Corporate Finance Case Study: Volkswagen Volkswagen (VW) Volkswagen (VW) is a German automobile manufacturer which was originally founded in 1937. Now VW Group is one of world’s leading automobile manufacturers and the largest carmaker in Europe‚ with its recent headquarter in Wolfsburg. VW is one of the ten brands under VW Group. (Volkswagen Homepage‚ 2011) 2011 VW’s revenue is 159‚337 million EUR; net income is 15‚409 million EUR‚ with a profit margin of 9.6707%. (Bloomberg
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Chapter 03 - Financial Statements Analysis and Long-Term Planning Chapter 03 Financial Statements Analysis and Long-Term Planning Multiple Choice Questions 1. One key reason a long-term financial plan is developed is because: A. the plan determines your financial policy. B. the plan determines your investment policy. C. there are direct connections between achievable corporate growth and the financial policy. D. there is unlimited growth possible in a well-developed financial plan. E. None of the
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Report on Leasing vs. Purchasing The benefits of leasing Computer equipment vs. purchasing Summary The company needs to upgrade its computer equipment. There are two upgrade paths to consider. In this proposal‚ we demonstrate how equipment leases take advantage of the benefits of reduced depreciation and taxation‚ easy scalability‚ reduction of IT staff usage‚ reduced energy costs‚ and reduction of capital spending. The company can free up money overall and maintain better control
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Name of the Researcher – Dr. Y. S. Vaishampayan Abstract: The Role of Subsidiary Companies from the Perspectives of Growth and Development THEME - Role of Competition‚ Flexibility and Trade in Economic Growth This Research Paper throws light on the efforts of Indian corporations in their objectives of maximization of shareholders wealth. To achieve this‚ they have taken the route of subsidiarization. This Paper only takes the results achieved by Indian business corporations in fulfilling
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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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In recent years there has been considerable growth in the use of credit derivatives‚ which protect lenders against the risk that a borrower will default. For example‚ bank A may be reluctant to refuse a loan to a major customer (customer X) but may be concerned about the total size of its exposure to that customer. Speculators in search of large profits (and prepared to tolerate large losses) are attracted by the leverage that derivatives provide. By this we mean that it is not necessary to lay out
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Chapter 14 Cost of Capital Multiple Choice Questions 1. A group of individuals got together and purchased all of the outstanding shares of common stock of DL Smith‚ Inc. What is the return that these individuals require on this investment called? A. dividend yield B. cost of equity C. capital gains yield D. cost of capital E. income return 2. Textile Mills borrows money at a rate of 13.5 percent. This interest rate is referred to as the: A. compound rate. B. current yield. C. cost of debt
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Valuation- “projected financial performance into values.” Involves projecting/ making budgets. Value of an Asset = Value of Cash Flow (CF) it Will Generate (not profits) CF=1/(1+r)^1 value is based on three things- Current Cash Flow‚ Expected growth (used with to estimate future cash flow)‚ Riskiness of expected future cash flow (discount rate).Net Present Value- Value CFs using project discount rate based on risk Investment Decision-which real assets the firm should acquire.Choose positive and
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PART SIX THE MOST RECENT CENTURY 1914–2010 Chapter 21—The Collapse and Recovery of Europe‚ 1914–1970s CHAPTER LEARNING OBJECTIVES: • To examine the history of Europe between 1914 and the 1970s as an organic whole made up of closely interconnected parts • To consider the repercussions of nationalism and colonialism in Europe and Japan • To increase student awareness of the effects of the two world wars • To help students imagine the appeal of totalitarian movements in the twentieth century
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by examining whether it is at least profitable enough to pay off its interest expenses. | Total Asset Turnover | Tells us the amount of sales generated for every dollar worth of assets. | Equity Multiplier | Tells us how a company uses debt to finance its assets. | Long-term Debt Ratio | Measures the percentage of the overall company’s assets that are owned by the equity and debt. | Times Interest Earned Ratio | (TIE) Tells us about a company’s ability to meet it’s debt obligations. This could
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