Financial management L. Fung AC3059‚ 2790059 2012 Undergraduate study in Economics‚ Management‚ Finance and the Social Sciences This is an extract from a subject guide for an undergraduate course offered as part of the University of London International Programmes in Economics‚ Management‚ Finance and the Social Sciences. Materials for these programmes are developed by academics at the London School of Economics and Political Science (LSE). For more information‚ see: www.londoninternational
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repair one of its’ steam boats or replacing it with a new diesel-powered vessel. After evaluating the different scenarios presented in the case‚ it is our recommendation that ESC should rent a diesel-powered boat. This decision was based on a Net Present Value (NPV) analysis on six different scenarios. Each scenario and its respective NPV is summarized below: Scenario 1. Rehabilitation of Cynthia - selling existing parts & converting to stoker firer 1950 2. Rehabilitation of Cynthia - using existing
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per share (EPS). Optimizing shareholder’s wealth is the optimum goal and therefore‚ this approach analyzes the high EPS based on an expected range of earnings before income taxes (EBIT). 2. Valuation: Determines impact of debt use on shareholder’s value by determining the level of debt at which the benefits of increased debt no longer outweigh the increased risks and expenses associated with financing (Wenk‚ 2012) 3. Cash Flow: Analyzes a firm’s debt capacity by using the weighted average of cost
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EVQUES T3 SuB 2011 Key 1. In a recent period 12‚250 units were made and there was a favorable labor efficiency variance of $22‚500. If 41‚000 labor-hours were worked and the standard wage rate was $12 per labor-hour‚ the standard hours allowed per unit of output is closest to: A. 3.19 B. 3.35 C. 3.50 D. 6.00 [pic] AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom ’s: Analysis Brewer - Chapter 09 #40 Learning Objective: 3 Level: Hard Source: CIMA
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Leverage 2.4 2.14 Financial Leverage 1.11 1.07 Combined Leverage 2.66 2.29 2. You are analyzing the beta for ABC Computers Ltd and have divided the Company into four broad business groups‚ with market values and betas for each group. Business group Market value of equity Unleveraged beta Main frames Rs 100 billion 1.10 Personal Computers Rs 100 billion 1.50 Software Rs 50 billion 2.00 Printers Rs 150 billion 1.00 ABC Computers Ltd had Rs 50 billion
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Net Present Value (NPV) Net present value is the present value of net cash inflows generated by a project including salvage value‚ if any‚ less the initial investment on the project. It is one of the most reliable measures used in capital budgeting because it accounts for time value of money by using discounted cash inflows. Before calculating NPV‚ a target rate of return is set which is used to discount the net cash inflows from a project. Net cash inflow equals total cash inflow during
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flow (DCF) methods: the net present value (NPV) method and the internal-rate-of-return (IRR) method 4. Use and evaluate the payback method (PB) 5. Use and evaluate the accounting rate-of-return (ARR) method 6. Income taxes and capital expenditure analysis 7. Post-completion audits Capital Budgeting • Capital budgeting involves investment decisions in projects that spans multiple years. – A good investment decision • One that raises the current market value of the firm’s equity‚ thereby
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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 the covariance of a firm’s debt with the market. A relevered Beta is the Equity-Beta of a firm with a new capital structure‚ underlying the old Asset-Beta. 1.3 Betas Investment Grade (>= BBB) [pic] [pic] Debt-Beta
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BY :SUMIT JAIN EMAIL:vaibhav4u38@rediffmail.com CHAPTER ONE FINANCIAL MANAGEMENT : AN OVERVIEW |Question : What do you mean by financial management ? | Answer : Meaning of Financial Management : The primary task of a Chartered Accountant is to deal with funds‚ ’Management of Funds’ is an important aspect of financial management in a business
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Summary i I. Privatization 1 II. Forms of Privatization 1 III. Privatization around the World 3 IV. Reasons for Privatization 4 V. Valuation of Assets 7 VI. Privatization Examples 9 VII. Issues Associated with Privatization VIII. Conclusion 19 21 TABLES: 1 2 3 4 5 Risk Distribution in Various Delivery Systems Net Present Value Example Internal Rate of Return Example Illinois Tollway Revenues and Expenses Prisoners Held in Private Facilities 5 8 8 11 14 APPENDIX: A B C Weighted
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