Case Introduction Fonderia di Torino S.P.A‚ founded in 1912 by Benito Cerini‚ was a manufacturing company which produced metal castings using semi-automated molding machines. The company’s main line of business was the production of precision metal castings for use in automotive‚ aerospace‚ and construction equipment. The company excelled at this and was awarded because of the quality of its products. The mainly European customers of Fonderia di Torino were original-equipment manufacturers (OEM)
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proposals as under: • Discounted Cash Flow. • Pay back period methods‚ pointing out their relative merits and demerits. • Under what circumstances is the pay back period method and the NPV Method used for evaluating projects. Question No 2 (A) What is the rationale for NPV Method? Discuss the feature of NPV Method? (B) Teja international is determining the cash flow for a project involving replacement of an old machine by a new machine. The old machine bought a few years ago has a book
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m.Module 3 CAPITAL BUDGETING Meaning of Capital Budgeting :- Capital Budgeting is the process of making Decisions regarding long term investments in Fixed Assets which are not meant for sale. It is long range planning to employ the available capital for the purpose of maximizing the long term profitability of the concern. Definition of Capital Budgeting:- Prof I.M.PANDEY Defines Capital Budgeting as the firms decision to invest its current funds most efficiently in long term activities
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Liedtke’s base case projections for a potential acquisition of Mercury Athletic‚ we have concluded that this is a positive net present value project‚ and that AGI should proceed with the acquisition. Under Mr. Liedtke’s operating assumptions‚ we calculate the value of Mercury’s discounted cash flows to be $624.446 million‚ and the acquisition price to be $156.643 million‚ yielding a net present value of $467‚804 for AGI. Our calculations indicate that this project becomes even more attractive financially
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methods used as being the Net Present value (NPV) method‚ the Internal Rate of Return (IRR) method‚ the Payback method‚ and the Accounting Rate of Return (ARR) method. Conversely‚ Brealey‚ Myers and Allen (2011) proposes that the NPV and IRR methods are considered prestige compared to the ARR and the Payback Methods‚ as they take into account the time value of money. Thus‚ the following project evaluation will focus on using the NPV and IRR methods. NPV Method: The Net Present Value method discounts
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variables regarding the investment and the spreadsheet automatically analyzes its attractiveness. Three traditional investment appraisal methods are used by the IAT. They include: • Pay-back Period • Internal Rate of Return (IRR) • NPV Included in the IAT are two spreadsheets with slightly different functionality. They are named: 1). Automated 2). Manual The main difference between these two worksheets lies in the way each creates future cash flows. The Automated
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regularly overstated. Est. Time: 01 - 05 2. 3. a. Analysis of how project profitability and NPV change if different assumptions are made about sales‚ cost‚ and other key variables b. Project NPV is recalculated by changing several inputs to new‚ but consistent‚ values. c. Determines the level of future sales at which project profitability or NPV equals zero. d. An extension of sensitivity analysis that explores all possible outcomes and weights
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gives us a NPV of $6‚349‚800. When I calculate the NPV for the Design Your Own Doll investment‚ I took the cash flow in year one to be 0 because the revenue was zero and it had not been launched at the time so the production costs would have been zero‚ leaving our operating profit nonexistent. So discounting the future cash flows leaves us with cash flows adding up to $9‚869‚800‚ with the terminal value of 1556500. After taking out the up-front expenditure of $5‚811‚000‚ I found the NPV to be $9
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Mercury Athletic Footwear Overview Active Gear‚ Inc. is a privately held footwear company with $470.3 million in revenue in 2006‚ making it relatively small compared to big players in the athletic and casual footwear industry. Eyeing an opportunity for growth via a bolt-on acquisition‚ John Liedtke‚ head of business development for the company‚ is looking into acquiring a subdivision of West Cost Fashions‚ Inc.‚ Mercury Athletic. With 2006 revenue of $431.1 million‚ Mercury Athletic represents
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including overrun of 10% so 9‚000‚000 open mine and over run 100000 Project B) 8300000 -(8300000*10%)= 7470000 1. Is this project financially feasible given the base scenario? Why or why not. Be sure to include a discussion of NPV and IRR. How does the lifetime income compare to the initial investment? 5 points 2. What are at least three risk factors that Heru should be considering in evaluating the project? What types of risk do they represent? 5 points 3. Is there
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