operations and cutomers’ satisfaction.It is an unidentifiable attribute or an intangible asset of a business. It enables the business to earn more than just sufficient profits which induces the entrepreneurs to remain in action all the times. Valuation of goodwill: Cost method It is the value which a rational buyer would pay for the business as a going concern less the value of net assets(assets-liabilities) taken over by the buyer. Cost of goodwill purchased=purchase price-net assets purchased
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Assignment for Week -2 Chapter 5 (5 - 9) Bond Valuation and Interest Rate Risk Bond L Bond S INS = $100 INS = $100 M = $1‚000 M = $1‚000 N = 15 Years N = 1 Year a) 1) rd = 5% VBL = INT/ (1 + rd)t + M/ (1 + rd)N =INT [1/rd – 1/ rd(1 + rd)N ] + M/ (1 + rd)N =$100 [1/0.05 – 1/ 0.05(1 + 0.05)15] + $1‚000/ (1 + 0.05)15 =$1040 + $480.77 = $1518.98
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Option Valuation Chapter 21 Intrinsic and Time Value intrinsic value of in-the-money options = the payoff that could be obtained from the immediate exercise of the option for a call option: stock price – exercise price for a put option: exercise price – stock price the intrinsic value for out-the-money or at-themoney options is equal to 0 time value of an option = difference between actual call price and intrinsic value as time approaches expiration date‚ time value goes to zero 21-2
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Boys-Manny‚ Moe‚ and Jack Equity Analysis and Valuation Kevin Biser LeAnn Carmona Fabian Garcia Brendan Grey Kevin Tavarez Brian Timme 1 Table of Contents Executive Summary.............................................................................................................. 9 Industry Analysis ..................................................................................................................................... 10 Accounting Analysis ............................
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Valuation Criteria for Cost Benefit Analysis 1. Principles of Cost Benefit Analysis Cost benefit analysis(CBA) is a process which is used to understand the monetary social costs as well as advantages of a capital investment project over a given time period. The principles of cost benefit analysis are based on three principles. The first is the appraisal of any specific project: This is an economic technique which is used by organizations as well as projects being handled by the government
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Chapter 10 Stocks and Their Valuation Learning Objectives Solutions to End-of-Chapter Problems 10-1 D0 = $1.25; g1-3 = 6%; gn = 4%; D1 through D5 = ? D1 = D0(1 + g1) = $1.25(1.06) = $1.3250. D2 = D0(1 + g1)(1 + g2) = $1.25(1.06)2 = $1.4045. D3 = D0(1 + g1)(1 + g2)(1 + g3) = $1.25(1.06)3 = $1.4888. D4 = D0(1 + g1)(1 + g2)(1 + g3)(1 + gn) = $1.25(1.06)3(1.04) = $1.5483. D5 = D0(1 + g1)(1 + g2)(1 + g3)(1 + gn)2 = $1.25(1.06)3(1.04)2 = $1.6103. 10-2 = $1.35/(12%
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PRINCIPLES OF VALUATION Because rational people prefer to receive benefits sooner than later and make sacrifices later than sooner‚ money‚ which provides the option to buy benefits‚ is likewise preferred sooner to later. If an individual prefers money sooner than later‚ then he/she values a dollar today more than a dollar tomorrow or a dollar in one year from now. A dollar today is worth a dollar today: therefore‚ a dollar next year must be worth less than a dollar today since it is less preferable/valuable
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on INTER COMPANY ANALYSIS Analysis of Pharmaceutical Industry in the Indian environment and comparative analysis among Ranbaxy Laboratories Ltd. and Cipla Ltd. Under the guidance of Prof P. Madhavan Visiting Professor‚ IIM Rohtak Undertaken by Ashwani Kumar Atif Aslam Dhiraj Rishiraj Sisodiya Shashi Singh pgp03.016 pgp03.017 pgp03.019 pgp03.054 pgp03.053 This project report is submitted as a partial requirement for the fulfilment of the Business Analysis and Valuation course‚ at the Indian
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EQUITY VALUATION MODELS Equity Valuation -Determining the total value of a company involves more than reviewing assets and revenue figures. An equity valuation takes several financial indicators into account; these include both tangible and intangible assets‚ and provide prospective investors‚ creditors or shareholders with an accurate perspective of the true value of a company at any given time Significance of Equity Valuation Model -Equity valuations are conducted to measure the value of
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CHAPTER 7 Bonds Valuation CHAPTER ORIENTATION This chapter introduces the concepts that underlie asset valuation. We are specifically concerned with bonds. We also look at the concept of the bondholder’s expected rate of return on an investment. CHAPTER OUTLINE I. Types of bonds A. Debentures: unsecured long-term debt. B. Subordinated debentures: bonds that have a lower claim on assets in the event of liquidation than do other senior debtholders. C. Mortgage bonds: bonds
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