not included. Net Investment is based on maintenance capital expenditure minus the depreciation related to Capex. Working Capital is based on the difference between current assets minus current liabilities. Working capital increases as sales revenues‚ in the calculation it is assumed that working capital is proportional to Revenue growth of 9%. Long term growth is 4% Company Tax Rate 35% Salary Growth is 10% Discount Rate Calculation WACC = E/V*Re + DV*Rd*(1-Tc) Where: E = Market Value of Equity‚ D
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Ke = Rf +β (Rm – Rf) = 0.0853+0.928(0.05) = 13.17% Through this rate we will further find out the present value of the revenue generated through sales by the company. Year Sales (Rs. in Cr.) Present Value (Rs. in Cr.) Discount Rate 2007 478.1 478.1 13.17 2008 524.4 461.173 2009 546.3 422.5 2010 851.0 578.8 2011 937.8 560.9 2012 1290.2 678.6 3180(approx.) Now taking the average of this value we get Rs. 530 Cr. Considering this to be the consolidated revenue per year we can say that the total
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capital structures. Financial Analysis – See appendix for detailed methodology and calculations | Capital Structure | Discount Rate | Net Present Value | Flow to Equity Approach | All Equity | R0 15.8% | $1‚228‚485 | Adjusted Present Value Approach | $750k Debt in Perpetuity | Rs 15.8% | $1‚528‚485 | Weighted Average Cost of Capital Approach | Debt/Market Value of .25 | RWACC 15.1% | $1‚469‚972 | | 2002E | 2003E | 2004E | 2005E | 2006E | Free Cash Flows ($ Thousands) | (112) | 6 | 151
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89 lakh MT in 1997-98. The corresponding value of foreign exchange earned was to the tune of Rs. 3371.00 crore in 1997-98. Indian Basmati Rice has been a favorite among international rice buyers. Following liberalization of international trade after World Trade Agreement‚ Indian rice will become highly competitive and has been identified as one of the major commodities for export. This provides us with ample opportunity for development of rice based value-added products for earning more foreign exchange
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project or not. The following alternatives can be used to address the problem: NPV: Net present value (NPV) is defined as the total present value (PV) of a time series of cash flows. It is a standard method for using the time value of money to appraise long-term projects. The method is used for capital budgeting‚ and widely throughout economics‚ it measures the excess or shortfall of cash flows‚ in present value terms‚ once financing charges are met. OPTION PRICING: The buyer of a call option
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1) How much importance should be given to the energy cost situation? Michael Burton’s proposal to expand into new energy efficient products is justified by increasing interest in the public and private sectors to reduce energy costs. At the highest level of government‚ the Obama administration has tied the US economy’s energy policy with its future success and competitiveness with other global powers. In a speech on June 2009‚ President Obama specifically mentions the Energy Department’s plans to
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using net present value (NPV) and internal rate of return (IRR). Joint Venture • Before 1993‚ -“cooperative joint venture”(CJV): a foreign company with a local Chinese firm - The amount of capital injected in to the business did not necessarily equal the amount of profit-sharing • After 1993‚ - “Equity joint venture” - The profit would be distributed in line with the ratio of capital injected. Introduction to NPV and IRR Net Present Value(净现值法） • The difference between the market value of a project
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of action Mr. Navallez should take‚ along with calculation to support the recommended course of action. Capital budget techniques Several techniques can be used to analyze an opportunity to invest in capital. Net Present Value (NPV) allows decision makers to analyze the present value (cost) of a capital investment and determine if the investment will compensate the cash outflow used for capital investment by an excess of the desired rate of return. Management “wants to know the rate of return
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show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document‚ and submit it in the appropriate week using the Assignment Submission button. Chapter 8 Exercise 1: 1. Basic present value calculations Calculate the present value of the following cash flows‚ rounding to the nearest dollar: A single cash inflow of $12‚000 in five years‚ discounted at a 12% rate of return. 12000/(1.12)^5 = $6‚809 An annual receipt of $16‚000 over the next 12 years
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Capital Budget Recommendation Capital Budget Recommendation There are multiple effective techniques that can be used to evaluate a capital expenditure budget. Some of the most commonly used techniques include net present value‚ internal rate of return‚ and payback period. Each evaluation technique will yield the results in different fashions‚ and often some will yield better results than others. When looking at a capital investment every option must be taken into consideration before coming
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