flow -1‚500‚000 540‚000 Table 2 NPV= -$1‚500‚000+ $540‚000*[(1-1.13^-5)/0.13] = $399‚304.88 1. For optimistic sensitivity analysis Based on the information given as the table 1‚ we can see clearly that there are five variables in the analysis‚ in terms of market size‚ market share‚ price‚ variable costs‚ and fixed costs. For each variable changing‚ we can get different cash flows‚ which will result in the movement of NPV even making the negative NPV. The consequences of the altering are
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9-201-054 REV : M A Y 4‚ 2010 B ENJA M IN E ST Y M ICHA EL K A NE BP Amoco (A): Policy Statement on the Use of Project Finance As two of the largest oil and gas firms in the world‚ The British Petroleum Company p.l.c. (BP) and Amoco Corporation (Amoco) had a long history of competitive encounters. This rivalry continued into the 1990s in a variety of locations ranging from the United States to the North Sea to‚ more recently‚ the Caspian Sea—a region that had opened up to exploration by Western
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A Comparison of Capital Budgeting Techniques Capital budgeting deals with setting the criteria and prescribing the process required for making capital investment choices. Choosing an investment project‚ that is‚ making a capital investment choice is ultimately a cost/benefit analysis. It requires valuing the project by comparing the payoff to its costs. Problem Value‚ rank and select investment projects Example 1. Project A Required rate year 1: year 2 year 3 year 4 year 5 Initial
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[pic] MASTER of BUSINESS ADMINISTRATION ECONOMICS FOR MANAGERS MTKM 5033 CAPITAL BUDGETING BY; MOHD FIRDAUS IBRAHIM M061310005 NORZAHFRAN NORJAMAL M061310034 ABU HANIFAH BIN A. JALAL M061310004 INSTRUCTOR; DR. SENTOT IMAM WAHJONO Table of content Page___ CAPITAL BUDGETING DEFINED 3 Categories of investment THE CAPITAL BUDGETING PROCESS 4 CAPITAL BUDGETING DECISION RULES 5 New project decision rules of capital
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Tebrett Bethell‚ Jackie Shroff Written By: Vijay Krishna Acharya and Aditya Chopra Genre: Action‚ Drama Length: 172 Minutes Contradictory to the previous installments to the Dhoom series‚ Dhoom 3 is sloppily scripted action in motion sequel to the action franchisee. Though it was sensationalized to be a Fast and Furious type thriller featuring fast bikes‚ hot women and most significantly the good looking-bad villain‚ but just couldn’t push enough to give that adrenaline rush.
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l. In a 1‚050-1‚500-word memo‚ define‚ analyze‚ and interpret the answers to items (c) through (h). Present the rationale behind each item and why it supports your decision stated in item (i). Also‚ attempt to describe the relationship between NPV and IRR. (Hint: The key factor here is the discount rate used.) In this memo‚ explain how you would analyze projects differently if they
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invest 8 8 PI 0.902 4 Calc annual OCF 8 8 IRR 14.12% 4 Calc terminal year 8 8 MIRR 16.10% 4 Net Project CF 8 8 NPV ($2‚295‚332.62) 4 Cum CF 2 2 Results area 20 20 Question 1 6 6 Questions Question 2 6 6 1) Using your spreadsheet model‚ indicate how much change in NPV occurs with a +1% increase in the discount rate. Question 3 4 4 Question 4 2 2 Question 5 12 12 NPV (at 19%) -2295333 —> note: type number here‚
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Fonderia di Torino S.p.A. 1. Please assess the economic benefits of acquiring the Vulcan Mold-Maker machine. What is the initial outlay? What are the benefits over time? What is an appropriate discount rate? Does the net present value(NPV) warrant the investment in the machine? Initial Case Outlay Price of new machine (1‚010‚000) Current after-tax market value of old machine [130‚000+{(415‚807-130‚682) -130‚000}*0.43]= 196‚704 Net outlay for new machine -1‚010‚000+196‚704 = -813‚296 Appropriate
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Year 4 $ 155‚000 $ 145‚000 A) Neither proposal would add value. B) Choose Proposal A because it has the highest IRR. C) Choose Proposal A because it has the highest NPV. D) Choose Proposal B because it has the highest IRR. E) Choose Proposal B because it has the highest NPV. Answer: A [NPV for A: $(2‚548); NPV for B: $(3‚892)] 2. You’re evaluating a proposed business project and you want to know what is the Internal Rate of Return. Based on the following estimated Free Cash Flows
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Capital Budgeting Rules: NPV‚ IRR‚ Payback‚ Discounted Payback‚ AAR Categories of Plans 1. Replacement Projects: decisions to replace old equipment – those are among the easier of capital budgeting techniques. It is important to decide whether to replace the equipment when it wears out or to invest in repairing the machine. 2. Expansion Projects: These are decisions whether to increase the size of business or not – they are more uncertain than replacement projects. 3. New products and services: These
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