I. Executive Summary In May of 2000‚ Yeats Valves chairman and CEO‚ Bill Yeats‚ met with his consultant and fellow board member‚ Kate Porter‚ to discuss the final negotiations regarding the acquisition of Yeats Valves by TSE International Corporation. Although the social terms of the merger had been discussed‚ no specific details had been settled. Organized in 1980 for engineering and developmental work on specialty valves and heat exchangers‚ Yeats Valves and Controls Inc (YVC) had a reputation
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(2008) and Chi and Huang (2005) examine the relation between earnings quality and partner tenure. They find that earnings quality tends to increase in partner tenure‚ consistent with findings in the United States based on audit firm tenure. However‚ their sample periods are prior to 2003 when partner rotation in Taiwan was voluntary. These studies‚ thus‚ do not directly investigate the effect of mandatory audit partner rotation on earnings quality or audit quality. ’ In this paper‚ we use audit data
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Scott‚ Financial Accounting Theory‚ 6th Edition Instructor’s Manual Chapter 2 Suggested Solutions to Questions and Problems 1. P.V. Ltd. Income Statement for Year 2 Accretion of discount (10% × 286.36) $28.64 P.V. Ltd. Balance Sheet As at Time 2 Financial Asset Cash Shareholders’ Equity $315.00 Opening balance Net income $286.36 28.64 Capital Asset Present value 0.00 $315.00 $315.00 Note that cash includes interest at 10% on opening cash balance of $150
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tax shield (APV) discounted at 5.5% (Rd) b. Terminal Value 1. Terminal Value taken using P/E multiple of 19.1 for earnings of year 2012 2. Discounted at WACC to get value at end of 2007 Q.2 Compute the cost of capital / discount rates that are relevant for this exercise A. Discount Rate Rate ReUnl 8.33% Rd 5.5% WACC @ 28.1% D/V 8.061% Q3. What is the value of AirThread Connections – before and after accounting for any synergies. A. Method Without Synergy With Synergy Discounted Cash flow $ 6‚898
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50/0.06*(1 – 1/1.06^30) + 1000/1.06^30 = $862.3517 Question 2 - Stock Valuation XYZ Corp. sells toothpicks. The company currently has earnings per share of $8.25. The company has no growth and pays out all earnings as dividends. It has a new project which will require an investment of $1.60 per share today (at time zero). The project will increase the earnings by $0.40 per share indefinitely starting one year after the investment. Investors require a 10 percent return on XYZ stock. Assume the firm
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market and for an investor that believes in a passive approach to investing‚ what is the primary duty of a portfolio manager? Diversification Question 1 1 out of 1 points Value stocks usually exhibit ___ price-to-book ratios and ___ price-to-earnings ratios. low‚ low Question 2
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D. 1. 2. 3. 4. 5. 6. INVESTMENT APPRAISAL The nature of investment decisions and the appraisal process Non-discounted cash flow techniques Discounted cash flow techniques Allowing for inflation and taxation in DCF Adjusting for risk and uncertainty in investment appraisal Specific investment decisions (lease or buy; asset replacement‚ capital rationing) The Nature of Investment Decisions and the Appraisal Process What is an investment? An investment is any expenditure in the expectation of
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points are valuable for shareholders and prospective investors who want to find out if the company is performing well‚ and what to expect with their stocks or investments in the near future. Intrinsic Value -Present Value of a firm’s cash flow discounted by the firms required rate of return. Market Price - The current quoted price at which investors buy or sell a share of common stock or a bond at a given time. Also known as "market price." Estimated Value and Market Price Under Valued – Intrinsic
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Lesson Plan on Capital Budgeting Capital Budgeting - process of deciding whether or not to commit resources to projects whose costs and benefits are spread over several time periods. Characteristics of a Capital Investment Decision: 1. Substantial amount of funds are required in capital projects. 2. Because of the length of time span by a capital investment decision‚ the element of uncertainty becomes more critical. 3. The effect of managerial errors will be difficult to reverse
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Content Approach I: “Dividend Discount Model” 3 (1) Dividend payout in 7 years 3 (2) Constant growth rate estimation 4 (3) Net earnings from same sector 11 (4) ROE for the companies in the same sample set 16 (5) Share price estimation by DDM 21 Approach II: “Valuation Multiple” 23 1) Price – earning ratio of each sector 23 2) Share price estimation by PE ratio 28 Reconciliation report 30 In this assignment‚ we are going to analyze 5 companies which are come from Banking
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