure that creditors‚ employees and others
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Penta ltd (Investment appraisal) Introduction What is investment appraisal? It is the activity responsible for carrying out a cost benefit analysis to justify capital expenditure for a new investment. Capital investment decisions are those decisions that make current outlays in return for a stream of benefits in future years. . The characteristic of many investments is risk and uncertainty. many organisations prefer to avoid high risk investments but may consider these investments if they
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preparing a statement of cash flows‚ the term cash is broadly defined to include both cash and cash equivalents. Cash comprises cash on hand and demand deposit with banks. Cash equivalents consist of short term‚ highly liquid investments such as treasury bills‚ commercial paper‚ and money market funds. Such investments are made solely for the purpose of generating a return on funds that are temporary idle. Instead of simply holding cash‚ most companies invest their excess cash reserves in these types
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CASE: Managing Offshore Investments: Who’s Currency?1 The Offshore Investment Fund (OIF) was incorporated in Fairfield‚ Connecticut‚ for the sole purpose of allowing U.S. shareholders to invest in Maltese securities. The Fund is listed on the New York Stock Exchange. The custodian of the Fund is the Shady Rest Bank and Trust Company of Connecticut (“Shady Rest”)‚ which keeps the accounts of the Fund. The question very quickly arose as to the currency in which the books of the fund were to be
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