our investment could reach up to 7% a year‚ we decided to spend $5‚500 annually on each policy. By age 65‚ my policy will have a death benefit totaling up to $236‚959. The amount my wife will leave behind could total $233‚586. Her policy could earn cash value of $149‚439. My policy could reach the value of $109‚593. I can earn up to $22‚639 tax free income while hers will grow up to $22‚668. Neither of us would ever expect losing the other to be easy. But at least we can be assured that we will not
Premium Investment Net present value Rate of return
Harmonic Hearing Co. | Case Analysis | | Yijing Zhou | 2013/3/26 | | Issue Burns and Irvine need $28.3 million to purchase Harmonic from its founder and complete and launch the new hearing aid. They have to determine the costs and benefits of different financing alternatives and‚ finally‚ select the optimal financing package in terms of expense‚ expected return to investment and financial flexibility. Analytical approach Unlevered free cash flows to the firm ROI analysis
Premium Net present value Free cash flow Cash flow
Question1. NPV = FCF1/(1+WACC)+FCF2/(1+WACC)^2+FCF3/(1+WACC)^3+FCF4/(1+WACC)^4+FCF5/(1+WACC)^5 +FCFp‚ where FCF1…FCF5 are the free cash flows in years from 1999 to 2003. FCF = Cash flow from Operations – increase in net working capital requirement – capital expenditures‚ discounted by WACC. For example‚ in 1999 FCF1 = (7965 – 516 – 4938)/(1+0‚1) = 2283. Similarly‚ we calculate FCF2=2479‚ FCF3=2666‚ FCF4=3007‚ FCF5=3132. As we assume‚ that after 2003 the FCF will grow permanently by 4% by year
Premium Net present value Cash flow Rate of return
this purchased was calculated by using $621.5 million as the initial investment. This figure was determined as a result of Kennecott giving Peabody $285 million in cash‚ assuming $36.5 million in liabilities‚ and taking on a reserved payment of $300 million. Also‚ the figures used to determine IRR came from the figures given under cash flow from
Premium Weighted average cost of capital Rate of return Net present value
2/11/13 Cases Monday 7-10pm Strong Tie Ltd. Case From the first scenario‚ I can conclude that Strong Tie Ltd is in terrible financial shape because of three straight years of negative CATO between 2010-2012. I used the growth rate calculated between the years 2006 to 2007 and the total was 7.72%. It increased by 1% for every year thereafter. But with an increasing working capital and variable costs‚ the increase in sales growth is not enough for Strong Tie to produce enough free cash flow to withstand
Premium Cost Costs Free cash flow
Executive Summary Biopure Corporation was established in 1984 and is a privately owned pharmaceutical firm. They are trying to launch two new products: Hemopure (human market) and Oxyglobin (veterinary market). They are the only company aggressively engaged in the development of blood substitutes for the vet market. Biopure has invested $200M in the development of said blood substitutes. They currently don’t have any revenues with little to no debt and financing of $50M to support these operations
Premium Health care Net present value Medicine
w1. Johnson Co. prepared the following reconciliation of its pretax F/S income to taxable income for the year ended 12/31/94‚ its first year of operations: Pretax financial income 160‚000 Nontaxable interest rcvd on municipal securities (5‚000) LT loss accrual in excess of deductible amount 10‚000 Depr. in excess of F/S amt (25‚000) Taxable income 140‚000 Johnson’s tax rate for 1994 is 40%
Premium Generally Accepted Accounting Principles Cash Cash flow
Chapter #3 Question 1 After winning the lottery‚ participants are often offered a choice between a flat amount immediately and a larger total sum paid out over time. Consider an example where a person has a choice between $100‚000 per year for 20 years ($2‚000‚000 total) or an immediate payment of $1‚200‚000. Consider how interest rates impact the choice that should be made. A. The equation to calculate the discounted present value of 20 annual payments is: Present value = $100‚000/(1 + i) + $100
Premium Investment Net present value Finance
7 – Discounted Cash Flow Techniques page 247 A brief tutorial on Excel financial functions (problems to follow) You may find the following Excel‚ built-in financial functions helpful when analyzing the problems below. (To access these functions‚ select Insert‚ Functions‚ and choose Financial.) =PV(rate‚ nper‚ pmt‚ fv‚ type) returns the present value of a series of cash flows. =FV(rate‚ nper‚ pmt‚ pv‚ type) returns the future value of a series of cash flows. =PMT(rate
Premium Net present value Rate of return Internal rate of return
Abstract This case study will provide an overview of the Coca-Cola Company as the perfect business as it pertains to the characteristics that make up a good business. A series of three questions will be discussed. Identifying four characteristics of a good business‚ identify four companies that display these characteristics‚ and in three years after purchasing common stock in these companies determine if the present analysis was correct. Discuss at least four characteristics of a good
Premium Berkshire Hathaway Free cash flow Cash flow