Capital Asset Pricing Model (CAPM) Versus the Discounted Cash Flows Method Managerial Analysis/BUSN 602 Capital asset pricing model or CAPM is a financial model that measures the risk premium inherent in equity investments like common stocks while Discounted Cash Flow or DCF compares the cost of an investment with the present value of future cash flows generated by the investment with the mindset being that if the cash flow is positive‚ then the investment is good. Generally speaking‚ CAPM is
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When the cash flows are uniform The cost of a proposal is $ 10‚000. The cash flows are as follows: Year Cash flows 1 2500 2 2500 3 2500 4 2500 5 2500 6 2500 Calculate Pay Back Period (PBP) When the cash flows are not uniform 1. There are two Proposals. Proposal A and Proposal B. Both cost the amount of $ 60‚000. The discount rate is 10%. The cash flows before depreciation and tax are as follows: Year Proposal A Proposal B $ $ 0
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1. How much will $1000 deposit in savings account earning a compound annual interest rate of 6% be worth at the end of the following number years? a) 3 years $1‚191 b) 5 years $1‚338 c) 10 years $1‚791 2. If you require a 9% return on your investment which would you prefer? a) $5‚000 today PV = $5‚000 b) $15‚000 five years from today PV = $9‚748.50 c) $1‚000 per year for 15 years PV = $8061 Select option b
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Net present value 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 moneyto appraise long-term projects. 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. The advantages of the NPV are following; first‚ it tells whether the investment will increase the firm’s value. Also‚ it considers all the cash flows‚
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MARKET PERFORMANCES OF HIGH AND LOW CASH HOLDING FIRMS. Prepared By Pranshu Singh 12010221059 Submitted to: - Prof. Naveen Kumar INTRODUCTION Stock market performance in high and low cash holding firm depends on the determinants of corporate cash holdings that have occupied a central place in corporate finance literature. Cash holding‚ according to Gill and Shah (2012) is defined as cash in hand or readily available for investment
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uniformity of practice. The Exclusive Economic Zone (Hereinafter EEZ) is a major innovation in the law of the sea. The concept finds codification in Article 55 of the United Nations Conventions on the Law of the Sea. Articles 55 to 75 of the UNCLOS deal broadly with various aspects of the EEZ. The present paper traces the evolution and the development of the concept of the Exclusive Economic Zones. The author will also analyze the development of the concept. EXCLUSIVE ECONOMIC ZONES Article 55
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Phase Two Individual Project The six key elements of an organization’s structure are as follows: work specialization‚ departmentalization‚ chain of command‚ span of control‚ centralization and decentralization‚ and formalization. (Eleventh Edition Management‚ 2012) Work specialization‚ sometimes called a division of labor‚ refers to the degree to which an organization divides individual tasks into separate jobs. Work specialization‚ allows the manager to take complex tasks and break them down
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Practical Accounting 1 Cash and Receivables -1. Assume the following facts for Kurt Company: the month-end bank statement shows a balance of P40‚000: outstanding checks totaled P2‚000; a deposit of P8‚000 is in transit at month-end; and a check for Pf400 was erroneously charged against the account by the bank. What is the correct cash balance at the end of the month? a. P33‚600 c. P45‚600 b. P34‚400 d. P46‚400 2. The August 31 bank statement of K‚ Inc. showed a balance of P113‚000. Deduction in
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Case 08-01: Go With the Flow‚ Inc. 1. Insurance Settlement Proceeds: involuntary conversion Investing cash inflow ASC 230-10-45-16 As stated in ASC 230-10-45-12‚ “All of the following are cash inflows from investing activities: a. Receipts from collections or sales of loans made by the entity and of other entities’ debt instruments (other than cash equivalents and certain debt instruments that are acquired specifically for resale as discussed in paragraph 230-10-45-21) that were purchased
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and ensure the safety and welfare of the people being governed. There is no doubt that the government must provide citizens with a social safety net. Due to the debt and amount of government spending‚ some may disagree but the government can find other safer ways of making sure the right people in need and deserving of the help provided by social safety nets. Social security‚ Medicare‚ Medicaid‚ unemployment benefits‚ free clinics‚ public education‚ free or reduced breakfast or lunch‚ etc.‚ are all
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