DATE: March 13‚ 2014 SUBJECT: Should Nucor Adopt the CSP Process? Cash Flow Analysis Cash flow analysis on Exhibit 1 represents net cash flow calculation using the base assumption. According to this calculation‚ Nucor would have net present value of $(11.99) million which is a negative value. This negative value on NPV indicates potential unprofitable consequences after implementing SMS’s compact strip production (CSP); therefore‚ Nucor should not invest in this new technology
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Analysis Introduction This project belongs in the engineering-efficiency category; therefore‚ it has to fit at least 3 of 4 performance hurdles‚ which are 1. Impact on EPS; 2.Payback; 3.Discounted cash flow and 4. Internal rate of return. In this article‚ some of those involved explained and described their opinions; however‚ professional knowledge may have been lacking. Therefore‚ we will expound and clarify below. Management Analysis Capital Expenditure On the surface‚ making sure
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President of Eagle Airlines‚ a simulation analysis is developed in order to evaluate company’s intention to proceed with the purchase of a new aircraft. According to the President’s estimations‚ the uncertain parameters which affect the annual cash flow are the below; 1. Hours flown 2. Charter Price/Hour 3. Ticket Price/Hour 4. Capacity of Scheduled flights 5. Ratio of charter flights 6. Operating Cost/hour The main assumption to work upon the scenarios is that the numbers generated for
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follow Howe Industries recently noted that‚ relative to the previous year‚ the company’s operating net cash flow increased‚ yet cash as reported on the balance sheet decreased. Which of the following factors could explain this situation? Answer The company cut its dividend. The company made a large investment in a profitable new plant. The company sold a division and received cash in return. The company issued new common stock. The company issued new long-term debt.
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Relevant cash flows Answer: d Diff: E . Which of the following statements is most correct? a. The rate of depreciation will often affect operating cash flows‚ even though depreciation is not a cash expense. b. Corporations should fully account for sunk costs when making investment decisions. c. Corporations should fully account for opportunity costs when making investment decisions. d. Statements a and c are correct. e. All of the statements above are correct. Relevant cash flows Answer:
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cookies‚ started business on October 1‚ 2011. The following transactions occurred during the month. 1. The company issued 6‚000 shares of common stock at $15 per share. 2. The company acquired office equipment on October 1 for $30‚000 cash. The equipment was used for administrative tasks. 3. The company purchased $15‚000 of ingredients on account. 4. Rent is $500 a month. On October 1‚ the company paid rent for October‚ November‚ and December. 5. The company sold pizza
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rules will always yield the same decision as long as two conditions are met: the project or investment’s cash flows are conventional and the project or investment is independent. If the initial cash flow is negative and all the subsequent cash flows are positive‚ the cash flows are said to be conventional. If at any point any of the 2nd or later cash flows are negative‚ meaning we have a cash outflow‚ the IRR will provide multiple rates of return which can make the decision of whether or not to choose
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the overhaul of the Cynthia II should be taken into consideration. Assumptions Several aspects of both buying decisions were unclear. Therefore‚ we had to make the following assumptions in order to be able to complete our calculations: All cash flows are in nominal terms‚ meaning that 3% inflation is included. Year 0 corresponds with 2009‚ year 1 with 2010 etc. We compared the depreciation of the new boat with the depreciation of the overhauled Cynthia II‚ therefore the depreciation is the
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Financial Analysis Eli Lilly & Company 2013 Annual Report Group Group 22 Ibrahim Ibrahim Al-Oraifi Al-Oraifi Dheya Dheya Al-Shehabiyah Al-Shehabiyah Namir Namir Al-Bassam Al-Bassam Happy Happy New New Year‚ Year‚ 2015 2015 Company Confidential © 2013 Eli Lilly and Company INTRODUCTION Founded in1876 by Col. Eli Lilly Headquarters in Indianapolis‚ Indiana The first company to mass-produce penicillin The world’s largest manufacturer and distributor of psychiatric medications • Products marketed
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Practice Problems Chapter 13 Recommended 1-3‚ 6‚ 8‚ 21‚22‚24 Discussion Questions 13-1. Risk-averse corporate managers are not unwilling to take risks‚ but will require a higher return from risky investments. There must be a premium or additional compensation for risk taking. 13-2. Risk may be defined in terms of the variability of outcomes from a given investment. The greater the variability‚ the greater the risk. Risk may be measured in terms of the coefficient of variation‚ in which we divide
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