not be the only method used for this project. The figures in the attached benefit and value proposal does indicate that the project will cost roughly $1‚000‚000.00 - $2‚000‚000.00 just to acquire the CRM system and another $1‚000‚000.00 for all implementation‚ up-training ‚ maintenance‚ etc. There are so many other methods that may be used whether it is a payback period or net present value or a net present value and payback period combined‚ the Board is encouraged to investigate or entertain future
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PETRA Group Companies • Located at Melaka and Terengganu • By 2001‚ the academy had 195 staff (89 administraton & 106 in training) VISION • a leader in the maritime education and training MISSION • to provide value added learning and provide excellent service to its clients; value added learning • a learning and development strategy that meets both the current and future needs of an organization Accounting System • Before 2001‚ relied on a customized single-user system • The academy’s desktop
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Corporate Finance Capital Budgeting Course Outline CAPITAL BUDGETING Course outline Key Principles in Capital Budgeting: Criteria for Investment Projects Net Pesent Value Internal Rate of Return Payback Profitability Index Finding Cash Flows Maria Ruiz 1 Financial Management Financial management is largely concerned with financing‚ dividend and investment decisions of the firm with some overall goal in mind. Corporate finance theory has developed around the goal of shareholder
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project based on the results of a Net Present Value Analysis. Assuming that the required rate of return is 15% and the initial cost of the machine is $3‚000‚000. Required rate of return 15% Year Cash Flow 0 $ (3‚000‚000) 1 $ 1‚100‚000 2 $ 1‚450‚000 3 $ 1‚300‚000 4 $ 950‚000 1. What is the project’s IRR? (10 pts) = 22.38% 2. What is the project’s NPV? (15 pts) = $450‚867.00 Computation of Net Present Value Year Cash Flow Present Factor @ 15% Present Value 1 $ 1‚100‚000 0.8696 $ 956‚522
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Approximately how much would that investment be wonh today: $1‚000‚ $10‚000‚ $100‚000‚ or $1‚000‚000 ’1 (b) Whm if the inlerest ratc were 669 ’0? 2. (The 72 nile) The number ot years II required for an investment 1.11 imerest rate I to double in value musl satisfy (1 + I yl = 2 Using In 2 = 69 and the approximation In( I + I ) ~ I valid ror small" show that /I ~ 69/i‚ where i is the interest rate percentage (that is. i = 100‚) Using the better approximation In( 1 +‚ ) ~ ‚ - !/2‚ show that lor‚ ~
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Fundamentals of corporate finance (European edition) by David Hillier Quartile 4 IBA Chapter 1 - 14 Chapter 1 Introduction to corporate finance 1.1 Corporate finance and the financial manager Corporate finance must be considered with three basic types of question: 1. What long-term investments to make 2. Where will we get the money for those investments from 3. How will we manage everyday financial activities 1. What long-term investment to make: To process of planning and
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Products and Systems | ROC | 9.10% | 11.0% | Book Value | $11.4 Billion | $4.6 Billion | Market Value | 75% | 25% | Growth | Revenue grew 3% in last 4 years | Sales grew 40% last year | The approach to a long-term solution for Teletech Corporation required a new WACC calculation of each business segment and a final determination when it comes to using the current hurdle rate or a risk-adjusted hurdle rate. Also a review of Teletech’s value creation formula of economic profit used to make strategic
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the benefits over time? What is an appropriate discount rate? Does the net present value (NPV) warrant the investment in the machine? Assume that with ordinary maintenance‚ the semi-automated equipment could be operated for two more years beyond its depreciable life. Given: Total Cost New Machine = 1‚010‚ 000 Euros Depreciated over 8 yrs; replace after 8yrs. Offer for (6) Old Machines = 130‚000 E each After-Tax Market Value for Old Machine. Original Cost of Old Machines = 415‚ 807 E Cumulative
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appropriate discount rate? Does the net present value(NPV) warrant the investment in the machine? Initial Case Outlay Price of new machine (1‚010‚000) Current after-tax market value of old machine [130‚000+{(415‚807-130‚682) -130‚000}*0.43]= 196‚704 Net outlay for new machine -1‚010‚000+196‚704 = -813‚296 Appropriate discount rate Rs = Rf+B(Rm-Rf) =5.3%+1.25*6% =12.8% Rb = 6.8%*(1-0.43) = 3.88% R(wacc) = (33%)*(3.88%)+(67%)*(12.8%) = 9.86% Net Present Value Since we are not provided with
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Uniform Annual Equivalent (UAE) - A Capital Budgeting Method. (The evaluation of two mutually exclusive projects with varying lives requires careful examination of the existence of the reinvestment opportunities at the end of the different economic lives of the projects. The current article deals with a method that may be adopted in situations wherein the level of investments‚ the life of the projects and cash inflows (or outflows) are unequal.) Risk is inherent in almost every business decisions
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