Essays on Time Value

Alpha Group

Consolidated financial statement of financial position for the year ended 31st December, 2015. Items £ (000) £ (000) Long-assets 2014 2015 Investment property, fair value 2500 2500 Property, plant, $ equipment 4324 4818 Total long-term assets 6824 7318 Current assets Cash 200 140 Cash equivalent 30 20 Trade receivables 1900 1200 Inventory 1000 1950 Dividends 100 190 Non-controlling interest share 120 150 Inventory, fair value cost to complete and sell 180 150 Total current assets 3530 3800 Total assets 10354 11118 Equity and liabilities Share capital 1500 1250 Retained earnings 1910 1000 Profits for the year 1000 1250 Dividends payables 100 190 ...

Investment Proposal for Cengage Learning, Inc.

Executive Summary

Purpose of the Paper The main purpose of the paper is to prepare an effective investment appraisal for Cengage Learning by using various financial management tools.

Overview of the Paper

The paper comprises of following material that can be seen in the overall paper. Investment appraisal techniques for introducing new product line Selection of two most common techniques Importance of techniques through literature Testing of Feasibility of new project Interpretation and conclusion on the analysis Techniques Used Results It is found from the above two analysis that the project is viable for the company and has potential to provide high return ...

Product and Cost Allocation

“Luggage R Us” is a new luggage company that helps customers design, make and ship their own personalized travel luggage. The company offers four standard luggage sizes that can be used by individuals for business trips, couples on a romantic vacation, and even for a family of four. The four sizes are segregated into the carry-on, medium, large, and the extra-large (Samsonite, 2016). The standard size used for the carry-on is at 22”x14.5”x9.75”, which is within the maximum size limit for baggage for most airline companies (Samsonite, 2016). Figure 1. Luggage sizes offered However, most carry-on luggage ...

Question 1

The Verizon’s IT-project approval process is being done under the Capital Program Planning section of the telecommunication company. It is the main component responsible of the planning process, in which it includes the company’s strategic initiatives in order to create a long-term plan for the maintenance of the resources and other important things which are needed by the information system. Generally, the Capital Program Planning is divided into three sections: the project identification, approval, and funding (Capital and Maintenance Planning, n.d). Though it seems that the second part covers the approval part, the other two sections are ...

Introduction

The choice of capital budgeting methods to be applied by companies defers and at times both recommended and non-recommended methods are commonly utilized by some large corporations which rely more on capital budgeting. The choice of the method to be applied is also influenced by growth opportunities, foreign sales, characteristics of the Management, industry, leverage, dividend payout ratio and growth opportunities and so forth (Blackstaff, 2012). It's good to note that, there exist various methods used to determine investment decisions, the choice is, however, not arbitrary (Blackstaff, 2012). According to Fabozzi and Ake (2013), Many professions in the field ...

About the report

The objective of this report is to assist One-World Investment Consortium, who is planning to invest £150 million in Thomas Cook PLC, a British global travel company listed on the London Stock Exchange under the ticker sign of ‘TCG’. We duly understand the impact of our professional recommendation on Consortium’s final decision making related to investment, and therefore, we intend to be comprehensive in the approach our analysis. As for the structure of this report, it will be a two-part report. In the first section of the report, we will evaluate the past 5 year(2007-2011) financial performance ...

Even though we may or may not notice, but the concept of time value of money surrounds us all the time in the form of compounding. The concept of time value of money asserts that the present value of a dollar received today is more than the one to be received in the future. In other words, money has the power of compounding and no rational person will forego his consumption without being compensated for it in the form of interest. For instance, if a person invest his funds in bonds, he is rewarded with fixed coupon payments on ...

Abstract

A patient survey at a community hospital in which I serve as the chief financial officer indicated the need for a commercial 24-hour pharmacy within the hospital. The pharmacy would ensure that patients and families fill prescriptions and begin taking prescribed medicines as and when ordered instead of waiting for the following day. In response to the findings of the survey, this paper seeks to look into the viability of the business. Herein provided is the proposal for the first three months of operations. The paper also looks into the financial implications of the proposed project by looking into ...

