Accounting and Corporate Finance

Accounting and Corporate Finance Essay example
High school
Essay
Finance & Accounting
Pages 10 (2510 words)
Download 0
The Net Present Value refers to the value of a future amount today.It basically helps in finding out whether a project is profitable or not.It requires finding out the present value of each future cash flow discounted at a specific value…

Introduction

It follows the principals of having discounted cash flows. The formula to find out the Net present value precisely can be written as: Cash flow (today i.e. year 0) + Cash flow (1 year from now) [/1+r (cost of capital)]^1 + Cash flow (2 years from now)/](1+r)^2 Cash flow refers to the amount of expected cash to be received at a certain point in time X years from now. Cash flows can either be negative or positive. An inflow of cash is a positive cash flow such as an income whereas an outflow is represented with a negative sign and denotes an outgoing cash amount due to for instance expenditure. If the NPV of a certain project equals zero, it denotes that the project is a break-even project; working at no profit-no loss. In simple words it means that the amount of capital invested is exactly equal to the return that would be generated by undertaking the project. A project should be taken up or initiated only if the net present value is at least zero or greater than zero. Even though the calculations of Net Present Value are fairly simple and convenient, it is still quicker to use a financial calculator for these calculations because if there are a large number of cash flows, it will become very inconvenient and time consuming to make the calculations with the formula (Brigham et al, 2010). ...
Download paper
Not exactly what you need?

Related papers

Finance and Accounting Research Paper: Corporate Financial Scandals
At a point Enron was one of the seventh largest corporations in The United States. Enron was a shining star on Wall Street, and from 1996 to the early 2000’s it was named America’s “Best Managed and Most Innovative Company” by Fortune Magazine. The scandal was revealed in October 2001 and lead to the bankruptcy of Enron Corporation; which sent.

You may also…
Finance and Accounting Essay: Corporate Social Responsibility
Nonetheless, it is in the last three decades that numerous discourses on CSR happened (Campbell 2007). There is an assumption that the notion of CSR has contributed to the changed nature of modern organizations (Tencati & Zolsnai, 2009). Since, CSR becomes the theoretical basis for organisations to accept the truism that their responsibility is not only to secure and increase profit for the firm…
Finance and Accounting Essay: Corporate Finance
Contents Corporate Finance   1 Executive summary 2 Contents 3 Introduction 5 Evaluation of different sources of long term capital 5 Sources 5 Cost 7 Risk 7 Advantages 7 Disadvantages 8 Issues involved in seeking an appropriate balance between different types of long term finance and the balance with the short and medium term finance 9 Gearing 9 Traditional and Modigliani and Millar theories 9…
Corporate Governance and Regulation - A Case Study (RBS)
The overdraft facility is one of the most versatile instruments in banking today. The Royal bank of Scotland apart from providing banking services in Scotland through 700 branches also provides branch banking services throughout the British Isles in collaboration with the NatWest and Ulster Bank. The Royal Bank of Scotland provides dedicated retail and commercial banking services in Scotland,…
application to Imperial College Master in Finance
Secondly, I could witness first-hand the environmental issues that are associated with that. I do not want to be too picky about where I find my first start, but I would like to begin my career within Asian financial hubs, such as Hong Kong and Singapore. The reasoning behind this is two-fold: I could familiarize myself with the Asian markets but I would also be able to network with many…
Corporate finance and Financial Accounting
However, it is the responsibility of the organization to formulate and implement appropriate strategies to deal with risks. For this case, the management of XYZ opted for acquisition of the company. XYZ sold itself to ABC International in exchange for $8.2 billion. After the acquisition, XYZ estimated that the worth of its shares would be placed at $100 per share. After the acquisition, ABC would…
corporate finance
Blume (1993) had suggested that CAPM provides a model of equilibrium risk/return relationship. The CAPM also denotes that there exists a linear relationship between expected return and non-diversifiable systematic risk which is denoted as beta. This linear relationship is denoted as security market line (SML). In SML, the systematic risk of a share is compared with the risk and return of the…