| 05 | 06 | 07 | EBITDA Margin | 8.6% | 15.6% | 9.7% | 5. What method to valuate inventories (FIFO, average weighting cost, LIFO…) has been used? The increase in purchases is of 44% and 22% in 06 and 07 respectively. As to the sales the increase was of 34% and 18%. We can conclude that they use FIFO because the inventory amount increases through 06 in 65% and then decreases in 07 by -13%.
We used the capital asset pricing model along with a political risk premium and a country market risk, beta. The cash flow is presumed to increase by an average 1% per year vs. previous year, from 2.7 in 1998 to 5.9 in 2005, and decrease to 4% by 2004, for each country; the discount was calculated at the local required rates of return. Was considered also the differences in inflation rates across countries and the estimation of forward exchange rates using parity conditions. (Schedule 6). 3.
Production is proportional to the stock of machinery. Growth Rate of GDP We want to determine the growth rate of GDP, which is defined as: G(Y) = (change in Y) / Y where Y = GDP To do this, we estimate the Incremental Capital-Output Ratio (ICOR), which is a measure of capital efficiency. ICOR = (change in K) / (change in Y) where K = capital stock A high ICOR implies a high increase in capital stock relative to the increase in GDP. Thus, the higher the ICOR, the lower the productivity of capital. Since capital is assumed to be the only binding production constraint, investment (I) in the Harrod-Domar model is defined as the growth in capital stock.
But the impact may not be very significant even if an average rate is taken. The effort required to estimate the inflation rate for each element may not justify the accuracy that may be obtained. If the understanding in the project is that sales and costs may increase by different values very different from the average inflation, then we may need to consider the inflation separately. Question 9 NPV $178,337 IRR 21.6% MIRR 17.6% ARR 28.5% Payback 2.56 years (The figures are from the attached file with Cell C38 = 4% and C39 =2% – sales inflation taken at 4% and cost inflation at 2%) Question 10 a. The NPV would decrease since the costs will be higher and the new NPV is $98,762 NPV $98,762 IRR 17.5% MIRR 15.2% ARR 22.2% Payback 2.76 years (The
The investment objective to UBS's global equity portfolio was to outperform the MSCI World Equity index by 225 basis points annually over the market cycle. This targeted return over the benchmark reflects a targeted tracking error of 3 to 5 percent in addition to a portfolio between 125 and 175 equity holdings. Describe the matrix approach used by UBS in allocating to countries and industries. UBS decided to use a matrixed based asset management approach that would span across countries and industries. They determined that a cross
Data Exercise 1 UMUC November 9, 2013 ECON 201 The relationship between unemployment and Gross Domestic Product (GDP) is referred to as Okun's law. The relationship was named after Arthur Okun who was the first person to propose the relationship. Okun’s law states that for every 1% increase in unemployment, GDP will be approximately 2% lower than its potential (Knotek, 2007). Figure [ 1 ] Figure 1 reflects the relationship between quarterly changes in unemployment and GDP from 1947 through 2002. The pattern holds true, as one can see a 1% in unemployment corresponds with approximately 2% negative growth.
The second series is an uneven cash flow stream, but it contains an annuity of $400 for 8 years. The series could also be thought of as a $100 annuity for 10 years plus an additional payment of $100 in Year 2, plus additional payments of $300 in Years 3 through 10. 8-3 True, because of compounding effects—growth on growth. The following example demonstrates the point. The annual growth rate is I in the following equation: $1(1 + I)10 = $2.
In the market for new homes, you would expect which of the following to occur? The market clearing price will fall and the equilibrium quantity will rise. 16 of 30 Price floors create surpluses by setting the price above equilibrium. 17 of 30 Price ceilings often generate black markets. 18 of 30 An import quota will limit the amount of a foreign good that can be brought into the United States.
A regressive tax in one in which the percentage decreases as the taxpayers’ income rises. Lower-income earners pay a larger percentage of their income in tax than higher income earners. Therefore such a tax places a larger burden on lower income households than it does on higher income earners. Almost every national government uses regressive taxes to raise a significant portion of its tax revenues. Indirect taxes such as VAT, GST and sales taxes are in fact regressive taxes, placing a larger burden on those whose ability to pay is lower and a smaller burden on the higher –income earners whose ability to pay is greater.
Question 3 Which price increase is needed to offset the profit impact of the increased raw material costs (assuming that volumes are constant)? Which price decrease will result from instituting price-flex (assume a best case and a worst case)? Answer 3 The selling price would increase by offsetting the raw material cost which is given in the “Appendix A” which shows that increase in the price by 6.5% would result in the positive side and a reductioncompany from reduction in the price. Understanding all this is done with respect to the case material. The volume is a constant which is assumed at 80% in the analysis of the price.