RE: DECISION ON CAPE SIZE CARRIER PRIORITY: [URGENT] Ms Mary Linn‚ After careful cash flow analysis and a discount rate (WACC) of 9%‚ commissioning a capsize carrier for 25 years is the only appropriate option for our firm. However‚ if the discount were instead 10%‚ both options would fail the NPV test by yielding negative results. I make this recommendation after thorough analysis of estimated cash flow and with the desire that our required 15-year life span will be amended. With the expected
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Accounting 610-32 28 October 2013 Do Stock Prices Fully Reflect Information in Accruals and Cash Flows About Future Earnings? The main purposes of the article is to examine whether information contained in accruals and cash flows of current earnings helps to predict future earnings. This paper is different in respect to other papers on the topic in that it focuses more on the accounting processes instead of statistical models. Also‚ this paper uses a less narrow-focused model‚ which allows for
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assess key factors in the areas of cash flow‚ equity‚ operations‚ profitability‚ and risk. The analysis will conclude with a recommendation on whether ExxonMobil is a secure long-term investment. Cash Flow The 2010 Annual Report notes “delivery of superior cash flow” as a financial highlight‚ driven by operating cash flow management and a disciplined approach to employed capital. Net cash flows generated from operating activities was the largest contributor of cash at $48.4B. This reflects a $20
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IRR= 11.49% The NPV of this project is negative and the IRR is lower then the Cost of Capital (12%) Rainbow products 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 : NPV= -Initial investment + PV = -35‚000 + 37‚500 NPV=$2‚500 Rainbow products could buy this machine with the service contract if they intent to use it in the long-run.
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Risk Analysis on Investment Decisions Investment techniques used in corporate finance when making decisions on projects usually focuses on cash flows of the firm (Ross‚ Westerfield‚ and Jaffe‚ 2004). Because of drastic changes in the business environment over the last decade‚ managers are requesting better‚ more accurate information‚ and improved techniques to meet company needs for making major decisions with data consisting of clear goals‚ a planned design‚ high ethics‚ revealed limitations‚
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Ratio and Operating Cash Flow to Current Liabilities Ratio. Both ratios use current liabilities in the denominator‚ although the current ratio using current liabilities at the end of a period and the cash flow ratio uses average current liabilities for the period. Thus‚ the explanation most likely relates to the numerator. The firm is probably growing and increasing inventories and accounts receivable‚ which increase the current ratio. However‚ the firm is not collecting cash from customers but having
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Income $5‚560 Depreciation $4‚268 Change in Working Capital $1‚397 Cash from Operating Activities $11‚225 Investing Activities: Increased in Fixed Assets ($6‚068) Cash from Investing Activities ($6‚068) Financing Activities: Decrease in Debt ($7‚655) Dividends Paid ($2‚900) New Stock Sold $4‚800 Cash from Financing Activities ($5‚755) Net Cash Flow ($598) Beginning Cash Flow $3‚245 Net Cash Flow ($598) Ending Cash $2‚647 Problem 12 a. Linden % Industry % Sales 6‚000 100
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Investment in Assets and required returns · Cash flow determination · Non-DCF and DCF techniques Case: Investment analysis and Lockheed Tri Star Assignment Questions 1. Compute the payback‚ net present value (NPV)‚ and internal rate of return (IRR) for this machine. Should Rainbow purchase it? Assume that all cash flows (except the initial purchase) occur at the end of the year‚ and do not consider taxes. 2. For a $500 per year additional expenditure‚ Rainbow can get a "Good As New" service
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banking laws to ensure they are always on top of information for company benefit. The financial situation of Anthony’s Orchard is not stable as it holds a significant amount of stock in its’ inventory. They would be required to turn this inventory into cash quickly. Pricing and marketing strategies may be used to shift product faster through their sales
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Question 2: Prepare a schedule showing the project’s annual‚ incremental‚ after-tax cash flows. INSERT TABLE HERE In order to prepare the schedule of cash flows‚ we had to take into consideration certain costs. Since the 12500 square feet factory space leased from AmeriLease Corporation is already unused and there is no foreseeable use in the future‚ it’s a sunk cost and we did not use it in our cash flows. On
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