Rights issue by the companies refers to a corporate invitation to the existing shareholders of the company to buy additional new shares of the company. Cash-strapped companies generally turn to rights issue for raising finance from market for investments in business activates. The companies grant shareholders chance to buy new shares at a discount rate than current market of share on a pre mentioned future date. Investment banks do this activity for business for some percentage of banking percentage on total amount of issued fund. By issuing share, the companies give opportunity to the shareholders to increase their financial exposure by purchasing companies’ stocks at a discounted price. Investment banks conduct the necessary legal activities to issue new shares on behalf of the companies by taking banking fees. The can trade the issued rights on market in similar way they trade ordinary shares through stock exchange until the new shares are bought back by the companies. Theoretically, some traditional and efficient methods are used to evaluate capital investment in domestic as well as emerging foreign markets by businesses. But, capital investment is highly risk associated strategic business activity and the company needs to focus beyond the traditional methods of evaluating capital investments like net present value, internal rate of return, payback period etc. Emerging financial businesses like investment banking and financial research companies offers flawless capital investment solutions to many leading multinational organizations and they follow several advanced methodologies for evaluating proposed capital investment practices by the MNCs especially in emerging markets. The main objective to use beyond the traditional methods is to reduce future risk i.e. these methods helps to identify the maximum extent of risk possibilities and provide alternative solution to reduce the possible risk in substantial extent. One of the efficient methodologies for evaluating capital investment is Salomon-Smith-Barney Model. This methodology is widespread and efficient method used by leading investment banks to evaluate capital investments especially in the emerging markets for reducing risk of investment. This is one of the most recent developed methodologies for international capital investment and it was developed in 2002 by Zenner and Akaydin for leading US investment bank Salomon Smith Barney (Anson, 2011, p.488). This model is risk adjusted and modified extension of G-CAPM approach of capital valuation. In this methodology, different global factors and are considered with a high importance and regional factors are recommended as useless due to market inefficiency. This model mainly focuses on how risk possible risk can be identified in maximum extent and how it can be minimized. As this methodology is modified extension of G-CAPM approach, therefore, it has focused on key shortcomings of the approach. Having a main objective to reduce risk of foreign investment especially in emerging economy perspective, this methodology has focused on a key fact that emerging markets are not totally harbor specific and integrated restraint and complications which can justify a risk premium. The developer of this methodology added an idiosyncratic risk premium into the G-CAPM approach and extended that approach in a new form with high capability of risk indication and reduction. This methodology has
Financial Management Table of Contents Answer a) 3 Answer b) 5 Answer c) 9 References 12 Answer a) As a medium size company, XX Chemical needs finance for its foreign investment in projects. Capital investment is one of the most critical strategic business activities of multinational businesses…
The literature (Arnold, 2007, Brealey et al, 2006) on finance and accounting would seem to indicate that the NPV methodology is one of the most comprehensive and reliable tools to use in a project appraisal. The advantages of NVP are that firstly the tool recognises the time value of money by using a discount rate (12% in this case), often WACC is used as the discount rate (Tennentt, 2008).
A finance manager should be indifferent to projects with a zero NPV and use other methods to help in the decision making concerning that project. (Horngren, Foster, and Datar, 2001) The NPV for the project that Peng intends to venture into can be calculated as follows.
A manager who is answerable and accountable for all his acts to another authority or some other person holding some higher rank or position is called an accountable manager. The authority to which such manager is accountable is generally the authority setting the regulations governing and directing the actions of such manager.
The objective of preparing this report is to measure the performance of this company and make a comparison of the same with the general industry. This paper will also analyze the performance of a competitor of WS Atkins with the aim of comparing the evaluation.
Some parts of the world were hit more than others. This resulted in worker migration among other consequences such as: the financial losses estimated in billions, large companies achieving resounding fails, increased government debt and rising unemployment, and a significant decline in economic activity (Morris 2008, p.
The period of analysis runs from 2003 to the year 2007 and it captured the following areas: combined Balance sheet, consolidated statement of change, combined statement of operations, cash flow statements and brief notes of the
banks, the financial crisis in Cyprus and the EU wide policy implications on the country’s financial sector are some of the aspects that will be discussed within this study. Thereafter the researcher will be setting forth certain recommendations that are aimed towards the
9 pages (2250 words)Coursework
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