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.
Comparing the two values it stands to reason that the better investment for Guillermo Furniture is the purchase and expansion for a laser lathe. Further evidence supporting this recommendation is the IRR. Based on the calculation option produces a rate of 53.56% meaning Guillermo could possibly expect up to approximately 53% return for his initial investment. As shown in Table 1 with the perspective timeline, based on a period of 10 years, Guillermo Furniture should expect a positive rate of return on his initial investment with reasonable payment options to cover the initial expansion and equipment purchase. Although the broker option is a viable investment with positive returns, as shown on Table 2, the NPV is not as favorable compared to option 1.
As shown in the fit put charts the S&P500 and GXP returns can be proven to be positively correlated by looking at the line of best fit with the data shown. The standard error is low as well being at 2.92%. The intercept or alpha in this regression is .0001809 which is not significantly different from zero. The t value is 15.56 which is greater than the t stat for a 5% significance level and the p value is less than .0001 which is the
A firm’s value depends on the positive net income generated in the past. True False A firm’s value depends on the firm’s ability to generate positive cash flows now and in the future True False When determining the value of a firm, which of the following statements is true? • Inversters are risk neutral. Other things equal they prefer to pay more stocks that are less risky and have uncertain cash flows • Investers love risk. Other things equal they prefer to pay more for stocks that are more risky and have uncertain cash flows.
One of the sectors where Canadians are still feeling the pressure is employment. The U.S stock market crash has been important for many reasons, the most important between them being the damage on wealth. Estimates differ on exactly how much citizens, corporations lost, but most figures are around the tens of trillions mark. These losses have not only been “colossal, but by dropping the worth of investments, they've made an increased risk and higher borrowing costs for businesses, which will affect their profit margins and ability to hire and keep employees for future years” (eHow.com, p. 1). The American market crash is being felt worldwide.
Although the increase is slight, it’s an indication of strength in the company’s ability to raise sales volume. “Not only will an increase in sales benefit the company, it will better prepare the corporation to handle adverse market conditions and economic downtrends.” (Hunt, 2013). During period years 13 to 14, net sales dropped by 3.40 %, totaling $225,400. This loss revenue is concerning because the company could possibly run into trouble paying back the debt. The effect of the
In this case, the quality of earnings for 2000 is -2.21, for 1999 is -1.03, for 1998 is -1.12 which is very low for an investment point of view. Quality of earnings should be greater than 1.0. Red Flag 2: Another “Red flags” could be Return on assets on 2000 because it’s significantly low comparing to 1999. Red Flags: lastly, during the year 2000, there is a significant increase with the gross profit % as well as profit margin % Question 2. According to AU 330 “Valuation or allocation”, “Completeness” and “Existence or occurrences” are the primary audit objectives that the auditors hope to accomplish.
It is reasonable to set the value to 0 because if one makes the value 0 we can observe a more precise answer, than if one changes the intercept. When I changed the intercept to 1 the equation decreased and had a +1 to it. It slowly kept decreasing as I increased the number. 6) Compare the equation of the line of best fit for your random sample with the lines
Research Paper Word Count: 1274 How successful can a company become before it is an economic danger for our country? That is the question a lot of Americans have begun to ask about the massive super store Wal-Mart. In a struggling American economy Wal-Mart thrives while smaller companies struggle and some even go bankrupt. There is always going to be companies that make it while others don’t, but when do American citizens need to step in and draw the line when one mega company like Wal-Mart becomes too powerful? With Wal-Mart using materials from other countries while its growing and expanding everyday it knocks out smaller businesses everywhere, which in turn hurts the economy and is literally a growing Monopoly in America, which we cannot
Encoding Specificity (also known as Transfer-Appropriate Processing): Memory is best when information processed at the time of retrieval matches information processed at the time of encoding. Schematic Processing: Memory is better or events that match our expectations than for events that are irrelevant to them, but memory is best for events that seem to violate our expectations. This is all great but its not the only way of looking at things. A big shift in perspective was announced by Frederick C. Bartlett (1932), almost 50 years after Ebbinghaus published his book. It is evident in the very title of this book: Remembering, and it is clear in Bartlett’s first chapter which is kind of an attack on Ebbinghaus.