allow another company to sell the same product under a different brand name for a fee. We have compared the two options to determine which marketing strategy would be in the best interest of Glaxo Italia in terms of net present value‚ rather than the IRR or payback period used previously. We have decided that co-marketing with another company would be the best option for Glaxo Italia as it has the higher net present value. Forecasting and Analysis We have decided to extend the forecasts to 2010
Premium Net present value Time value of money Marketing
1. How does Teletech currently use the hurdle rate? Teletech currently uses the hurdle rate in the assessment of the firm’s economic profit and NPV. The rate is based on an estimate of Teletech’s WACC. Currently‚ the hurdle rate for Teletech is 10.407%‚ using data in Figure 1. The case rounds this number to 10.41% 2. What are the segment WACCs for Teletech? What assumptions do you have to make to do these calculations? Using the data in Figure 1‚ we can calculate the WACC for the
Premium Investment Finance Weighted average cost of capital
CASE: MAKING NORWICH TOOLS LATHE INVESTMENT DECISIONS PAR T A: PAYBACK PERIOD years cash flows 0 1 2 3 4 5 (660‚000) 128‚000 182‚000 166‚000 168‚000 450‚000 PBPA LATHE A cumulative cash flows cash flows LATHE B cumulative cash flows 128‚000 310‚000 476‚000 644‚000 1‚094‚000 (360‚000) 88‚000 120‚000 96‚000 86‚000 207‚000 88‚000 208‚000 304‚000 390‚000 597‚000 4.04 PBPB 3.65 ACCEPTABILTY OF EACH PROJECT: Lathe A will be
Premium Net present value
a. Should Caledonia focus on cash flows or accounting profits in making its capital-budgeting decisions? Should the company be interested in incremental cash flows‚ incremental profits‚ total free cash flows‚ or total profits? Caledonia should focus on cash flows‚ not accounting profits. Free cash flows are able to be reinvested‚ whereas accounting profits are shown when they are earned‚ not when the cash is actually received. The company should be interested in incremental after-tax cash flows
Premium Cash flow Investment Generally Accepted Accounting Principles
propel Euroland foods into the next level of global business. Under the board of directors spending limit of EUR120 million EUR119.25 million would be invested in our proposed projects. Our allocation of funds that best suits Euroland foods are based on NPV‚ economics‚ share value‚ and payback period. The various capital projects were also considered on the track record of the manager supporting each project and the probability of market share gain‚ brand image‚ and share value growth. The capital projects
Premium Investment Net present value Capital accumulation
University of Phoenix Material Capital Budgeting Case Your company is thinking about acquiring another corporation. You have two choices—the cost of each choice is $250‚000. You cannot spend more than that‚ so acquiring both corporations is not an option. The following are your critical data: Corporation A Revenues = $100‚000 in year one‚ increasing by 10% each year Expenses = $20‚000 in year one‚ increasing by 15% each year Depreciation expense = $5‚000 each year
Premium Net present value Internal rate of return Cash flow
Quantitative Business Methods Problem 1. A client invests $500‚000 in a bond fund project to earn 7% annually. Estimate the value of this investment after 10 years. Solution FVN = PV(1+r)N Here we have FV10= 500‚000 (1+0‚07)10 = 983 575‚68 Problem 2. For liquidity purposes a client keeps $100‚000 in a bank account. The bank quotes a stated annual interest rate of 7%. How much will your client have in this account at the end a. One year b. Two years Assuming no withdrawals (so all the
Premium Net present value Decision theory Internal rate of return
project for investing and owning a plant for producing their own PCB’s‚ this way they would assure a continuous supply and have 100% control over quality standards. In this case‚ there is a big amount of capital that should be invested‚ which is needed to be analyzed in order to see whether it is viable for the company or not. The case present several information regarding expected production costs for in-sourcing and expected purchases for outsourcing. Since there is no projected information of Income
Premium Depreciation Investment Net present value
Diamond Chemicals: Case 21-22 TO: Lucy Morris FROM: DATE: September 30‚ 2009 SUBJECT: Merseyside Project In this memo I will be making a recommendation for or against the Merseyside Project. With the help of a few questions that guide my memo‚ I will be able to determine whether or not to continue funding for the Merseyside Project. This memo will include an exhibit that will show an analysis of the Merseyside Project including the NPV and the IRR. In the DCF analysis that was
Premium Carbon Diamond Atom
Hittle Company Ltd (Case Study) You are a financial analyst for the Hittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments‚ project X and Y. Each project has a cost of $10000 and the cost of capital for each project is 12 percent. The projects expected net cash flows are as follows: |Expected Cash flows | | | | | |year
Premium Net present value