ABSTRACT

This study compares the use of the use of Kinesio Taping® (KT) versus use of Sham Taping over the erector spine muscles on performance of the Biering Sorensen Test in normal, healthy young adults. Fatigue of muscle of the trunk extensor plays a very important role in chronic Low Back Pain (LBP). Physiology behind this fatigue is complex and has not been fully understood. Use of Kinesio Taping supports mobility of damaged structures and at the same time influences the mechanism at which muscle erector muscles perform in relation to fatigue. Sham Taping test consists of measuring total amount ...

Investment Analysis

Pfizer is an American international pharmaceutical company that is headquartered in New York. It is among the largest pharmaceutical companies on the globe. The operational activity of Pfizer is to produce drugs and vaccines to overcome disease including cardiology, immunology, neurology, and oncology. The core products of the company are Lyrica, Lipitor, Diflucan, and Zithromax. There are more than 78,300 employees working in different cities associated with the organization. It believes in merger and acquisition to spread the business all over the globe through fulfilling legal requirements and social responsibilities of business. Pfizer was found in 1849, but ...

The primary goal of every investor is to maximize his returns. To determine the right company to invest in an investor require analyze the performance of a company using various tools which include the financial ratios analysis, cash flow analysis, risk analysis, stock valuation and time value of money. This paper provides a detailed analysis of an investor who has 100,000 and is in differenced between saving the money in a saving account or investing it in stocks of 3M company which is a manufacturing and mining company producing over 55, 000 products.

Use of Financial Ratios

The liquidity ratios shows the ...

Saving v/s Investment

Although used interchangeably, the terms savings and investment differs significantly. Important to note, the term savings refers to short-period investment in highly liquid products that allow the depositor/investor to access money any time or with minimal hassle. Some of the saving based instruments available for the investors are saving account, certificate of deposits, checking accounts,et cetera. Another notable feature of saving is that the money deposited is insured by the Federal Deposit Insurance Corporation (FDIC). Therefore, a saving carries minimal risk as in any condition,i.e. even if the bank defaults, the deposit will be safeguard up to ...

Net present value

NPV is gotten by subtracting cash outflows from the sum cash inflows from the project investment. To get current values, a discounted rate used which is the rate of return or the opportunity cost of capital. The opportunity cost of capital is the rate of return that an investor could earn if the money would have invested in financial assets of equal risk (Gollier, 2009). It’s therefore, the return that an investor would expect to receive. It’s vital in capital budgeting because of the determination of the expected profits from the projects to be invested if approved ...

Recommendations to the Restaurant Manager

In the current state, the restaurant is profitable. The break-even point is 89,474 covers with a margin of safety of 10,526 covers, and the net profit is £60,000. This implies that the restaurant sales have to fall, by at least 10,526 covers for it to start making losses. The manager has several considerations to make on measures to improve the profitability of the restaurant. The available options and offers are discussed below.

Reducing the price to £10.00

If the price is reduced to £10.00, there will be a rise in sales to 12,000 covers. The contribution margin will fall ...

Article 1: The case for minimizing risk in your bond holdings by William Bernstein

There is always a trade-off between risk and return. Investors are rational and risk-averse hence, they require additional returns when the risk involved in any investment is high. In this article, William Bernstein explains how investors can reduce the risk in their investments in bonds without necessarily interfering with the expected returns on the bonds. One of the risks affecting bondholders is the interest risk. Changes in interest rates affect the return on bonds. When interest rates rise, bondholders lose since the prices of bonds fall. This is because the bond will be paying a lower coupon interest compared ...

Re:

Anyone who needs to perform time value of money calculations Definition A financial calculator is an instrument used to perform time value of money calculations in the finance and business environment The purpose of a calculator is to perform math calculations. If you press the “2” key, hit the “+” button, press the”2” key again and hit the “=” button, you will see the number 4 as the result. Of course we don’t need calculators for simple calculations like this. We need them for the more complicated ones that could take hours to do by hand, thus increasing ...

Summary: Time Value of Money

The concept of compounding is deeply embedded in our everyday life, and this calls for our attention to understand the basics of time value of money. Important to note, the concept of time Value of Money asserts that value of a dollar received today is more than the same amount of dollar received at a future date. Stated simply, a dollar today cane invested in a return generating asset, and at future period, the investor will get additional interest on the money invested. Stated below are some of the reasons as why money has time value: a)Risk and ...

