assumptions that you used to estimate it. We first used the 15% discount rate to calculate NPV and the Cash Flows by using that discount rate we ended up with a negative NPV of $ (2‚137‚217.21). We determined that the discount rate of 15% was out dated and insufficient. Therefor to calculate a more accurate NPV for the project‚ we decided to use the rate of 9.62% that we computed. And using this number we got the NPV of $746‚981.31. I would recommend Worldwide Paper Company (WPC) to use the 9.62% discount
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cash flows? Whole bottom line c) What are the terminal cash flows? Depreciation amounts Salvage value + operating cash flow 2) Calculate the project’s NPV‚ IRR and Cash Payback. IRR= 61% NPV= $11‚051‚576 Cash Payback= 1.7011 3) Should the project be accepted? Defend your answer. Due to the fact that the NPV is positive at $11‚051‚576 and the IRR at 61% is higher than the cost of capital; the project should create revenue for the firm and therefore should be accepted.
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OCEAN CARRIERS CASE 1) Should Ls Linn purchase the $39M capsize? Make two different assumptions. First‚ assume that Ocean Carriers is a U.S. firm subject to a 35% statutory (and effective) marginal tax rate. Second‚ assume that Ocean Carriers is domiciled in Hong Kong for tax purposes‚ where ship owners are not required to pay any tax on profits made overseas and are also exempted from paying any tax on profit made on cargo uplifted from Hong Kong‚ i.e.‚ assume a zero tax rate. The
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Case 1 – New Heritage Doll Company 1. Set forth and compare the business cases for each of the two projections under consideration by Emily Harris. Which do you regard as more compelling? Productions was New Heritage´s largest division as measured by total assets‚ and easily its most asset-Intensive. Approximately 75 % of the division´s sales were made to the company´s retailing division‚ with the remaining 25% comprising private label goods manufactured for other firms. The division revenue figures
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Faculty of Economics and Business Academic year 2013-2014 On the first page of this exam form you will find important information about this exam. Please read the information below before answering any exam questions! Exam: Financiering (6011P0122) and Finance (6011P0135) Date and time of the exam: Tuesday‚ April 22 Duration of the exam: 1 hour You have to identify yourself using your validated UvA-identification card or other legal ID-card. If you are not registered via SIS for the course
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present value (NPV) calculations‚ break even breakdowns‚ and shareholder stock analysis based on a sales volume of 210 aircraft; this case study identifies flaws in the initial proposals presented by Lockheed in 1971. Financial Analysis including tables‚ graphs and other Analysis Table 1: Cash flow an NVP analysis Net present value of this project is just over -$584 million Table 2: Present Value factors and new present value based on varying discount rates Chart 3: NPV vs. Discount
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Crisp Markets Analysis Introduction Crisp Markets has a business option that whether to open grocery store in downtown Brooklyn or develop the online grocery shopping. If running traditional grocery store‚ Crisp Markets has to rent and renovate a space in downtown Brooklyn. So the up-front renovation costs and rent should to be considered‚ which use the straight-line depreciation with a zero salvage value. Compared to this‚ the cost of branching out online grocery shopping includes
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He has escalated the company’s success by introducing low-fat yoghurt and ice-cream. Question 2 Using NPV‚ conduct a straight financial analysis of the investment alternatives and rank the projects. Which NPV of the three should be used? Why? Suggest a way to evaluate the effluent project? Analysis) In order to rank the projects based on NPV calculations‚ the preferred metric will be the NPV at minimum Rate of Return. A sliding scale of Internal Rate of Return (IRR) that understands the differences
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Formulas Midterm Cost of Capital 1.1 Basic Formula [pic] The Equity-Beta is the covariance of the stock-return with the market-return 1.2 Betas Non Investment Grade (< BBB) The Equity-Beta can be analyzed 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
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corporate governance stance has started to shift in order to include some elements of the Anglo-American way of corporate governance. It appears that a final decision has been made to build Disney Sea Park (despite unattractive ARR‚ but attractive NPV/IRR and ACFR) not only for the potential profits reaped for the company but also due to their responsibility to keep uphold the interests of its stakeholders (which would include its parent company‚ stockholders‚ landowners‚ suppliers‚ creditors‚ the
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