Yan Guo (International Exchange Program) Zejian Yang (International Exchange Program) Groupe Ariel S.A. Abstract Groupe Ariel is a company that manufactures and sells printers‚ copiers and other document production equipment. The case focuses on an investment project in the company’s Mexican subsidiary that would expand operations into a new market‚ something it been slow to do in the past. Groupe Ariel believes its products have better durability for a lower after-sales service costs and markets
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Groupe Ariel SA Case Introduction Groupe Ariel SA of France is considering a project in Mexico. They need to analyze the net present value of the project‚ keeping in mind the exchange rates between Mexican Pesos and Euros in order to maximize their return. They also need to keep in mind the inflation rates over time and the risks involved with this type of investment. Analysis Number 1. Groupe Ariel is recycling old equipment in Mexico. They will need to use pesos to calculate their cash
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NPV Versus IRR W.L. Silber I. Our favorite project A has the following cash flows: -1000 0 0 1 0 2 +300 3 +600 4 +900 5 We know that if the cost of capital is 18 percent we reject the project because the net present value is negative: - 1000 + 300 600 900 + + = NPV 3 4 (1.18) (1.18) (1.18)5 - 1000 + 182.59 + 309.47 + 393.40 = -114.54 We also know that at a cost of capital of 8% we accept the project because the net present value is positive: - 1000 + 300 600 900
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Running head: A COMPARISON OF EVA AND NPV A Comparison of EVA and NPV (discuss the differences and similarity of EVA and NPV; why would companies choose to adopt EVA‚ implementation issues; chronicle the implementation experience of EVA on a real life company). 1 A COMPARISON OF EVA AND NPV 2 A Comparison of EVA and NPV (discuss the differences and similarity of EVA and NPV; why would companies choose to adopt EVA‚ implementation issues; chronicle the implementation
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N04 HL P1 Q5 Payback Calculation Year Machine A $ Machine B $ 1 45‚000 25‚000 Part of 2 20‚000 (0.57 of 35‚000) 35‚000 Part of 3 - 25‚000 (0.45 of 55‚000) Investment 65‚000 85‚000 1 + 0.57 = 1.57 (Machine A has payback period of 1.57 years) 2 + 0.45 = 2.45 (Machine B has payback period of 2.45 years) Accounting Rate of Return Calculation Machine A $ Machine B $ Net Return 155‚000 205‚000 Total Return-Investment 155‚000 – 65‚000 = 90‚000 205‚000 – 85‚000 = 120‚000
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**What is NPV?** a) If the value of NPV is greater than 0‚ then the project is a go! In other words‚ it’s profitable and worth the risk. b) If the value of NPV is less than 0‚ then the project isn’t worth the risk and is a no-go. So NPV takes risk and reward into consideration‚ which is why we use it in the world of corporate finance and capital budgeting. **Example** In order for us to calculate NPV‚ let’s use the following example. Suppose we’d like to make 10% profit on a 3
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before-tax required rate of return for Deer Valley is 14%. Compute the before-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the lift will be a profitable investment. Show calculations to support your answer. 2. Assume that the after-tax required rate of return for Deer Valley is 8%‚ the income tax rate is 40%‚ and the MACRS recovery period is 10 years. Compute the after-tax NPV of the new lift and advise the managers of Deer Valley about whether adding the
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know whether to make the investment in Euros or Pesos. When we calculated the NPV in euros we can use two different approaches. You can find the NPV (Euro) by either translate NPV (Peso) by dividing it by 15‚99. However‚ the better solution is to use the expected future spot rate on every cash flow‚ because this estimate is more accurate. Inflation rate is important to look at because‚ if the inflation rate changes‚ the NPV also changes and that will effect their decision. So‚ they have to consider
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| ADVERTISING ARIEL AD BRIEF | | | ISSUES Quality: Ariel is a Tier 1 brand and is expected to deliver the best. There should be no compromise in its quality but as observed by many consumers Ariel when mixed in water‚ after a while small stones can be seen and felt in the surf. They are hard stones and therefore needs to be thrown out. Price: Ariel pricing suits consumers of Sec A and Sec B but the way it has positioned showing middle class families only has led to a confusion in
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TITLE: COMMERCIAL LENGTH: 55 sec PRODUCT: ARIEL SURF WRITER: VIDEO | AUDIO | In our TV commercial we hire the celebrity sahir lodhi as a host.In start of commercial we display our product ARIEL on the screen.We will commence are add from some street. We will place big table for food arrangement for people and will offer them to have that food. Which will make that food mat dirty and which would be difficult enough to be washed by one round by washing. We will ask the people who will going
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