CHAPTER 1: INTRODUCTION TO CORPORATE FINANCE Contents 1. Scope of financial management 5. Company stakeholders 2. Forms of business organization 6. Management‐Shareholders’ Relationship 3. The objectives of the firm 7. The Audit 4. Regulatory frameworks for companies 8. Public Sector Organisation Learning Outcomes When you have read and understand this chapter
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Introduction: Finance is the life-blood of all business activities. Finance is needed not only for establishing a business enterprise‚ but it is also needed to keep it alive and also to see it growing. Every business enterprise needs two types of capital‚ viz.‚ fixed or long-term capital and working or short-term capital. Source of Finance: There are several sources which a business enterprise company can use for raising the required amount of capital. What sources and methods the company will
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Main characteristics of project finance Project finance is a form of long term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of the project sponsors. In most cases‚ a project financing structure involves a number of equity investors‚ the sponsors‚ as well as a group of banks or other lending institutions that provide loans to the operation. The loans are usually non-recourse loans‚ which are secured by the
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BUSS384 - Corporate Finance - Problem Set #1 Due by Wednesday‚ 15 October 2014 1. [10 points] Sydney Industries‚ Inc.‚ is considering a new project that costs $30 million. The project will generate after-tax (year-end) cash flows of $8 million for five years. The firm has a debt-to-equity ratio of 0.25. The cost of equity is 12 percent and the cost of debt is 7 percent. The corporate tax rate is 40 percent. It appears that the project has the same risk of the overall firm. Should Sydney undertake
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increases. e. The flotation costs associated with issuing preferred stock increase. __c__ 2. Duval Inc. uses only equity capital‚ and it has two equally-sized divisions. Division A’s cost of capital is 10.0%‚ Division B’s cost is 14.0%‚ and the corporate (composite) WACC is 12.0%. All of Division A’s projects are equally risky‚ as are all of Division B’s projects. However‚ the projects of Division A are less risky than those of Division B. Which of the following projects should the firm accept?
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Origin of the Term Paper: This term paper is a requirement for the course Managerial Finance (FIN435) under our honorable instructor Md. Lutfur Rahman‚ the Department of Business Administration‚ East West University. Objectives of the study: As a part of the course Managerial Finance‚ we had the opportunity to prepare a term paper on Dividend policy and capital structure of the following DSE listed firms- ← Pran (AMCL) ← BATBC ← Dhaka Fisheries ← National Tea ← Apex
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Entrepreneurial Finance Philippe Gregoire Louvain School of Management – Université catholique de Louvain Reference book : Entrepreneurial finance‚ a casebook. Paul A. Gompers and William A. Sahlman. John Wiley & Sons‚ Inc. 2002 1 Entrepreneurial finance Project assessment (POCD) Funding (amount‚ firm’s value‚ best partner) Deal (ownership / control / incentives) Exit (IPO) Project Assessment • 4 critical success factors for entrepreneurial ventures People Opportunity
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the form of payments? 5. What should Mr. Cizik recommend that the Cooper management do? CONGOLEUM CORP 1. WHAT CHARACTERISTICS OF CONGOLEUM MAKE IT A LIKELY CANDIDATE FOR A LEVERAGE BUYOUT? 2. WHY WOULD INSTITUTIONAL INVESTORS BE WILLING TO FINANCE A LEVERAGE BUYOUT WITH THE CAPITAL STRUCTURE PROPOSED? 3. WHAT RETURN WOULD BE APPROPRIATE FOR THE INSTITUTIONAL INVESTORS ON AN INVESTMENT WITH THIS RISK LEVEL? WHAT RETURN WILL THE INSTITUTIONAL INVESTORS REALIZE IF THEIR TIME HORIZON FOR THE INVESTMENT
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Task 1 Identify the different sources of finance available to Mr Norman for buying the new online learning system to expand his service business. There are many different sources of finance available to Mr Norman for investment in order to expand his business. These include: Using personal savings to invest in the business growth Raising equity through issue of new shares. Short term bank loan Long term bank loan Bank overdraft Using retained earnings from the profits earned in the past
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WHAT IS OVERTRADING? Overtrading means a situation of operating a business with insufficient long term capital to support the current volume of business. A situation in which a company is growing its sales faster than it can finance them. Overtrading often occurs when companies expand their own operations too quickly aggressively. Overtrading can arise even if the organization is trading profitably. Over-expansion of business is one of the main reasons for overtrading and therefore overtrading
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