SUBJECT : CORPORATE FINANCIAL MANAGEMENT CASE STUDY TITLE : THE SHEPHERD KENNEL BUSINESS PLAN DATE : 17TH NOVEMBER 2013 EXECUTIVE SUMMARY This business plan is derived from the passion that we have in dogs. They are loving animals and we believe every home should have one. We decided to concentrate on a particular breed as this will allow us to be specialists in this dog segment. German Shepherd dogs are our chosen breed and we feel that this breed while requires a lot of attention
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Capital Budgeting Decision Process 1. Introduction The maximization of shareholder wealth can be achieved through dividend policy and increasing share price of the mark value. In order to derive more profits‚ our company shall invest potential investments which always cover a number of years. Those investments involve substantial initial outlay at the outset and the process. The management is responsible to participate in the process of planning‚ analyzing‚ evaluating‚ selecting
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A firm is considering two projects‚ and it requires a 12% return on its projects. Their minimum payback period is 2.5 years. Assuming the projects are independent (not mutually exclusive)‚ which would you choose based on the payback method? The NPV? The IRR? Project A Project B Initial outlay $200‚000 Initial outlay $180‚000 Cash flows Year 1 $70‚000 Year 1 $80‚000 Year 2 $80‚000 Year 2 $90‚000 Year 3 $90‚000 Year 3 $30‚000
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RES 9776 – Spring 2015 Real Estate Finance Professor: Stephen J. Pearlman Case Study - Angus Cartwright III Joonho Kim Yan Chen Qinqin (Renee) Yang Jae Paik Contents I. Case Overview 2 II. Analysis and Assumptions 2 III. Financial Analysis 4 IV. Recommendations Reasoning 5 Appendix 6 Exhibit 5 Exhibit 8 I. Case Overview Angus Cartwright III‚ an investment advisor‚ was asked to provide investment advisory services for two clients
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performance. Comparatively speaking‚ HPL’s 9.26% EBITDA ratio is stronger than industry competition‚ another indicator of strong earnings and management. 2) Vent Consulting’s analytical summary is provided in Appendix 1. Note the calculated NPV of $4‚971 and IRR of 11.1% at tab
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capital structure. Firstly‚ I explain why firm should use Net Present Value (NPV) methods for capital budgeting rather than Return on Investment (ROI) method and Payback Period method. Secondly‚ I calculate the Weighted Average Cost of Capital (WACC) which will be used as discount rate while calculating NPV. Then‚ I decide which rapid prototyping system company should invest as well as I compare the each expansion projects’ IRR with WACC to decide which projects should be invested and which should not
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criteria Accept Reject Pay Back Period (PBP) PBP < target period PBP >target period Accounting Rate of Return (ARR) ARR > target rate ARR < target rate Discounting criteria Accept Reject Net Present Value (NPV) NPV > 0 NPV < 0 Internal Rate of Return (IRR) IRR > cost of capital IRR < cost of capital Benefit- Cost Ratio (BCR) BCR >1 BCR < 1 Implementation The implementation phase for an industrial project‚ which involves the setting up of manufacturing facilities‚ consists of several stages:
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TEST 2 MGF 301 Corporation Finance Fall 2013 Please sign name in box (Note: Total Points = 100; Multiple Choice = 4 points each unless otherwise indicated) 1. YT Inc. is considering implementing a new project. Which of the following is a cash flow that should be taken into account for capital budgeting purposes? (a) Expected lost sales in a related YT Inc. product caused by the new product (b) The annual bonus paid to the YT Inc. President based on last year’s earnings
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Solution to Case 23 Evaluating Project Risk It’s Better to Be Safe Than Sorry! Questions: 1. What seems to be wrong with the way the NPV of each project has been calculated? Indicate without any calculations‚ how Pete and John should go about recalculating the projects’ NPVs. The NPV of each project has been calculated by discounting the cash flows at the 8% before-tax cost of debt. This is incorrect. Since the company has debt‚ preferred stock and common
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I do believe that the proposal should be accepted. The reason being the Clark project has a positive NPV. The net present value method offsets the present value of an investment’s cash inflows against the present value of the cash outflows. If the present value of cash inflows exceeds the present value of cash outflows‚ then it clears the minimum cost of capital and is deemed to be a suitable undertaking. On the other hand‚ if the present value of cash inflows is less than the present value of cash
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