units $ 1‚000‚000.00 Less: Volume- related variable cost (500‚000.00) Non-Volume-related variable cost (300‚000.00) Cash based Earnings before interest & taxes $ 200‚000.00 Accounting strategy Given : Initial Investment : $100‚000.00 Expected share: 25% Period: Constant at 3 years Promotion outlay Expected Inflows 2‚500 units Increase @ 100 Expected Outflows VCost Increase (2‚500 units @ 50) FxCost Increase (300‚000x10%) Net Cashflows 10% DCF NPV Computation: Sales/ Per unit $ Period 0 Period
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Fonderia Di Torino 1. Please assess the economic benefits of acquiring the Vulcan Mold-Maker machine. 1.What is the initial outlay? -The initial outlay is the Net Investment of $813‚296. 2. What are the benefits over time? - The benefits over time include higher quality products‚ lower scrap rates‚ which will save raw material costs. The company will employ twenty-five less workers which equates to lower costs in terms of managing‚ training‚ and insuring those employees. Lastly the foundry
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flow item. 10-3. If a project requires an increased investment in working capital‚ the amount of this investment should be considered as part of the initial outlay associated with the project ’s acceptance. Since this investment in working capital is never "consumed‚" an offsetting inflow of the same size as the working capital ’s initial outlay will occur at the termination of the project corresponding to the recapture of this working capital. In effect‚ only the time value of money associated
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CAPITAL BUDGETING MEANING OF CAPITAL BUDGETING Capital budgeting is the making of long term planning decision for investment fixed assets and their financing. Capital budgeting decision is concerned with current investment that will pay for itself and yield an acceptable rate of return over its life span. Hampton (1992) defines capital budgeting as the decision making process by which firms evaluate the purchase of major fixed assets‚ including buildings‚ equipment. It also covers decisions to
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Assessment: Lite orange juice Project 1. Define the term “incremental cash flow”. Since the project will be financed in part by debt‚ should the cash flow analysis include the interest expense? Incremental cash flow is the additional operating cash flow that an organization receives from taking on a new project. A positive incremental cash flow means that the company ’s cash flow will increase with the acceptance of the project. Cash flow analysis should not include the interest expense. We
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|[pic] |Course Syllabus | | |School of Business | | |FIN/370 Version 7 | |
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based on various decision criteria and how to adjust for riskiness of a given project or combination of projects. Incremental after-tax cash flows are initial outlay‚ differential cash flows over the projects life‚ and terminal cash flows. Relevant information needed for an adequate project assessment from a cash flow perspective are: Initial: Purchase price; installation fees; training; inventory and related start-up costs Differential annual cash flows: Changes in earnings (before interest
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Syllabus School of Business FIN/370 Version 7 Finance for Business Copyright © 2012‚ 2011‚ 2010‚ 2008‚ 2006 by University of Phoenix. All rights reserved. Course Description This course introduces the student to the essential elements of finance for business. Emphasis is placed on financial management‚ financial markets‚ and the tools‚ techniques‚ and methodologies used in making financial decisions. Topics include: Financial planning‚ working capital management‚ capital budgeting‚ long-term
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Calculate the project’s payback period and discounted payback period at a rate of 12%. 8. A firm is considering the following mutually exclusive investment projects: Project A requires an initial outlay of $500 and will return $120 per year for the next seven years. Project B requires an initial outlay of $5‚000 and will return $1‚350 per year for the next five years. The required rate of return is 10%. What is the net present value of the project with the highest net present value? Which project
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Joint-Venture Singapore: Asian Pacific Breweries first started out in Singapore as a Joint-Venture between Heineken International and Fraser and Neave in the year 1931 and is first known as Malayan Breweries Limited. New Zealand: Asian Pacific Breweries made a 50-50 joint-venture with DB Breweries Ltd which was previously known as DB Group Ltd which is one of the two main brewers in New Zealand and also provides contract packaging services. Cambodia: Asian Pacific Breweries formed a joint-venture
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