Case 1 – New Heritage Doll Company 1. Set forth and compare the business cases for each of the two projections under consideration by Emily Harris. Which do you regard as more compelling? Productions was New Heritage´s largest division as measured by total assets‚ and easily its most asset-Intensive. Approximately 75 % of the division´s sales were made to the company´s retailing division‚ with the remaining 25% comprising private label goods manufactured for other firms. The division revenue figures
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number of A3XX sold per year since it was at full production‚ we divided the project into two different parts‚ the ramp-up period from 2001 to 2008 and the stable operating period thereafter. To get the free cash flow of year 2001 to 2008‚ we assumed that 1) planes sold are sold at cost‚ therefore no cash inflow emerged from selling planes in this period; 2)Expenses in 2000 are regarded as sunk cost and are neglected from calculation; 3)Research and development expenditure are also considered as expense;
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acquire Mercury Athletic Footwear‚ the results of the financial analysis below indicate Active Gear should proceed with the acquisition. Based on the Free Cash Flow Method‚ considering the financial projections and assumptions for Mercury Athletic‚ indicate the acquisition has a positive net present value of $112‚778‚000 [Present Value of Future Cash Flows (59‚440‚000) + Terminal Value ($276‚921‚000) – Purchase Price ($223‚583‚000)]. There are also possible synergies that could make the project even
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(RMp)Bi‚ Market Risk Premium (RMp) = Market return – Risk free Chapter 4 -Bond: long term promissory note -Zero Coupon Bond: issued at discount‚ no payment -Call provision: issuing corp can redeem bonds prior to maturity at call premium; typically happens if interest rates fall below coupon rate -Value of bond: present value of annuity + present value of lump sum -Nominal interest rate (Rd) = r* + IP + DRP + LP + MRP r* = real risk free‚ IP = inflation premiums‚ DRP = default risk‚ LP = liquidity
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shareholders. As you see below the graph shoes how much more leverage these creditors have. The statement of cash flows shows a net income of 516 million with a net free cash flow of 2.02 billion for their operating activities. The investing activities have a net cash flow of -1.01 billion and the financing operations paid out 188 million in cash dividends with a net cash flow of -1.08 billion.
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00Test Week 5 Midterm Exam Part 1 Started 11/12/14 12:52 PM Submitted 11/12/14 3:39 PM Status Needs Grading Attempt Score 40 out of 50 points Time Elapsed 2 hours‚ 46 minutes out of 2 hours. Instructions This exam consist of 25 multiple choice questions and covers the material in Chapters 1 through 3. Question 1 .2 out of 2 points Correct You recently sold 200 shares of Apple stock to your brother. The transfer was made through a broker‚ and the trade occurred on the NYSE. This
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Examining the components of economic profit and studying the finer points of its calculation require an understanding of its underlying principles. Here we look at how it matters as a performance measure - which is distinct from a wealth metric - and how it is closely related to market value added (MVA). Finally‚ in establishing an overall picture of economic profit‚ we help you undo any perceived complexity by showing how all of the calculations surrounding economic profit originate from three main
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GAINESBORO MACHINE TOOLS CORPORATION Overview In mid September 2005‚ Ashley Swenson‚ the chief financial officer of this large CAD/CAM equipment manufacturer must decide whether to pay out dividends to the firm¡¦s shareholders or repurchase stock. If Swenson chooses to pay out dividends‚ she must also decide on the magnitude of the payout. A subsidiary question is whether the firm should embark on a campaign of corporate-image advertising and change its corporate name to reflect its new outlook
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New Heritage Doll Company 1. Describe and compare the business rationales for each of the two project proposals under consideration. Which do you feel is the more compelling? Project 1: Match My Doll Clothing Line Expansion Expand the successful Match My Doll Clothing Line to include matching all-season clothing for tween girls and their dolls. Pros: Current popularity will enable company to maintain premium prices. Company could take advantage of off-peak discounts offered by some suppliers
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statements. How accurate are they? Do we deliberately use them to lie just to ensure bonuses? Find examples and discuss. Financial statements are extremely important‚ as they “report what has actually happened to assets‚ earnings‚ dividends‚ and cash flows during the past few years‚ whereas the written materials attempt to explain why things turned out the way they did” (Ehrhardt & Brigham‚ pg. 49). In order to know the success or identify areas of improvement for a company‚ it is imperative
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