Executive Summary

The paper discusses different topics related to the field of corporate finance and how the same will impact my future career, during which I plan to work as an equity investor. Beginning with the paper, I first discussed the importance of the financial statements and what information they reveal about the company. However,more than reading these financial statements, it is important that we learn how to study the financial statements using the tool of common-size statements and financial ratios as these tools help us in evaluating the trend in the financial standing of the company. Thereafter, I discussed ...

Introduction

We know that the money we are having in hand now is more valuable than the money collected later. This is due to the fact that we can make money right now by putting the money in business, purchasing something, selling it later like stocks or depositing in the bank to earn interest. But the future money is always less valuable. This is known as time value of money (TVM). Future money is always less valuable due to inflation. So how do we compare the value of money now and the value of money in the future. This is ...

Net Present Value

The Net Present Value is used in estimating the potential value of every project by applying the discounted cash flow valuation that requires an estimation of the size and time of all cash flows that increases from the project (Ehrhardt & Brigham, 2016). However, NPV is affected greatly by the discounting rate. Therefore, making a selection on the proper rate that is sometimes known as the hurdle rate is essential during decision making. Moreover, this should make a reflection on the riskiness of the investment because it is typically measured by the unpredictability of cash flows. Therefore, it must take ...

Business Finance Finals

The situation presented in the situation with client one is the for a business to survive a proper cash flow should be in place. The behavior of the person involve would also be barrier or a good mark on how they handle their financial management. As this is noted in the study of (Almeida, Campellow and Weisbach. 2004) in which they captured that “two important areas of research in corporate finance are the effects of financial constraints on firm behavior and the manner in which firms perform financial management”. In the line of the different of profits and cash ...

This report analyses the most recent financial reports of two companies; Sino Gas and Energy of Australia (2014), and Solar World of Germany (2015). Sino Gas and Energy reported total provisions of $97,166 that constituted 0.09% of the total assets. Solar World reported total provisions of k€ 49,466 that constituted 5.69% of the total assets. The provisions for the two companies are listed below in descending order based on their book values:

Sino Gas and Energy $

Other provisions 60,837 Employee entitlements 36,329 Total 97,166 Solar world k€ Warranties 24,653 Pensions 10,704 Litigation risks 9,190 Other ...

Part A:

Importance of Capital Investment Decision The university has now reached a stage where it cannot procrastinate the decision to build a new building and replace the existing one, which has now turned expensive to run and is also imposing a poor environmental performance. Therefore, it has now turned crucial for the university to replace the old building with the new one not only because the existing facility impedes the profitability position of the organization, but is also harming the environment and is thus sending a negative signal amongst the community. Henceforth, the university should proceed with the appraisal of ...

The Time value of Money

Q1) Identify the steps involved in computing future value of multiple cash flows? When there are multiple cash flows, their values are determined by finding the future value of each cash flow and then adding all the values to ascertain total future value of the multiple cash flows.

Step 1: Ascertain appropriate discount rate to discount cash flows.

Step 2: Finding Future Value for each cash flow using a discount rate ascertained in Step 1.

Step 3: Add up all the values which will be the future value of multiple cash flows.

Q2)Which economic principle is involved in finding the present and future value of multiple ...

- P/E Ratio stands for Price-Earnings Ratio. The variables that affect P/E ratio are market price of a share. Market price of the share is what it is trading at the stock exchange. The second variable that affects the P/E ratio is the Earning Per Share. Earnings per share are calculated by dividing the Net Profit after Interest and Taxes divided by the number of shares outstanding. All of these calculations reveal how much the firm is valued in terms of stock valulation.

- Stock valuation uses the time value of money in the calculation. There are several concepts ...

A dollar today is worth more than a dollar tomorrow

One of the most important concepts in finance is time value of money that means that money has its value. This means that a dollar in hand today will be worth more than a dollar a person will have in the near future. For example, that a dollar that is invested today in saving account or in some bond will have an interest added in it on an annual basis that will eventually result in the rise of dollar value in the future. (Business Finance Online, 2013) This occurs because of:

- Risk and Uncertainty is always present because no one can pre-determine ...

