Financial management (final exam) - Essay Example

Only on StudentShare

Extract of sample
Financial management (final exam)

Therefore, the results of both techniques will be different because of the differences between the assumptions of both techniques. Question 2 Part A a) Project A Years 0 1 2 3 4 Initial Investment (20,000,000) Cash Flows 3,000,000 7,000,000 9,000,000 15,000,000 Discount Factor (8%) 1.0000 0.9259 0.8573 0.7938 0.7350 Discounted Cash Flows (20,000,000) 2,777,778 6,001,372 7,144,490 11,025,448 Net Present Value 6,949,087 Project B Years 0 1 2 3 4 Initial Investment (20,000,000) Cash Flows 10,000,000 8,000,000 5,000,000 5,000,000 Discount Factor (8%) 1.0000 0.9259 0.8573 0.7938 0.7350 Discounted Cash Flows (20,000,000) 9,259,259 6,858,711 3,969,161 3,675,149 Net Present Value 3,762,280 Based on the above results it can be clearly observed that Project A has generated higher NPV therefore, it should be accepted. ...Show more


Part I Question 1 a) Cost of Equity Re = Rf + Beta (Market Risk Premium)   = 2% + 1.16 (3.5%) Re = 6.06% b) Weighted Average Cost of Capital WACC = [Wd x Rd(1-Tax Rate) + We x Re ]   = [0.30 x 0.07 x 0.6] + [0.7 x 0.0606]    = 5.50% c) Enterprise Value using Discounted Cash Flow Technique Years 0 1 2 3 Terminal Value Growth Rate 5.00% 3.00% 1.00% Cash Flows 65.00 30.00 31.50 32.45 819.24 Discount Factor (5.50%) 1.0000 0.9524 0.9070 0.8638 0.8227 Discounted Free Cash Flows 65.00 28.57 28.57 28.03 673.99 Enterprise Value 824.16         d) Enterprise Value using M&A Multiple Technique e) The difference between the two approaches of enterprise valuation exists because of several factors…
Author : bartelloda
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Financial management (final exam)"
with a personal 20% discount.
Grab the best paper

Related Essays

Financial Management Coca-Cola Company
Investment is a vital activity which requires various types of analysis to be done. To choose the right company is a very important decision. If the investor chooses the wrong stock then he or she could have to bear loss. The nonfinancial parameters has been discussed in this project.
6 pages (1500 words) Research Paper
The understanding financial data, and developing and making judgements on proposals against strategic objectives
This paper is an international module providing a broad overview of financial values for all learners and a base for additional in depth study of finance and accounting. The report consists of International Financial Reporting, Interpretation of accounting information, Budgeting and Organisational Objectives and Investment appraisal Techniques.
15 pages (3750 words) Essay
Financial Planning
This paper would formulate the financial planning of a client, Mr. James Patterson. The financial plan is based on the information that was obtained from Mr. James Patterson about him. The recognition of the present situation of Mr. Patterson is decisive because that would decide whether the recommended strategies are suitable, in the light of his personal situation, needs or objectives.
5 pages (1250 words) Research Paper
Multijurisdictional tax final exam (emergency - has limited time!)
Other than this licensed public warehouse and $2,000 of inventory held within it, Corporation A has no physical presence in any state in the US. In other words, it has no other property or employees in the US. Please read the applicable treaty provision and Massachusetts law and answer the questions that follow.
9 pages (2250 words) Coursework
First Exam
98). In order to make a decision on whether to lease or buy, the advantages of leasing or buying must be analyzed. In addition, the disadvantages of leasing and buying can be evaluated. For new companies, short-term leasing and purchase of cars can solve the problem because it will lead to increase in the company’s assets rather than liabilities (Parker, 2005, p.
6 pages (1500 words) Assignment
Final exam
Without this kind of information the business cannot survive as it will need to know what to expect in advance and do what is necessary to ensure that operations are conducted smoothly. Assessing the Reasonability of the Ten (10) Year Projections The license fee for the facility was not taken into consideration in the budget.
4 pages (1000 words) Assignment
Financial Reporting and Accountability exam questions
4 Earnings per Share 5 Basic and diluted EPS 5 Explain why the regulators have been so concerned about the way the published EPS value is calculated? 5 Why should diluted EPS be calculated? 6 Why should comparative year EPS values be restated? 6 Explain what disclosures must be made.
7 pages (1750 words) Essay
Arsenal football club
Later on, the name developed into ‘Arsenal Football Club’. From the time of formation in 1886, the club has experienced several financial turbulences, and has progressed and established itself gradually as a professional football club in present days. The annual
8 pages (2000 words) Coursework
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email