OVERVIEW OF CORPORATION Lesson 1 Chapter 1 : Outline 1.1 What is Corporate Finance ? Some important questions that are answered using finance • What long-term investments should the firm take on? • Where will we get the long-term financing to pay for the investment? • How will we manage the everyday financial activities of the firm? Financial Manager Financial managers try to answer some or all of these questions The top financial manager within a firm is usually the Chief
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coupon and the rate (%) is the coupon rate. Premium/Discount - When you buy a bond you may pay a premium to acquire that bond or alternatively you may buy the bond at a discount. Where this occurs‚ the amount actually paid for the bond is greater (where it is acquired at a premium) or less (where it is acquired at a discount) than the face value of the bond. Whether you can acquire a bond at a discount or will have to pay a premium to acquire it will depend on how the coupon/interest rate being paid
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Problems In reviewing the case of New Balance Athletic Shoe‚ Inc. it is clear that there are a few major problems that the company is facing. First of all‚ New Balance falls behind its other major competitors‚ Nike‚ Adidas and Reebok‚ in the area of marketing. Unlike its competitors‚ New Balance does not undertake celebrity endorsements. This puts them at a disadvantage when it comes to brand building. This also causes the company to lose out somewhat on gaining awareness on a global scale as it
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“hurdles” will be used to evaluate if the capital expenditure proposal for Merseyside Works should go ahead. These being: * Impact on earnings per share * Payback Period * NPV of the project (Discounted Cash Flow method) * Internal Rate of Return Background Victoria Chemicals is a major competitor in the world wide chemical industry and a leader in producing polypropylene. Victoria Chemicals was under pressure from investors to improve its financial performance because of
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Management. A. In your judgment‚ what were the principal causes of the recent financial crisis and Great Recession? Would you include Government policies that encouraged housing purchases for those who could not afford them‚ artificially low interest rates implemented by the Federal Reserve‚ banks and mortgage brokers who were greedy‚ the failure of Government regulators to provide proper oversight to the banks and other financial institutions‚ individuals who borrowed and spent more than they should
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1. What is the return on investment for the proposed web portal project? The ROI Analysis concluded an Internal Rate of Return (IRR) of 44% (see Exhibit 14A). The IRR is larger than 12% required and it has a positive NPV. Based on the information the project can be acceptable and can be a good investment. The high IRR from the analysis hinges on optimistic projections of increasing market penetration and a steady growth in average order size. The key driver of the ROI analysis was the market
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Chapter 1: I. Key attributed of successful companies a. Have skilled people b. Have strong relationships c. Have enough funding to execute their plans and support their operations II. To be successful‚ a company must meet its first main goal a. Identifying‚ creating‚ and delivering highly values products and services to its customers. III. Corporate life cycle a. Starting up as a proprietorship i. Three important advantage 1. It is easily and inexpensively formed 2. Subject to few
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savings. Nevertheless‚ by being relatively old in his life‚ John became more risk-averse and wanted to take advantage of the new capitalization rate of 15% in his current stock position‚ and sell at most half of his current stock to finance a real estate property. This would definitely bring a more secure investment with a more defined schedule of expected returns. On the other hand‚ Judy DeRight was a bit younger than John yet currently managing her own small-sized chemical company‚ giving her an investment
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FIN370 WK3 Solutions Guide: 1. We focus on free cash flows rather than accounting profits because these are the flows that the firm receives and can reinvest. Only by examining cash flows are we able to correctly analyze the timing of the benefit or cost. Also‚ we are only interested in these cash flows on an after tax basis as only those flows are available to the shareholder. In addition‚ it is only the incremental cash flows that interest us‚ because‚ looking at the project from the point
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However‚ there are some problems such as capital costs‚ marketing cannibalization‚ discount rate used‚ etc. from different departments and divisions. The company needs to take all these factors into account and decide whether to carry out this project. The criteria for analysis include the impact on earnings per share (EPS)‚ payback period‚ discounted cash flow (NPV analysis)‚ and Internal Rate of Return (IRR). In the analysis we believe the project will benefit the Diamond Chemicals‚ and therefore
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