A. $100 B. $200 A. Each investment costs $480. What investments should the firm make according to the present value? PVIF: Yr1 .909‚ Yr2 .826‚ Yr3 .751 A. $300(.909) + 200(.826) + 100(.751) = $513 $513 ‑ 480 = $33 B. $200(.909) + 200(.826) + 200(.751) = $497 $497 ‑ 480 = $17 Both investments have a positive net present value‚ so both would be a good investment. B. What is the internal rate of return for the 2 investments? Which investment
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the chapter is to distinguish solvency from liquidity. The former concerns whether assets exceed liabilities‚ whereas liquidity refers to the firm’s ability to meet short-term obligations with cash while remaining a going-concern.1 The major empha1 The going-concern principle involves the firm’s ability to remain as a viable business. Hence‚ solvency violates the going-concern principle as selling off assets to repay sis of the chapter centers on the cash conversion period‚ which is the
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Task 2: Assessing the sources available to the businesses (a critical analysis of short term‚ midterm and long term financing) Finance is the bloodline of any business‚ and firms must try to tap every possible source of funds available. These sources can be either available externally or internally‚ as a Financial Manager the key is to explore these opportunities and exploit them. In our case study for BOATLINE Limited‚ various businesses finance available can be broadly classified into: a.) Internal
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Part e. Estimate the required net working capital for each year and the cash flow due to investments in net working capital. The firm needs to increase its net working capital by 12% of incremental sales revenues. This amount is needed in the year before the sales revenue is earned. The amount for year 0 is 12% x $250‚000 = $30‚000.00‚ and that for year 1‚ 2‚ and 3 are $30‚900.00‚ $31‚827.00‚ and $32‚781.81 respectively. The cash flow due to the changes in the working capital is shown in Table 2
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Current and Noncurrent Assets Paper Johnnie Kersh September 08‚ 2014 ACC/400 Kylene Smith What is an asset? An asset is an item that is owned by customers and businesses. It has an economic value that can be converted into cash and help repay debts. It also tells how much a business has in value. Accounts receivables‚ cash‚ and securities are some examples of assets. Assets are equal to the sum of liabilities‚ common stock‚ preferred stock‚ and retained earnings that
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Rf +β (Rm – Rf) = 0.0853+0.928(0.05) = 13.17% Through this rate we will further find out the present value of the revenue generated through sales by the company. Year Sales (Rs. in Cr.) Present Value (Rs. in Cr.) Discount Rate 2007 478.1 478.1 13.17 2008 524.4 461.173 2009 546.3 422.5 2010 851.0 578.8 2011 937.8 560.9 2012 1290.2 678.6 3180(approx.) Now taking the average of this value we get Rs. 530 Cr. Considering this to be the consolidated revenue per year we can say that the total
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! !! CHAPTER 21! Sample Exam Questions! ! 1. [CPA Adapted] If the algebraic sum of the present values of all cash flows related to a proposed capital expenditure discounted at the company’s required rate of return is positive‚ it indicates that the! A. resultant amount is the maximum that should be paid for the asset.! B. discount rate used is not the proper required rate of return for this company.! C. investment is the best alternative.! D. return on the investment exceeds the company’s required
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$43. o Borrowed $300 million against Mesa securities‚ and made an offer of $65/share for 13.5 million shares‚ which would increase Mesa ’s holdings to 21.3%. o Under the re-incorporation‚ they would have to borrow an amount many times the value of Mesa ’s net
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Chapter One Basic Areas of Finance: 1. Corporate Finance = Business Finance 2. Investments a. Work with financial assets such as stocks and bonds. b. Value of financial assets‚ risk verses return and asset allocation. c. Job opportunities. 3. Financial Institutions a. Companies that specialize in financial matters. i. Banks – Credit unions‚ savings‚ and loans. ii. Insurance Companies iii. Brokerage Firms b. Job Opportunities. 4. International Finance a. An area of specialization within each of the
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using various financial ratios; for the benefit of potential shareholders‚ lenders or suppliers. The report also indicates how non-financial performance indicators can help an organisation measure performance. This report will also look into the net present value method of appraisal‚ and explain its advantages and disadvantages. 2.0 Main Content The focus of the first part of this report is to analyse the performance of the ITE Group. The “ITE is one of the world’s leading organisers of international
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