1. Is HMC’s recent payout policy consistent with the goal of preserving the real (adjusted for Harvard’s expense growth) value of the endowment and its distribution into perpetuity? Yes. From Exhibit 1. We can see that HMC’s recent payout is round 3.4% to 4.6% (1993-2000).
? How does systematic risk differ from unsystematic risk? What is meant by the Capital Asset Pricing Model? Describe how it relates to expected return and risk. Find the real return on the following investments: Stock Nominal Return Inflation A 10% 3% B 15% 8% C -5% 2% ?
The effects of forfeitures and income taxes should be ignored. Analysis: 1. I think Sooner or Later should use $9 grant-date fair value to measure its compensation cost. FASB requires companies to recognize compensation cost using the fair-value method, and also according to 718-10-30-2 “A share-based payment transaction with employees shall be measured based on the fair value (or in certain situations specified in this Topic, a calculated value or intrinsic value) of the equity instruments issued.” Therefore, Sooner or Later should use the fair value to measure its compensation expenses. But the question is which fair value should Sooner or Later use to measure the compensation.
Now, what would be the impact on net income, total profit margin, and cash flow? Their depreciation would be $750,000. The total revenue minus total expense will equal net income. Net income and revenue will be times by 100 to get the profit margin. Net income plus depreciation will equal their cash flow.
Module 03 Assignment Bernard J Wyant Jr Rasmussen College Author Note This research paper is being submitted on July 28, 2013, for Don Frey, A406/ACG4010 Section 01, Cost Accounting Principles and Application. Module 03 Assignment Explain how absorption costing could provide undesirable incentives to management to build inventory. Include in your assessment how to best set up absorption costing systems to avoid this incentive and what types of measures and controls should be included to assist in its prevention. Producing more units for inventory absorbs fixed manufacturing costs and increases operating income. The reason for increased operating income is the deferral of fixed manufacturing overhead contained in unsold inventory (Chapter 9: Absorption/Variable Costing, n.d.).
The methods used in this assignment are the payback period, NPV, IRR, and describing factors if Caladonia Products were doing a lease versus a buy will also be considered. 12a-12e. Caladonia is considering two additional mutually exclusive projects. The cash flows associated with these projects are as follows: Year Project A Project B 0 -$100,000 -$100,000 1 32,000 0 2 32,000 0 3 32,000 0 4 32,000 0 5 32,000 $200,000 The required rate of return of these projects is 11%. Payback Period Payback period is a capital budgeting criterion measure, which promptly provides the number of years the project will return is original investment (Keown, Martin, Petty, & Scott, 2005, p.292).
Marriott Corporation: Cost of Capital Case 1. For what purposes does Marriott use its cost of capital estimate? Does this make sense? The Marriott Corporation uses their cost of capital estimate as their hurdle rate to determine which investment opportunities should be accepted or rejected. By requiring any potential projects meet the division’s respective hurdle rate, the company ensures that their investments will have high enough returns to compensate for any risks that must be undertaken.
1. If you were the Chief Investment Officer of the Notre Dame Endowment would you consider changing the investment policy and asset allocation policy of the Endowment? Why? Why not? If I were the Chief Investment Officer of the Notre Dame Endowment, I would consider changing the investment policy and asset allocation policy of the Endowment.
Given the information above, sketch Mike’s budget line on the graph below. [pic] QUESTION 3 (1000 points) a) State four (4) properties of indifference curves that can be derived based on the three (3) main assumptions of preferences (EXCLUDE the property that indifference curves cannot cross). (400 points) i) Indifference Curves are Negatively Sloped – The IC slopes downward because as the consumption of Good X increases then a certain amount Good Y must be given up to maintain the same level of satisfaction. ii) A Higher Indifference Curve Represents A Higher Level Of Satisfaction – A combination of Goods lying on a higher indifference curve will be preferred by a consumer to a combination of goods that lie on a lower indifference curve. iii) Indifference Curves Are Convex To The Origin – As the amount of Good X increases by equal amounts, Good Y will reduce by smaller amounts.
Case Analysis - Acme Investment trust How is the fee structure suggested by Hicks, Muse, Tate, and Furst different from standard private equity fee structure? Standard PE fee structureGenerally Standard fee structure has two components Management fees and Carried interest.In Standard PE fee structure private equity investors receive capital gains as long as the portfolio generates certain returns i.e portfolio value exceeds 100% .Under this structure the cost basis of each investment is first returned to limited partners. The remainder of capital gain on this investment was then divided between limited and general partners on the basis of agreed upon formula. The fee structure suggested by HMFT * According to the fee structure suggested by Hicks, Muse, Tate, and Furst ,the investors are guaranteed at least 20% return. The management fees received by GP will be according to industry standards.