This ensures us to get the reinvestment return from the cash flow on the WACC without worrying about the scale problem. I find that developing the new technologies in the house has higher MIRR than purchasing; the two rates are 17.40% and 15.40% respectively. 2. NPV, the sum of the present value of the cash outflows and inflows can measure the expected change in wealth from undertaking the project. The NPV for purchasing the technologies is 94.71 million and the NPV for developing the technologies is 127.24 million.
Question 1 Which of the following is generally NOT true and an advantage of going public? Answer | | Facilitates stockholder diversification. | | | Increases the liquidity of the firm's stock. | | | Makes it easier to obtain new equity capital. | | | Establishes a market value for the firm.
Discount rate = 11%. The Net Present Value (NPV) of an investment proposal is equal to the present value of its annual free cash flows less the investment’s initial outlay (Keown, A. J., Martin, J. D., & Petty, J. W. (2014). The rule here is that our company will accept projects with a net present value greater than zero, and decline the ones with a net present value that is less than zero. The greater the net present value, the more appropriate the investment is. Based on that, Corporation B is desirable to Corporation A as it has a greater net present value.
This is in direct result of owing more money on the balance of the loan than what the car is worth at the time of purchase. Viewing these statistics gives an in-depth insight and a visual representation to show outside entities how the company has fared over the past year and their strength entering into the current
With the presence of economy’s downturn, Ford Motor Company faced with record losses and many union employees were forced to compromise with some cases and in some areas that they may have not before. Such deals were made in effort to keep Ford from globally outsourcing jobs. “The UAW began negotiations in 2007 with the Ford Motor Company and the two other automobile manufacturers to reverse the negative impact the economy would have on profits. “ (Lucas & Furdek, 2010). The guidelines and provisions set within the Ford Motor Company’s agreement with the UAW would bind them legally to fulfilling their obligations.
Ratio analysis for TRI illustrates conservative debt levels and ability to service additional debt. By borrowing $17,450,000 to invest in production equipment and technologies, liquidity ratios change little. Similarly, solvency ratios change little except for the free cash flow ratio, affected by capital expenditures but not offset by loan proceeds in the calculation. Profitability ratios will realize improvements; gross profit ratios will increase from reduced labor costs. Net income ratios benefit from improved gross profit calculations but also include increased interest and depreciation expense from the new loan and equipment, lowering net income.
Alibaba 1) Analyze the buyer decision process of a traditional Porsche customer. The traditional Porsche customer, follow the first stage Need Recognition. Most of the traditional Porsche customer is a financially successful people, and who see themselves entrepreneurial. The need to show themselves with the right car and Porsche is like a piece of clothing to stand for. And the customer started information search for the right car, which is the challenging Porsche with the competent performance machine.
(Davis) Relevant Factual Information about the Problem or Decision the Organization Faced The collapse in industry proﬁtability in 2007–2009 and the bankruptcies of General Motors and Chrysler were not simply consequences of the ﬁnancial crisis. They also reﬂected the massive structural problems of the industry—most notably, too many ﬁrms with too much capacity chasing too little demand. The catastrophic decline in industry revenues and proﬁts in 2008 promised a major industry restructuring. (Grant) Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials A SWOT analysis can work to generate effective solution for Ford and the auto industry: Strengths Strong position in US market. Ford is the second largest automaker in US, the second largest vehicle market in the world.
Zipcar uses its own line of cars to provide rental car services, which provides for no delays in car availability from third parties. Zipcar has built strong relationships with petroleum stations and with repair stations that has provided them with consistent fuel supply as well as timely car repairs when needed. The buyer power in the competitive position of Zipcar is strong. Buyers can easily choose between other car rental services, for instance, if a potential buyer feels that his/her needs will not be satisfied, they can easily switch over to a competitor for services. The power of a new market entrant is evaluated to be strong due
REDESIGNING NISSAN (A) : ANALYSIS CARLOS GHOSN TAKE CHARGE SAVED FROM SCRAPYARD Renault and Nissan announced there alliance in march 1999 , Renaults cash injection of $5.4 billion for an equity stake of over 36% in Nissan would reduce Japenese automakers mountainous debt . It provided Renault with access to two huge markets – North America and Asia where it was virtually absent , whereas Renault had its market in strength in Europe and Latin America where Nissan was weak . The alliance of these two companies complemented each other as Renault would access to Nissan`s engineering and manufacturing expertise , Nissan would benefit from renualts marketing and design . In 1998 , Nissan had a desperate financial situation , it had only 4 models out of 43 which were profitable and it had spent around %1 billion on intrest payment alone . Nissans chairperson Yoshikazu Hanawa had tried to secure relations with foreign investors yet other car makers were afraid to walk into the deal .