the life of the project and commit the firm to a particular course of action over a relatively long period of time. As such‚ they are costly and difficult to reverse‚ both because of: (1) their large cost and (2) the fact that they involve fixed assets‚ which cannot be liquidated easily. 2. Why is it difficult to find exceptionally profitable projects? It is hard to find extremely profitable projects‚ because it is hard to keep competition out. Profitability attracts competition‚ and unless
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acquisition. Linda wade‚ smitty’s treasurer and your boss‚ has been asked to place a value on a potential target‚ hill’s hardware‚ a small chain that operates in an adjacent state‚ and she has enlisted your help. The table below indicates wade’s estimates of hill’s earnings potential if it came under smitty’s management (in millions of dollars). 2001 2002 2003 2004 NET SALES $60.0 $90.0 $112.5 $127.5 COST OF
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3‚870.0 3‚499.7 3‚830.1 2‚118.0 (3) Enterprise (1)(2) EBITDAX Company Name Chesapeake Energy Corporation Anadarko Petroleum Occidental Petroleum Corporation Apache Corporation Devon Energy Corporation EOG Resources‚ Inc. Value Value $ 15‚489 $ 29‚710 28‚937 40‚880 61‚989 64‚381 32‚252 37‚384 28‚999 37‚353 22‚289
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MASTER IN ECONOMICS OF BANKNG AND FINANCE MEBF 5th ______________________________________________ SUBJECT: COMPANY VALUATION CASE STUDY: BIOTECHNOLOGY S.A Prepared by: Tran Ngoc Minh (MEBF 5th) Assignment: Company Valuation Case Study: BioTechnology Student: Tran Ngoc Minh – MEBF 5th TABLE OF CONTENT I. Introduction of company valuation methods and process........................................................3 1. Abstract.........................................................
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be used as criterion for acceptance or rejection of a project in capital-budgeting analysis. The project’s initial outlay cost equals $8‚100‚000. The net present value is $15‚955‚500. The internal rate of return is 76.16%. After careful consideration of these values‚ it is in the best interest of the firm to accept this project. The net present value is positive or greater than zero and the internal rate of return is greater than the required rate of return 15%. This is to be considered a “good”
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Seattle present an investment seminar to the mayors of the represented cities‚ and Strother and Tibbs‚ who will make the actual presentation‚ have asked you to help them by answering the following questions. What are the key features of a bond? Par value - face amount‚ paid at maturity Coupon interest rate - Stated interest rate Maturity length - years until bond must be repaid Issue date - Date when bond is issued Default risk - Risk that issuer will not make interest payments Call provisions
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6 1 =(250‚0 00*1/21 )=11‚90 5 138‚095. 00 0 8.6% 2.a. Explain the mechanism of calculating the present value of cash flows.What is annuity due? How can you calculate the present and future values of an annuity due? Illustrate Ans. Money has time value: e.g. Rs 1‚000 received today is not the same after year Present value of cash flow: It shows the value of expected amount at current value. Discount rate = Inflation rate + required rate of return + risk free premium rate Details required
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Marriott Corporation Abstract Marriott Corporation has three divisions – lodging‚ contract services and restaurants – with dissimilar operations. The company uses three separate hurdle rates for the three divisions to value the proposed projects. It is believed that this strategy is more appropriate that using a single firm-wide discount rate because the operations of the three divisions differ drastically. However‚ the company has to ensure that the company uses an appropriate discount rate for
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Results Summary A combination of the three methods was used in determining the value of the Chiffon Project. The underlying determinant was that cash flows must be both incremental and predictable to be included in the cash flow analysis. The value of GF in 1967 without Chiffon was $1.85 Billion. The value of the Chiffon Project was calculated to be (-) $10.6 Million. As a result‚ the value of GF with Chiffon was calculated as the difference between the two at $1.84 Billion. Based
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What is the portfolio expected return and standard deviation? You are considering adding another stock‚ DNKN‚ with a beta of 1.3 to the portfolio. The market risk premium is 8% and the risk-free rate is 2.5%. What is the expected return of this asset? You decide to open a separate account at another brokerage firm. Your goal is to have a portfolio beta of 1.12. The portfolio consists of 20% U.S. Treasury bills‚ 50% stock A‚ and 30% stock B. Stock A has a risklevel equivalent to that of the overall
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