Capital Asset Pricing Model (CAPM) Versus the Discounted Cash Flows Method Managerial Analysis/BUSN 602 Capital asset pricing model or CAPM is a financial model that measures the risk premium inherent in equity investments like common stocks while Discounted Cash Flow or DCF compares the cost of an investment with the present value of future cash flows generated by the investment with the mindset being that if the cash flow is positive‚ then the investment is good. Generally speaking‚ CAPM is
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for 2012 OCF = {Earnings before Interest and Taxes × (1 – Tax rate)} + Depreciation OCF = {EBIT × (1 – T)} + Depreciation = {$89 000 × (1 – 0.20)} + $11 000 = $82 200 Free Cash Flow (FCF) for 2012 FCF = OCF1 – Net Fixed Assets Investments – Net Current Assets Investment FCF = OCF – NFAI – NCAI NFAI = Change in net fixed assets + Depreciation = ($132 000 – $128 000) + $11 000 = $15 000 NCAI = Chance in current assets – Change in (Accounts Payable + Accruals)
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Auction: Only way of allocating natural resources to private firms? Auction: Only way of allocating natural resources to private firms? “Is Auction the right way of allocating natural resources?” Time and again this question has come into limelight. Many scams still make us debate on this. Whether it is the 2G spectrum allocation scam or allotment of oil or Coalgate scam? Before getting into this debate lets first try to understand the rationality behind the allocation of natural resources
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the amount of cash available from operations for distribution to all investors (including stockholders and debtholders) after making necessary investments to support operations. The Free Cash Flow (FCF) is important because a company’s value depends upon the amount of FCF it can generate. The 5 uses of FCF are: * To pay interest on debt * To pay back principal on debt * To pay dividends * To buy back stock * To buy nonoperating assets (e.g.
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sources. They argue that First-Come-First-Serve (FCFS) queuing is not adequate; more discriminating queuing algorithms must be used in conjunction with source flow control algorithms to control congestion effectively in noncooperative environments. While designing algorithm they consider mainly three things 1) bandwidth‚ 2) promptness‚ and 3) buffer space. They conduct tests using six different scenarios comparing FQ against FCFS using generic‚ Jacobson and Karels (JK)‚ and DECbit
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ACCT1501 ACCOUNTING & FINANCIAL MANAGEMENT 1A SEMESTER 1 2008 COURSE NOTES Last Revised: 13th August 2008. kaheiyeh.web.officelive.com Contents Page 3: The Nature of Accounting Page 5: The Balance Sheet & Transaction Analysis Page 8: The Income Statement & Transaction Analysis Page 13: Financial Reporting Principles Page 18: Adjustment to Accounting Entries Page 23: Completing the Accounting Cycle Page 26: Accounting for Cash Holdings & Receivables Page 30: Accounting for Inventory Page 37:
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FINS3625 APPLIED CORPORATE FINANCE Case Study Written Report Week 8 Valuation: Laura Martin Name Student Number % Contributio n 20 20 20 20 20 Signature Karen Chan Yifeng Chen (Nino) Tony Richardson Weitao Wu (Tony) Wendy (Wenyu) Yan z3242429 z3283995 z3253113 z3284666 z3241580 1 Multiples versus DCF analysis Multiples analysis is simple to understand and apply. The inputs for the multiple are publicly available‚ though are vulnerable to accounting manipulation. Also
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Part 1: In 2000‚ Radio One‚ Inc. sees strategic opportunity in the opportunity to grow through acquisition‚ following a Clear Channel divestiture mandated by the FCC. The divestiture poses the opportunity to Radio One to acquire twelve (12) urban stations that are in the top 50 African American markets in the U.S. Even though the company saw tremendous growth through acquisition over the prior decade‚ this unique situation has the potential to generate significant shareholder value and further
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Overview The footwear industry is a mature‚ very competitive with low growth and stable profit margins. Active Gear‚ Inc. is a privately held footwear company which is a profitable firm in the industry with $470.3 million revenue in 2006. West Coast Fashions‚ Inc is a large business of men’s and women’s apparel decided to dispose of one of their divisions: Mercury Athletic with $431.1 million revenue in 2006. AGI is very profitable but it is smaller than other competitors‚ which is becoming a competitive
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Cash Flows Revised by C. Chang. Copyright 1996 by The McGraw-Hill Companies‚ Inc OUTLINE n n n n n n n What is FCF? FCFF? FCFE? How Do You Calculate FCFF? FCFF Calculation– the CFO Method FCFF Calculation– the EBIT Method Equivalence: FCFF(CFO) vs FCFF(EBIT) Free Cash Flow to Equity (FCFE) Free Cash Flow Example What is FCF? FCFF? FCFE? n Free Cash Flows to Firm (FCFF) n The cash produced by the business activities of a firm available for distribution
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