Finance and Growth Strategies - Essay Example

Only on StudentShare

Extract of sample
Finance and Growth Strategies

The results are shown in Table 1.
The internal rate of return is the cost of capital that will equate the present value of future cash flows to zero. In other words, it is the required rate of return which will yield a zero NPV. Thus, equation 1 can be modified such that NPV is replaced by 0. NPV calculations can be done manually but the process is tedious as it requires calculating the NPV by using different values of cost of capital. Another is the use of software like Microsoft Excel to generate a more accurate figure.
The decision whether the project should be accepted or not will be based on the results of the financial and strategic analyses using techniques like NPV and IRR. In using NPV as a tool, the general rule is to accept projects or investments which generates a positive NPV while reject those which yields negative NPV. The result of the NPV has a direct implication on the value of IRR relative to the required rate of return. Accordingly, a project is pursued if the IRR is equal to or higher than the required rate of return. In contrast, a project with a lower IRR than the cost of capital is turned down. It should be noted that a positive NPV is indicative of an IRR which is higher than the required rate of return.
The project considered by Fijisawa, which is ...Show more

Summary

The net present value (NPV) of a project represents the present value of the total cash inflows and outflows. The NPV can be calculated by discounting the cash flows according to the required rate of return. In the case of Fijisawa, NPV is computed as the present value of the future cash inflows less the initial investment…
Author : fannie05
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Finance and Growth Strategies Essay"
with a personal 20% discount.
Grab the best paper

Related Essays

Finance Essay
While some of the fluctuation in the share price may be ascribed to the fluctuation in the overall market (as demonstrated later) the changes are largely based on the different reports emanating in the media about the company's performance and the opinions offered by different 'gurus'.
15 pages (3750 words) Essay
Instructional Strategies Essay
A democratic approach is one whereby learners are provided with an interactive environment where they can express their views, opinions, suggestions and have an opportunity to support their arguments. It is involves both the teacher and the learner where the teacher comes up with the topic to be discussed which is open to any form of criticisms or additions to the main point.
8 pages (2000 words) Essay
Finance Growth
Capital budgeting decisions of firms are considered to be of strategic importance not only for the growth of the company but for the economy as a whole. The capital budgeting decisions commit the economy's productive resources to its production systems and also for the firms as they strengthen and renew the resources.
10 pages (2500 words) Essay
Finance and Growth Strategies
Linter is stated to have found that the existing dividend rate becomes a benchmark for the management and companies faced strong reluctance in reducing dividend from this benchmark. Therefore, if the company keeps doing well, it prefers to retain the dividend rate or hikes it to the extent possible.
11 pages (2750 words) Essay
Finance and Growth Strategies -MBA-
inating component of putting these methods into practice will be to see how they would work in various perspectives -- like valuing a private firm, valuing an acquisition target or valuing a distressed enterprise. In theory, the value of a business organisation’s share can be
13 pages (3250 words) Essay
Finance & Growth Strategies
ic, diversifiable, firm-specific or unique risk is associated with a particular organization and includes risks due to management, industry sector, vagaries of the market nationalisation of assets, inadequate public relations in addition to problems due to labour and research
12 pages (3000 words) Essay
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
YOUR PRIZE:
Apply my DISCOUNT