choice of inaction will lead to an undesirable outcome (e.g. a loss). There are many different types of risks‚ and some of them can be quantified using formal statistical methods such as the scenario analysis with the mean and standard deviation of the NPV. However‚ some are quantified using subjective judgemental estimates involving human decision making. Both methods of risk assessment are important to capital budgeting (“The relationship between risk and capital budgeting‚” n.d.). Part i. What are
Premium Net present value Investment Risk
l. In a 1‚050-1‚500-word memo‚ define‚ analyze‚ and interpret the answers to items (c) through (h). Present the rationale behind each item and why it supports your decision stated in item (i). Also‚ attempt to describe the relationship between NPV and IRR. (Hint: The key factor here is the discount rate used.) In this memo‚ explain how you would analyze projects differently if they
Premium Net present value
CHAPTER 6‚ Case #1 BETHESDA MINING To analyze this project‚ we must calculate the incremental cash flows generated by the project. Since net working capital is built up ahead of sales‚ the initial cash flow depends in part on this cash outflow. So‚ we will begin by calculating sales. Each year‚ the company will sell 500‚000 tons under contract‚ and the rest on the spot market. The total sales revenue is the price per ton under contract times 500‚000 tons‚ plus the spot market sales times the
Premium Depreciation Net present value Generally Accepted Accounting Principles
Week 09 Mini Case Three Word Template Please write a one-page report to explain whether or not Dorchester‚ Ltd. Should build the new manufacturing plant in the United States? [Please see excel calculations below] When a company is looking to start up a new project it’s important for them to forecast whether or not the project will be profitable or not. They can’t just outline the projected profit from the project without considering the cost of raising capital to finance
Premium Management Marketing Economics
1. Valuation of Virginia’s assets a. Present value: PV = $2‚000‚000 + $3‚000‚000/(1+0.06)1 = $2‚000‚000 + $2‚830‚189 = $4‚830‚189 b. Future Value (1 year): FV = 2‚000‚000(1+0.06)1 + 3‚000‚000 = 2‚120‚000 + 3‚000‚000 = 5‚120‚000 2. Valuation of Viginia’s assets with investment c. $1 million investment PV = $1‚800‚000/(1+0.06)1 + $3‚000‚000 = $1‚698‚113 + $3‚000‚000 = $4‚698‚113 d. $2 million investment
Premium Stock market Net present value Rate of return
1. Teletech Corporation currently uses its hurdle rate to measure its economic profit and NPV. It is used to measure value creation‚ and providing information on each unit’s performance for investors. Teletech’s current practice of “one size fits all” hurdle rate is not the best practice because each division has its own risks and nature of operations. Therefore‚ each division’s profitability should be compared to that division’s own WACC. 2. See attachment 3. According to Rick Phillip’s
Premium Investment Finance Profit
Case#1 Stock Valuation at Ragan Engines Ans. 1 EPS= $5.08 No. of shares= 300‚000 r=20% ROE=25% DPS=Total dividend/No. of shares=640000/300000=$2.13 Net income = EPS*No. of shares =5.08*300000 =1524000 g=Retention ratio*ROE =[1-(640000/1524000)*0.25 = (1-0.42)*0.25 =0.58*0.25=0.145=14.5% Po=D1/r-g =Do (1+g)/r-g =2.13(1+0.145)/0.20-0.145 =2.43885/0.055 = $44.34 Ans. 2 Industry growth rate g = Retention ratio*ROE
Premium Stock market Stock Fundamental analysis
Marriot Case Brief 1. What is the weighted Average Cost of Capital for Marriot Corporation? WACC for Marriott Corp is 11.89 WACC of divisions: Lodging 10.29‚ Restaurant 13.49‚ Contract Services 13.615 a) What risk-free rate and the risk premium did you use to calculate the cost of equity? We used 8.95% as the risk free rate (LT Government Debt) and the MRP we used was 7.43%‚ which means are expected market return is 8.95+7.43=16.38% b) How did you measure Marriott’s cost of debt? We added
Free Arithmetic mean Average Weighted average cost of capital
• Compare the two cases in terms of methods‚ costs (if applicable)‚ and effectiveness of the outcomes (3 points). Both cases are a form of an alert identification subsystem belonging to the parent HELP System. Furthermore‚ both cases did not explicitly state vocabulary and ontology used. However‚ I can infer based on my knowledge in the field now that diseases‚ diagnoses‚ laboratory and procedures follow ICD 10‚ SNOMED‚ LOINC and CPT ontology for coding and that interoperability is achieved by
Premium Medicine Health care Patient
There have been a number of cases of feral children raised in social isolation with little or no human contact. Few have captured public and scientific attention like that of young girl called Genie. The girl was given the name Genie in her case files to protect her identity and privacy. "The case name is Genie. This is not the person’s real name.She spent almost her entire childhood locked in a bedroom‚ isolated and abused for over a decade. Genie’s case was one of the first to put the critical
Premium Feral children Sociology Oxana Malaya