Formulas Midterm Cost of Capital 1.1 Basic Formula [pic] The Equity-Beta is the covariance of the stock-return with the market-return 1.2 Betas Non Investment Grade (< BBB) The Equity-Beta can be analyzed as follows: [pic] The Equity-Beta is a function of the risk of a firm’s assets (operating risk) and the amount of financial leverage. [pic] An Asset-Beta (= unlevered Beta) reflects a firm’s operating risks without the effects of leverage. The Debt-Beta is
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Myers The accompanying table summarizes Johnny’s NPV calculation. He assumed Marsha would take 25 100-mile trips per year‚ saving $200‚ plus $1.00 per mile‚ plus a $40 tip on every trip. Operating costs would be $.45 per mile. The net savings are $295 per trip and $7375 per year. These savings increase with inflation at an assumed rate of 4% per year. It seems that Marsha’s horse transporter was a good buy after all: NPV is positive (+ $14‚325). MINICASE SOLUTIONS THE JONES FAMILY’S
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A STUDY ON “CAPITAL BUDGETING” WITH REFEREENCE TO BHARAT HEAVY ELECTRICIAL LIMITED A project report submitted in partial fulfillment of requirments for the awards of degree of MASTER OF BUSINESS ADMINISTRATION BY DEPARTMENT OF BUSINESS MANAGEMENT SRI INDU INSTITUTE OF MANAGEMENT (AFFILIATED TO OSMANIA UNIVERSITY) 2007-2009 ACKNOWLEDGEMENT My sincere thanks are due to all who have helped me in various ways in the course of the project. I am deeply grateful to MR.P.V.ARUN KUMAR for giving
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question that needs answering is whether the proposed project is financially feasible. Our calculations will show that‚ yes‚ the Net Present Value (NPV) of this project is positive. NPV is a stable measure to determine if a project is financially sound. Therefore‚ the foremost criteria used to determine whether or not Diamond Chemicals should allocate monetary resources to renovate its Merseyside plant is the NPV rule which states that a project should be accepted if its Net Present Value is
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would be to replace the Conway with a new diesel powered boat. I assumed no operating costs in 1950 and that Economy was still up and running during this time‚ the cost pertaining to the project didn’t come into effect until 1951. Also the NPV calculations at the beginning of the year showed that any upgrade would not cause any issues with the daily operations. A standard 10% rate of return was assumed for each option‚ the debt-to-equity ratio in 1950 was 0.075‚ proving that Economy could indeed
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Introduction Schering Plough is a large pharmaceutical company who is about to lose the patent to its largest revenue generating drug‚ Claratin. The loss of exclusive rights to this product could decrease Schering Plough’s revenue by over 90%. Schering Plough in hindsight of what will become of their financial position with the expiration of this patent has decided that it must develop a new product which uses Loratadine‚ the main component of Claratin. The two drugs the company wishes to
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NEW HERITAGE DOLL COMPANY Capital Budgeting NEW HERITAGE DOLL COMPANY Capital Budgeting Brief Case Brief Case Brief Case Brief Case Brief Case Brief Case Brief Case Brief Case To: CFO (New Heritage Doll Company) From: Date: 11/16/12 RE: NEW HERITAGE DOLL COMPANY To: CFO (New Heritage Doll Company) From: Date: 11/16/12 RE: NEW HERITAGE DOLL COMPANY Here a composite report is advanced on the toy industry‚ New Heritage Doll Company and the evaluation of
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calculated the present value of the future Free Cash Flows until 2006. After that‚ based on the assumption that after 2006 CF would grow at 5%‚ we estimated the terminal value of the company. Finally‚ based on these assumptions‚ the NPV of the project would be: 1228‚485 2. What is the Internal Rate of Return (IRR) of this project? The internal rate of return is the rate that would make the net present value of the firm’s project equal to zero. In other words‚ the IRR is the
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Title Page Number 1.0 Executive Summary 1 2.0 Sales Forecast 2.1 Sales Forecast 2.2 Methods and Assumptions 2 3.0 Capital Expenditure Budget 3 4.0 Investment Analysis 4 4.1 Cash Flows 5 4.2 NPV Analysis 5 4.3 Rate of Return Calculations 5 4.4 Payback Period Calculations 6 5.0 Pro Forma Financial Statements 5.1 Pro Forma Income Statement 7 5.2 Pro Forma Balance Sheet 7 5.3 Pro Forma Cash Budget 8 6.0 Works Cited 9 7.0 Appendices 10 7.1 Appendix 1: [Sales Budget]
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|Case 9 | |Performance Boating Products‚ Inc. | Performance Boating Products‚ Inc I. Situation Analysis • Performance Boating Products‚ Inc (PBP) manufactures attachments for boat hulls and motors that aid watercraft in reducing drag and maintaining ‘plane’. • PBP attachments can be integrated as part of new
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