Assessment: Lite orange juice Project 1. Define the term “incremental cash flow”. Since the project will be financed in part by debt‚ should the cash flow analysis include the interest expense? Incremental cash flow is the additional operating cash flow that an organization receives from taking on a new project. A positive incremental cash flow means that the company ’s cash flow will increase with the acceptance of the project. Cash flow analysis should not include the interest expense. We
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Return Vs. Required Return 21 Portfolio Planning 21 Dividend growth model 24 Corporate Valuation Model 24 Constant & non-constant growth of dividend 27 Actual prices Vs. Expected Prices 27 Weighted average cost of capital (WACC) 28 Trend of financial statements in last five years 30 Acknowledgement First of all we all are thankful to one and only the Almighty Allah for always guiding us in the thick and thin and giving us strengths and courage to complete this
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Vidyasagar University Journal of Commerce Vol.11‚ March 2006 EVA BASED PERFORMANCE MEASUREMENT: A CASE STUDY OF DABUR INDIA LIMITED Debdas Rakshit* ABSTRACT Traditional measures of corporate performance are many in number. Measures using common bases are Net Profit Margin‚ Operating Profit Margin‚ Return on Investment (ROI)‚ Return on Net Worth (RONW)‚ Earning Per Share (EPS) etc. Among these‚ again ROI is recognized as the most popular yardstick of overall performance. But it is often argued that
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Bond P is a premium bond with a 12 percent coupon. Bond D is a 6 percent coupon bond currently selling at a discount. Both bonds make annual payments‚ have a YTM of 9 percent‚ and have five years to maturity. The current yield for Bonds P and D is percent and percent‚ respectively. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g.‚ 32.16)) | If interest rates remain unchanged‚ the expected capital gains yield over the next year for Bonds P and D is percent
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rankings are reflected with each of the six (6) quantitative ranking calculations below; however‚ if asked to select just one of the rankings‚ then NPV would be selected. That being said‚ the top four projects in the NPV ranking (assuming a 10% WACC) are: Project 3‚ Project 4‚ Project 8‚ and Project 5. Although Project 7’s NPV is higher than Project 5‚ it is not listed because it is mutually exclusive with Project 8 and they cannot be ranked together. More of these calculations are outlined
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not accept this project‚ their competition will in the near future which will take away future profitability (sales) as a whole & could decrease their firm’s market share. For Super Project‚ I calculated a positive NPV of $70M‚ an IRR of 12% (with WACC=10%) and a payback recovery of 6.7 years against a 10 year required payback. Those three factors tell me to accept the project. A positive NPV will result in profitability over the 10 year period‚ a positive EVA‚ & positive MVA. A positive IRR indicates
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7-2 Constant Growth Valuation Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e.‚ D1 = $1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock‚ rs‚ is 15%. What is the value per share of Boehm’s stock? P = D1/(rs – g) Price = $1.50 / (0.15 - 0.07) = $18.75 7-4 Preferred Stock Valuation Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of
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22.3 145.2 139.5 9.18% CARIBOU No Data Tax Rate Interest Expense Net Income Long Term Debt & other liabilities Total Equity Return on Invested Capital (ROIC) WACC = rD (1- Tc )*( D / V )+ rE *( E / V ) Cost of Debt Tax Rate Total Debt Cost of Equity Total Equity Total Market Value Risk Free Rate Historical Market Return Beta WACC rD Tc D rE E V rF rM B Interest Expense / (Total Debt) Avg tax rate for 2008 per Exhibit 9B Short Term + Long Term Debt Total Equity per from Exhibit 7 Total Market
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The Cost of Capital for Goff Computer‚ Inc. Rahul Parikh BUS650: Managerial Finance (MAH1209A) Dr Charles Smith March 18‚ 2012. The Cost of Capital for Goff Computer‚ Inc.: 1. Most publicly traded corporations are required to submit 10Q (quarterly) and 10K (annual) reports to the SEC detailing their financial operations over the previous quarter or year‚ respectively. These corporate fillings are available on the SEC Web site at www.sec.gov. Go to the SEC Web site‚ follow the “Search for
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Contents 1. Introduction 1 2. Valuation Methodology 2 2.1. Discounted Cash Flow 2 2.2. Terminal Value 3 2.3. Weighted Average Cost of Capital 3 2.3.1 Cost of Equity 4 2.3.2 Cost of Debt 4 2.4. Free Cash Flow 4 3. Calculation of WACC for Kia motors 5 4. Calculation of Free Cash Flow for Kia motors 5 5. Estimation of the value for Kia motors at the end of 2011 6 6. Conclusion 6 References 7 Appendix -1 8 Financial Highlight 8 Appendix -2 9 Consolidated Statements
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