- The beta estimates are reasonable. The beta coefficients of all the assets are less than one which, when compared to the market beta of one indicates that the price of the investment will be less volatile than the market. This is due to the fact that the betas of these investments are less than the market value which is taken as the benchmark value.

- The most important measure of risk in this situation is the calculation of Sharpe ratio. This is because this ratio measures the risk adjustment performance of the investment as opposed to standard deviation ...

In capital evaluation a number of financial decision making options are used. The paper shall focus on the following capital investment decision making evaluation criteria Net Present Value, Profitability Index and the Internal Rate of Return. The paper shall discuss the definitions, the advantages and the disadvantages in each of the criterion for capital evaluation.

The Net Present Value (NPV) is the capital investment evaluation method that considers the final outcome after the cash outflows have been deducted from the cash inflows. In other words, in NPV method, all the costs and incomes are considered and the difference calculated. The ...

Techniques for analyzing capital budgeting have changed a lot in due course. With different techniques, many analysts believe that techniques that consider the time value of money are more useful. Methods, like payback period, which is old, have a disadvantage of not using the time valuably and which at the end will fall. The older methods will be replaced by the newer and better methods. There are different capital budgeting techniques that investors use and there is no specific technique that every investor would be using. So it is the choice of the investors to select which method he wants to. ...

Weighted average cost of capital (WACC) is the minimum return expected from the securities of a company. It is the sum of the weighted costs of the individual components in the capital structure. The product of the cost of capital of a component and the proportion of the component in the capital structure yields the weighted cost of that particular component in the capital structure. The cost of capital for equity is the ratio of the dividend per share and the market price for each share. This is computed as 1.50/15*100=10%. The weighted cost of equity capital is the product ...

Chapter 1 Essay

In the first chapter entitled “The financial planning process”, an in-depth analysis of what personal finance is carried out. It focused on the some prime aspects which must be considered by anyone willing to manage their personal finance. These were; goal setting, budgeting and spending, saving and investing, buying and leasing, investing in the future, insurance and also focusing on career and employee benefits decisions. The chapter also discusses what a poor financial planning can do to a person; which includes making bad decisions, wastage of time, failing to accomplish the goals, be exposed to a scam, suffering from anxiety, or ...

- Evaluation of the Company’s Objectives

The corporate objectives of Aztec Catering, a company providing catering services to businesses, schools, colleges, hospitals and retirement houses in the United Kingdom are the following:

These corporate objectives of the company require substantial work to refine, extract and direct the company towards profitability, sustainability and growth. The first step in refining the corporate objectives of the company is to be familiar with what a corporate objective is. Faucett (2012), defines corporate objectives as ”statements of intent that provide the basic direction for the activities of an organization in pursuit of its mission.” This means that a corporate objective is a broad, ...

Annuities and perpetuities are types of financial instrument, which make payments at regular intervals (parrino & kidwell, 2009). Although both perpetuities and annuities make regular payments, there is a difference in the life span of the financial instruments. Annuities have a finite lifespan while perpetuities have an infinite life span (Grinblatt & Titman, 2002). Examples of annuities are; loan repayment and lottery winning. For loan repayment, the principal and interest are repaid in regular intervals while in lottery winning the winner receives a fixed amount of the winning for fixed period. Example of perpetuity is a charity donation and a pension fund is a pension fund ...

- Worksheet entry figures

Cash flow figures and adjustments:

The price used for sales estimation is the £50/MWh tariff that is guaranteed by the government. On the other hand, the megawatts used for the two projects over the 15years period include 60,000 MWh for the small wind-farm and 120,000 MWh for the large wind-farm project.

Cash flow items from the profit and loss account

Adjusted figures - Government grant cash-flow is accounted for in year 1 since it is received in the first year although spread over the 15 years for purpose of profit and loss computation. In that respect the grant receipts for the two projects is calculated as ( ...

NPV

NPV (the net present value) is used to calculate, and analyze how much is a project is useful also to find out the difference between the present value of cash inflows and the present value of cash outflows. Also, we should know that the NPV analysis is sensitive when we calculate the future cash inflows for the project's revenues. Simply the NPV method shows whether we should undertake a project or reject it; it is useful to make decisions and it is easy to use. According to the primary investment rule, if the NPV is positive that means the project ...

