expenditure committee should accept all the proposals before it. This will be based on the factors as detailed on part three of this document. The NPV’s of all these projects are positive‚ a positive NPV contributes favorable to the share price or share value. The Internal Rate of Return of these entire projects are below the prototype store IRR which is a benchmark project. The IRR is an alternative to NPV however if the NPV is positive and the IRR is not what is desired‚ the NPV may supersede in making
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Case study ULC operates different types of lease in Bangladesh. In our report‚ we focus on purchase order type of lease conducted by ULC. Generally there are three party involved in a purchase order lease. They are- • The leasing company • The borrower • Vendor In our report‚ these parties are- • United leasing company • Apollo Hospital Ltd • Siemens Therefore‚ here Apollo hospital ltd is the borrower and siemens is the vendor. Now we will discuss the steps of the process of purchase
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where is it shown on a time line? Is this opportunity rate a single number that is used to evaluate all potential investment? The rate of return you would earn on an alternative investment of small risk if you don’t invest in the security under consideration. An opportunity cost is the difference in return between an investment that has chosen for investment and one that is inevitably gave up. For example‚ if a person invests in equity and get 3% return over a period of time then by investing his/her
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-PF + FV /(1+r) PV = FV/(1+r) or PV = C1/1-r + C2/(1-r)2 + .. + CT/(1-r)T Rate of return: R=(Vf-Vi)/Vf Rate r compounded m times a year: FV = C(1+r/m)mt 10% semiannually = 10.25% annually‚ Hence 10.25 is said to be the Effective Annual Yield (EAY) 1+EAY = (1+r/m)mt Assignment 2 Perpetuity The value of D received each year‚ forever: PV = D/r Annuity The value of D received each year for T years: PV = (D/r)*[1 – 1/(1+r)T] Growing Perpetuity PV = D/(R-g) R: the cost of capital‚ interest
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NORTHERN DRILLING INC. THE MOND NICKEL CONTRACT DECISION – A TACTIVAL DILEMMA IN A GROWTH STRATEGY THE PROBLEM Peter Bremner‚ general manager for Northern Drilling Inc. (Northern) was looking over the RFP for an upcoming exploration contract for one of Canada’s largest mining companies‚ Mond Nickel Company (Mond). The RFP consisted of 2 projects‚ a Deep/Complex job (3‚000m holes) and an Intermediate/Routine job (1‚800m holes). The proposal was due in 3 weeks and Peter had to make a decision whether
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Example 14.3: Yield to Maturity Suppose an 8% coupon‚ 30year bond is selling at 1‚276.76 what average rate of return would be earned by an investor purchasing the bond at this price? We find the interest rate at which the present value of the remaining 60 semiannual payments equal the bond price. This is the rate consistent with the observed price of the bond. Therefore‚ we solve for r in the following equation: [pic] 1‚276.76 = [pic] $40 + $1000
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when she turns 55. She estimates that she will be able to earn a 9 percent rate of return on her retirement investments over time: she wants to set aside a constant amount of money every year (at the end of the year) to help achieve her objective. How much money must Robinson invest at the end of each of the next 25 years to realize her goal of $600‚000 at the end of that time? $600‚000 = PMT(FVIFA.09‚25) = PMT(84.701) PMT = $7‚083.74 2. Two investment opportunities are open
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FIN/370 Final Examination Study Guide This study guide prepares you for the Final Examination you complete in the last week of the course. It contains practice questions‚ which are related to each week’s objectives. Highlight the correct response‚ and then refer to the answer key at the end of this Study Guide to check your answers. Use each week’s questions as a self-test at the start of a new week to reflect on the previous week’s concepts. When you come across concepts that you are unfamiliar
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required tonnage of shipping capacity to fulfill the various contracts held with Superior. Although the agents tried to arrange for ships to arrive at Thunder Bay in a steady stream‚ the vagaries of lockage transfer times in the Seaway resulted in quite variable arrival times‚ at times forcing arriving ships to anchor when both wharfs were busy. This resulted in SGE having to incur demurrage charges at a rate of $2000 per day. Mike Armstrong‚ manager of port facilities for SGE‚ had just learned that
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consider is whether the loan is due now or later The concept of amortization is applicable if the loan or financial obligation due now Finding the Size of Each Payment The size of the periodic payment to settle a debt is highly dependent on the time the payment is made. For ordinary annuity ? ?=? 1 − 1 + ? −? For annuity due ? ?=? 1 − 1 + ? −? 1 + ? For deferred annuity ? 1+? ? ?=? 1 − 1 + ? −? Example The cash price of a shopping equipment was P 120‚000. Alex bought it with a down payment
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