1. (45 points) Calculate the value of Carborundum (on an aggregate and per share basis) using both the Free Cash Flow to Capital (FCFcap) and Free Cash Flow to Equity (FCFeq) methods. Use the following assumptions: Note: Rf=5.6%; MRP=8.8%‚ Carborundum’s levered beta (prior to deal)=1.16 FCFeq=Net Income + Non Cash Deductions-Capital Expenditures-Change in Net Working Capital-Debt Repayment+ Debt Issuances + Miscellaneous Extras Answer: Value of Kennecott using FCFcap is: $53.8 Value of Kennecott
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Products‚ a closely held corporation‚ are contemplating merging the successful venture into a much larger diversified firm that operates in the same industry. ACE estimates its free cash flows that will be available to the enterprise next year at $5‚200‚000. Since the venture is now in its maturity stage‚ ACE’s free cash flows are expected to continue to grow at a 6 percent annual compound growth rate in the future. A weighted average cost of capital (WACC) for the venture is estimated at 15 percent. Interest-bearing
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some rounding errors. Good luck! ____ 1. You have just calculated the present value of the expected cash flows of a potential investment. Management thinks your figures are too low. Which of the following actions would improve the present value of your cash flows? a. extend the cash flows over a longer period of time b. increase the discount rate c. decrease the discount rate d. extend the cash flows over a longer period of time‚ and decrease the discount rate 2. The effective rate of interest will always
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account the timing of cash flows and the IRR does not. For example if you took 2 projects that required the same initial outlay and had the same cash inflows for the same period of time but one project was deferred for one year‚ using the NPV we would have different values but the IRR would give us the same. The NPV approach takes into account the scale of the project and the IRR does not. For example The NPV approach can include multiple positive and negative cash flows in its calculations whereas
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Project report on Highlights of ’Financial Management’ In Public Sector Undertakings CONTENTS 1. Introduction 2. Highlights of financial management in public sector undertakings - Budgets in Public Sector - Revised Budget - Sources of Funds in Public Sector - Role of Financial Advisor - Capital Budgeting - Working Capital Management - Financial Delegation - Financial Reporting - Profitability of Central Public Sector Undertakings 3. Role of financial management in the reforming of psu’s - Performance
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acquire? How much should Genzyme pay for its interest? We will attempt to answer these questions by first giving a brief overview of the two companies involved‚ and then by calculating the Net Present Value of the joint venture based on expected cash flows. Because we were given no operating history of the two companies‚ this is the only method we will use to determine what interest Genzyme should take in the joint venture. We will provide answers in three different scenarios: Genzyme’s estimates‚ conservative
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Cornelius‚ P.‚ A. van de Putte and M. Romani (2005)‚ Three decades of scenario planning in Shell This paper of Peter Cornelius (Cornelius‚ P.‚ A. van de Putte and M. Romani (2005)‚ ) focuses on the external environment in which companies operate. Changes in this business environment can create risk/challenges or create important new opportunities. Forecasting the future‚ usually based on the assumption that tomorrow’s world will be much like today’s will provide an inappropriate tool to anticipate
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Citect Corporation (HBS 9-209-022) Study Questions 1. Do you think TB or Schneider would create more value as the owner of Citect? 2. TB would assume what risks if they are the winning bidder? 3. Should TB continue to bid on Citect and at what price? Are the expected ROIs and IRRs to TB sufficient at your revised bid amount? (* note: a detailed evaluation model will be constructed during the class session *) Study Questions 1. Is Newell just another conglomerate? How is it organized differently
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International Project Financing In partial fulfillment of the degree of Master of Finance & Control Submitted by: Deepti Jayam Roll no 1830 Department of Financial Studies University of Delhi South Campus Internal supervisor: External supervisor: Dr. V. K. Vasal Mrs. Chetna Khuller Department of Financial Studies Head Treasury and Finance University of Delhi South Campus NIIT Lt. New Delhi. New Delhi
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following data will show a competitive advantage for CEMEX: Table1 Calculated selected indexes on the basis of Exhibit 4 | CEMEX | HOLDERBANK | LAFARGE | (A)EBITDA / ton cement | 46 | 26 | 38 | (B)CAPEX / ton cement | 7 | 11 | 18 | (C)Free Cash Flow / ton cement | 22 | 8 | 8 | (D)TEV adjusted / ton cement | 172 | 160 | 130 | (A) shows a cost advantage to CEMEX due to a good global positioning satellites systems which decreases the costs for fuel‚ maintenance and payroll. Furthermore‚ CEMEX
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