[Your Full Name]

Introduction

The concept of corporate finance lies in time value of money and is often regarded as the foundation of the corporate strategy as well as the financial management. The concept of net present value is applied in a number of financial decisions and the time value of money is dependent on the same principle. Therefore, this paper will be focused on the importance of the time value of money based on the concept of net present value. This concept is clarified by using the example of bond valuation as mentioned in the question. However, this paper is ...

Answer 1)

Time Value of Money is an important concept in the world of finance. As per the principle, the value of money received today is more than the same amount of money to be received in some future date. In other words, as per the principle of Time Value of Money, money carries the power to earn interest. Thus, any amount of money is worth more the sooner it is received. For Instance, $100 invested at 10% rate of interest for 1 year will be $110 after the end of year. Similarly, if $100 is received after 1 year, this ...

Criticisms of Payback and Simple Rate of Return Methods

Payback Period and Simple Rate of Return Methods are among the tools used in capital budget budgeting. Payback period measures the length of time to recoup an investment, while the simple rate of return method, also known as Accounting Rate of Return (ARR) provides the expected income for the entire life of a capital investment (Investopedia, 2014).

The formulas to calculate for these two methods are:

- Payback Period = Cost of Project / Annual Cash Inflows

Criterion: The project that has shorter payback period is deemed better.

- Simple Rate of Return= Average profit /Initial investment

Criterion: Choose the project with higher returns or exceeds the hurdle rate.

Although considered as the simplest method in appraising capital investments, one of the criticisms with the payback period method is it ignores benefits from ...

The net present value of a project is simply the difference between the present value of future cash flows and the purchase price. Discounted cash flows are commonly measured by the NPV method, and are a standard method for calculating the time value of money. This measurement of time value of money is important when appraising long-term projects. Furthermore, the NPV aids in indicating the value the investment would create for the firm. A negative or positive cash flow is not the determinant while accepting a project. Calculated risk is the over powering factor when making a decision. NPV falls short in decision ...

Tools for Evaluating the Projects

Biz Systems Consultants Ltd is a firm that is set up by experienced persons. Now they are in consideration for the projects that have investment of 17, 00,000$ and three projects are mutually exclusive. In this report we will find out the ways and tools that can help the firm in accessing the feasibility of the project. There are different methods of accessing the feasibility of projects as well as many sources of finance but we will discuss here the three major sources of finance that are best suitable for the company (Bearse, 1993). For the company Biz ...

It is commonly known that the money in hand today is more worth than the money of same amount in future. This idea is based on earning potential. This principle says that the money can earn interest and gradually can grow. Everyone knows the fact that the money deposited in bank account will earn interest. The time value of the money is a priori principle that a fixed amount of the money that is accessible today is more costly than the same amount of near future. This principle can be generalized for the economic resources available by social contract. We can ...

Question 1: Net present value, Internal Rate of Return and simple payback period

Net present value The NPV of the project above is positive indicating that the project is viable. Internal Rate of Return (interpolation) NPV when r is 15% Positive NPV, P = 138,642 Negative NPV, N = -3,852 Higher discount rate, B = 15% Lower discount rate, A = 8% IRR = 8% + 138,642138,642+3,852 [15 – 8] = 8% + 138,642142,494 × 7 = 8% + 6.81 = 14.81% The internal rate of return for the project is 14.81% indicating that if the discount rate is 14.81%, then the NPV of the ...

Introduction

This report is about the evaluation of an attractiveness of one project of Wall-Mart using different methodologies and measures taking into account different theories. The main purpose of this investigation is determination of the advantages and disadvantages of the different methods and it is necessary to make a decision about investment in this Wall-Mart project using all computed values.

Present value is a parameter which reflects the present value of future cash flows that have been discounted. To calculate a present value it necessary to use the following formula: Present Value=i=1nCFi1+ri, where n is number of periods, r ...

Personal finance

Learning is a continuous experience that starts at birth. Although formal learning takes place within learning institutions, much of human learning is a product of experiences from life. Like in other areas of professional development, financially planning is a product of both formal and informal learning experiences. In this respect, multiple experiences throughout my life have shaped my financial planning skills. My learning experience with respect to financial planning is traceable to my days in college. Being in learning institutions calls for self-discipline and control with regard to financial. This offered the first and extremely important lessons with regard to financial planning. ...

