profit is correlated with economic profit‚ but not perfectly so. Accounting profit can be measured much more easily. b. What is the relationship between accounting rate of return and economic rate of return? Answer: The accounting rate of return is the ratio of after-tax profit to average book investment. Economic rate of return is the ratio of after-tax economic profit to the market value of the investment. Economic profit equals cash accruals to the asset combined with changes in its market
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FINAL EXAMINATION: BUSINESS 312 Instructions: This examination is open book and open notes. Time limit is exactly 3 hours‚ no extensions. Return this question sheet with your answers. 1. (10 marks) Consider two firms that are identical other than their share prices‚ their dividend growth rate‚ and their rates of return on equity. Which of these two firms has the greater dividend yield? Explain. Use no numerical examples in your answer. 2. (10 marks) A public firm is considering
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Introduction to Standard Costing Standard costing is an important subtopic of cost accounting. Standard costs are usually associated with a manufacturing company’s costs of direct material‚ direct labor‚ and manufacturing overhead. Rather than assigning the actual costs of direct material‚ direct labor‚ and manufacturing overhead to a product‚ many manufacturers assign the expected or standard cost. This means that a manufacturer’s inventories and cost of goods sold will begin with amounts reflecting
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discount rate should Worldwide Paper Company (WPC) use to analyze those cash flows? Be prepared to justify your recommended rate and the assumptions that you used to estimate it. We first used the 15% discount rate to calculate NPV and the Cash Flows by using that discount rate we ended up with a negative NPV of $ (2‚137‚217.21). We determined that the discount rate of 15% was out dated and insufficient. Therefor to calculate a more accurate NPV for the project‚ we decided to use the rate of 9.62%
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impact category- financial‚ legal‚ dilution of control‚ and bankruptcy). The sources of finance available for a business include loans from bank. This source of finance is open to all kinds of business. Long-term bank loan offers money to business in return to a regular payment and a security on the loan‚ for example a building. The implication of this source of finance are financial because‚ the organization will need to pay interest therefore‚ the business profit will be affected directly‚ the higher
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Project‚ we must use the estimated cash flows calculated to derive a decision based on a particular capital budgeting technique. Within this report we have considered the Accounting Rate of Return‚ the Payback Period‚ the Internal Rate of Return (IRR) and the Net Present Value (NPV) techniques. The accounting rate of return is defined as the average after-tax profit divided by the average invested capital. The average invested capital for the Super Project is simply the average of the $200‚000.00 initially
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1. Introduction Beer is the most widely consumed alcoholic beverage and it is oldest prepared beverage in the world; the beer is third most popular after water and tea. The big two breweries that are Carlsberg Brewery Malaysia Berhad(CBMB) and Guinness Anchor Berhad(GAB) in malaysia. Strengths and weakness of Carlsberg Brewery Malaysia Berhad The strengths of Carlsberg Malaysia are that brand image‚ strong financial position quality and distribution network. The Carlsberg Group has a long tradition
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We are going to link the present and the future by using the notion of interest rate that could be called discount rate‚ required rate of return or cost of capital. Finance is all about cash flows but more precisely about the exact date of the realization of the cash flow. I) PRESENT VALUE Example 1: What is the value today of $110 to be received in one year? - suppose the interest rate ‚ r =10% - if you had the money today you could : o put in the bank
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need only enter a few key variables regarding the investment and the spreadsheet automatically analyzes its attractiveness. Three traditional investment appraisal methods are used by the IAT. They include: • Pay-back Period • Internal Rate of Return (IRR) • NPV Included in the IAT are two spreadsheets with slightly different functionality. They are named: 1). Automated 2). Manual The main difference between these two worksheets lies in the way each creates
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value (NPV)‚ internal rate of return (IRR) and modified internal rate of return (MIRR) all offer particular strengths and weaknesses. The payback period is the simplest capital budgeting method and helps determine how long it will take to pay back a projects initial investment by focusing on cash flows during the payback period. While this
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