Chapter 9 Cost of Capital 1. What is the WACC? a. Weighted Average Cost of Capital- most firms employ different types of capital‚ and because of their differences in risk‚ the difference securities have different required rates of return. Typically=debt‚ preferred stock and common equity. 2. What precautions must we take when measuring the WACC to use for capital budgeting decisions (future investment)? b. The company’s current and recent past book and market value structures
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The Good‚ The Bad‚ The Wal-Mart Wal-Mart is one of the largest companies in the U.S. is Wal-Mart really what we need? Wal-Mart is a discount store that is bad for America and the economy and other smaller company that may be competition for Wal-Mart. Wal-Mart is a big company and offers people discounts for the same products another companies may be charging higher for. So of course you would rather buy it cheaper‚ which now is putting the other business out of business and also people that
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If Venerus implements the suggested methodology‚ what would be the range of discount rates that AES would use around the world? * 12% discount rate was used for all projects * Venerus felt that this model worked fairly well * In 1990s this model of capital budgeting was exported to projects overseas * model became increasingly strained with the expansions in Brazil and Argentina * because hedging key exposures such as regulatory or currency risk was not feasible
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Improve your - Excel - Office.com Page 1 of 5 Support / Excel / Excel 2003 Help and How-to / Excel for your job / Finance Improve your capital budgeting techniques Applies to: Microsoft Office Excel 2003‚ PowerPoint 2003 By BearingPoint Capital budgeting is a financial analysis tool that applies quantitative analysis to support strong management decisions. Using capital budgeting analysis‚ you can explain: l l l The benefit impact of an investment decision over time The cost impact
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000 | 2 | $120‚000 | 3 | $850‚000 | If the discount rate is 0%‚ what is the project’s net present value? Year | Cash flow | Discount rate | Discount factor | Discounted cash flow | 0 | -$400‚000 | 0% | 1.00 | -$400‚000 | 1 | $100‚000 | 0% | 1.00 | $100‚000 | 2 | $120‚000 | 0% | 1.00 | $120‚000 | 3 | $850‚000 | 0% | 1.00 | $850‚000 | | | | Net present value | $670‚000 | If the discount rate is 2%‚ what is the project’s net present value? Year | Cash flow | Discount rate
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Good or Bad? Do you ever wonder if you are good or bad? The potential for evil scares many people. Most people these days strive to be the best they can be. They want to have excellence and do the best to their ability‚ but they do evil acts that make them the total opposite. Throughout history humans have shown that they can be evil; however‚ there are more people that possess a trait of being good. There are many ways people can be depicted as being “good”. One of those ways would be someone
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George ’s Trains: A Conservative Approach Sandra Boyadjian Ashford University Managerial Finance BUS 650 Richard Barrett December 7‚ 2014 George ’s Trains: A Conservative Approach This paper’s objective is analyze the practice of George ’s trains as it pertains to evaluating capital budgeting. Based on the video abstract‚ this paper will identify possible pitfalls‚ which may affect the business performance of the George’s Trains. Furthermore‚ this paper will deliver a statement of cash flow based
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Strategy AES distinguishes itself through developing new products and applications at a low cost. It is committed to social responsibility and empowering its employees through its four main principles which include integrity‚ fairness‚ social responsibility and fun. It is "different" from other corporations because AES is focused on retaining its core values and culture as the corporation expands in size. The company ’s sources of sustainable competitive advantage include technical leadership
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Good Action/Good Person I consider a good action to be something that helps others and is unselfish. Within the last year I have helped my Grandma through her cancer treatments. I believe that this is a good action because it was helping my Grandma in a time of need when she needed an extra hand. I took time out of my school schedule in order to help her get to and from the treatments‚ helped her around the house and visited with her giving moral support. I would get up early and drive her to the
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UGANDA MANGEMENT INSTITUTE Public Policy and Governance Module: Public Budgeting and Good Governance QUESTION: Budgeting process is a waste of time and valuable resources. Evaluate this statement. A budget is a plan for financing an enterprise or government during a definite period‚ which is prepared and submitted by a responsible executive to a representative body (or other duly constituted agent) whose approval and authorization are necessary before the plan may be executed. In the
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