NPV is short for Net Present Value and it makes difference between the present value and cost of a project. In addition‚ NPV takes into account all cash flows through out the whole life of the projects‚ as well as the time value of money. And it compares like with like as all inflows and outflows are discounted to today¡¯s date. Also‚ the cost of capital is very unlikely to be changed over a period of time. To judge if the NPV is good‚ we should see the value of it‚ and the rule is the high the better
Premium Net present value Discounted cash flow Time
minimum amount of return on a project the company is willing to accept before starting a project. It is used in project evaluation to evaluate the amount of return on the project. A common method for evaluating the hurdle rate is apply the discounted cash flow method to the project‚ like net present value. 2. How does Teletech Corporation currently use the hurdle rate? They used it based on the firm’s rating‚ beta‚ cost of capital‚ and they calculated WACC of 9.3% for the whole corporation
Premium Net present value Weighted average cost of capital Internal rate of return
faster with SS or with IB as a partner? Can SS achieve better margin enhancement with BV or SS as a partner? Can IB create more incremental value at BV or SS? © 2013 HARVARD BUSINESS SCHOOL PUBLISHING 3 VALUATION EXERCISE: BASE CASE STOCK PRICES You were asked to perform a DCF valuation for Bel Vino (and/or Starshine) Based on public
Premium Harvard Business School Harvard University Business school
$5‚904 to $5‚678 billion C) PacifiCorp’s bid of $5.1 billion in cash and 4.3 billion in liabilities and preferred stock equals $9.4 billion which is out of range for the ranges written in question 2 above. $9.4 billion is higher than $9‚289 billion. This means that Warren must think the intrinsic value of the company is higher than what the market value and book value. The present value is based of the Discounted Cash Flows model which is $4.76 billion. D) E) Warren Buffett’s perspective
Premium Net present value Discounted cash flow Cash flow
enabled Sealed Air to have $54 million in cash. Because there was no profitable project available‚ Sealed Air managers decided to use Leveraged Recapitalizations to provide large payout to shareholders. Leveraged Recapitalizations was a good idea for the Sealed Air Corporation’s shareholders and the company. The reasons are as follows: (1) Benefit the shareholders A year after Sealed Air implemented the WCM‚ it had $54 million in cash and expected the cash to double in the next year and a half
Premium Corporate finance Money Free cash flow
(Points : 5) Evaluation of alternatives Coding Training Maintenance Question 3. 3. (TCO C) Mini Corp. acquires a patent from Maxi Co. in exchange for 2‚500 shares of Mini Corp.’s $5 par value common stock and $75‚000 cash. When the patent was initially issued to Maxi Co.‚ Mini Corp.’s stock was selling at $7.50 per share. When Mini Corp. acquired the patent‚ its stock was selling for $9 a share. Mini Corp. should record the patent at what amount? (Points : 5)
Premium Stock Income statement Discounted cash flow
period during 2000-2005 (note the project starts in 2000). Numbers used in the Appendix A and B are drawn directly from Case Exhibits 3-7. AAR will be calculated as indicated in Case Exhibit 2‚ and NPV and IRR calculations will be based on Discounted Cash Flows including Interest Payments (because in Exhibit 7‚ OL seems to include Interest in their calculations). Case Background The case describes how the OL management team was eager to expand the business beyond its Disneyland enterprise in Japan
Premium Net present value Internal rate of return Discounted cash flow
Aqua Bounty Case Analysis Aqua Bounty‚ a US-based biotechnology company that has been dedicating itself to commercialization of genetically modified salmons‚ is right standing at the cross of its future paths. This analysis would utilize financial models to help value the firm ahead of its IPO‚ in consideration of given senarios and a series of market assumptions. Situation Sketch By the moment when it was spun off its parent company into an independent entity in March 2000‚ Aqua Bounty had invested
Premium Income statement Revenue Inventory
shareholder’s objective; get good return and safety of their capital. If profit maximization is an objective of a business‚ wealth maximization is the tools to maintain the objectives. Wealth equals to present value of cash flows substracted by cost. Since wealth maximization is based on cash flow‚ it can avoids any ambiguity in accounting the profit. While profit maximization is based on profit‚ it is kind of hazy. There are many kind of profit It can be gross profit‚ net profit‚ before the tax profit‚
Premium Economics Discounted cash flow Time
for XYZ Manufacturing Company if Free Cash Flows in 2013 are $678‚ WACC= 12.5%‚ and growth rate is 4%. Assume growth is expected to be constant after 2013. $12‚245.67 $3‚231.31 $8‚295.53 $375.28 $19‚231.45 3. award: 1.00 point National Electric Company (NEC) is considering a $40 million project in its power systems division. Tom Edison‚ the company’s chief financial officer‚ has evaluated the project and determined that the project’s unlevered cash flows will be $2.6 million per year in perpetuity
Premium Weighted average cost of capital Finance Discounted cash flow