INVESTMENT APPRAISAL Exercise1: Project K has a cost of $52‚125‚ its expected net cash inflows are $12‚000 per year for 8 years‚ and its cost of capital is 12%. a. What is the project’s PP (time thu hồi dc vốn)? b. What is the project’s DPP? c. What is the project’s NPV? d. What is the project’s IRR? a) PP = 52‚125/12‚000 = 4.34 b) 52‚125 – 12‚000/1.12 – 12‚000/1.12^2 – 12‚000/1.12^3 – 12‚000/1.12^4 – 12‚000/1.12^5 – 12‚000/1.12^6 = 2788 PV (7) = 12000/1.12^7 = 5428 DPP = 6 + 2788/5428
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Investment Appraisal: The Gamma plc case Gamma plc is considering buying a new machine to expand their production of office furniture. The machine costs £1.3 million and will last for 5 years. The scrap value of these machines is £150‚000. It is expected that the asset will be sold for this value on the last day of the fifth year‚ and that a replacement machine will then be purchased. An investment of £120‚000 in working capital will be needed initially. The projected financial data
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F9? Performance objectives 15 and 16 are relevant to this exam ADVANCED INVESTMENT APPRAISAL Investment appraisal is one of the eight core topics within Paper F9‚ Financial Management and it is a topic which has been well represented in the F9 exam. The methods of investment appraisal are payback‚ accounting rate of return and the discounted cash flow methods of net present value (NPV) and internal rate of return (IRR). For each of these methods students must ensure that they can define it‚ make
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Jacqueline Homel Course Code: CCJ15 Course name: Introduction to Crime and Criminology Assessment number: 1 Due Date: 23.04.10 Extension confirmation number: 14177 Student name: Tamara Chatterton Student number: S2736240 This essay will examine four different types of crime. These include: Property‚ Violent‚ White-collar and Internet crimes. To examine these in detail this essay will define and explain each one. It will then describe how they are measured and how data id gathered for each of them. It
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rest of our life. In this case‚ NPV is the most appropriate answer out of two or three most widely used techniques in capital decision making. While doing so we also should keep in mind two major features of NPV: 1) in monetary terms‚ NPV is the difference between today’s market value of the investment and its original cost. 2) a financial manager should always act on behalf of the interests of shareholders through distinguishing and picking up projects with positive NPV‚ since it’s very clear that the
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Investment Appraisal under Uncertainty Question a Internal Memo Date: November 15‚ 2012 Subject: Investment report To: Mr. Michael the Chief Engineer Mr. Richard the accountant Mrs. Rachel the economist From: Alex the Managing Director Hello‚ everyone‚ I would like to present an introduction and brief description of the investment project to you‚ and wish to make sense as much as possible. To begin with‚ this project
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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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Investment Appraisal – Essay Question Q3) Using quantitative and qualitative information‚ suggest which school Felix and Holly should invest in. In the case study we are told that Felix and Holly are finding it hard to decide whether to invest in a soccer school or a netball school. They can use many different investment appraisal techniques which are both qualitative and quantitative in order to identify which investment would be most appropriate or worthwhile. They need to consider the level
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(MBAZ505) The main purpose of investment is to maximize shareholders’ wealth by improving the value of the firm. Firms invest to replace existing equipment‚ for expansion‚ and for compliance with government regulations. There are three categories of investment decisions: acceptance or rejection‚ ranking of projects‚ and choosing between projects. To assess whether it is viable to invest or not the NPV technique can be used to compare the present value of returns and costs. If the NPV is negative it implies
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TYPES OF INVESTMENT FOREIGN DIRECT INVESTMENT: Foreign direct investment includes "mergers and acquisitions‚ building new facilities‚ reinvesting profits earned from overseas operations and intra company loans. Foreign direct investment refers just to build new facilities. FDI is defined as the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor. FDI is the sum of equity
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