Answer 1)

a)There's a substantial unexpected increase in inflation: Undiversifiable/Systematic Risk: Since inflation and related increase in it is a macro economic factor and something not related to performance of stock or related companies, the diversiifcation process cannot deal with it and hence effect of inflation will remain in the portfolio construction even if we include all the availble stock in our portfolio. b) Major Recession in US: Undiversifiable/Systematic Risk: Just like Inflation, Recession is also an macro economic factor and an investor cannot deal with it. Important to note that an investor is always compensated for bearing systematic risk not ...

1. Suggest a methodology to supplement the traditional methods for evaluating the capital investments of Johnson Controls in the emerging markets to reduce risk providing a rationale of how risk will be reduced. The nature of the specific risk and projects usually determine the methodology to be implemented for the evaluation of capital investments. There are several traditional methodologies that management uses to measure the effectiveness of a specific investment. The three most popular methods for the evaluation of capital investments include; payback period, internal rate of return (IRR), and net present value (NPV). For further specificity, NPV and IRR are ...

Problem:

A company is considering two projects, Project A and Project B with different cash flows as disclosed in the table hereunder: However, since the company has a limited budget, it can only invest in one of the project. Thus, the managers of the company take the help of capital budgeting techniques, NPV analysis and Payback Period.

NPV Analysis:

The NPV is the sum of the present values of all the expected incremental cash flows if a project is undertaken. The discount rate used is the firm’s cost of capital, adjusted for the risk level of the project. In other words, the ...

Administrative modification, powered by an extension of information technology, may have underwrote to the erosion of the previously established relationship between company size and the quantitative investment appraisal criteria selected. Seemingly, companies are by means of utilizing more methods composed, while the use of the more urbane discounted cash flow. However, systems are sophisticated, and that use of the less hypothetically sound accounting rate of return technique seems to be reduced, than aforementioned studies would have recommended of businesses . Consequently, accounting modification may result from procedures ascending within an organization in which it is operational, while as of ...

Finance - Investment appraisal

Finance - Investment Appraisal Payback period for Option A: Payback period for Option A = [2 + (90000/120000)] years [2 + 0.75] years 2.75 years = 2 years and 270 days

Payback period for Option B:

The Payback period for Option A = [5 + (80000/430000)] years [5 + 0.19] years 5.75 years = 2 years and 70 days

NPV and IRR for the option A:

NPV for option A = Sum of all cash inflows and outflows = +64280 IRR for option A = lower NPV% + (higher NPV % - lower NPV %)x ( lower NPV / Lower NPV – Higher NPV) = 0.1 + (12% - 10%) x (86200 / 86200 – 64280) = 0.1 + 0.07 = 0.107 = ...

Data Table: One (Values of horizontal distances and time)

This table provides the calculated horizontal distances (x) in (ft) and the time (t) in seconds. The time increment is 0.5 seconds. Horizontal distances are obtained using the formula x = v0xt. The initial horizontal distance is taken as 0.

Chart 1: Horizontal Distance against time Graph of x against t

This chart shows the relationship that exists between the horizontal distances (x) and the time (t). From the graph, it is evident that there is a positive linear relationship between the horizontal distances and the time. This indicates that the velocity is constant. Consequently, the horizontal acceleration does not change. Figure 1: Graph of x against t

Data Table: 2(Values of Vertical distances and time)

This table provides ...

Part I: Review of background material

The first model is the capital asset pricing model. It describes the relationship which exists between risk and expected returns and it is applied is securities’ pricing. In this model, an investor should be compensated for both the risk and the time value of money. The risk free rate is the factor for the time value of money. It compensates all investors for their fund commitment for a certain period. According to CAPM, the expected return on a specific security or a portfolio is equivalent to the risk free rate and the risk premium added together. These are the issues which will ...

- Suppose your bank account will be worth $4,200.00 in one year. The interest rate (discount rate) that the bank pays is 5%.

PV = FV * [1 / (1 + i)t], where PV is the present value my bank account,

FV is the future value,

i is the interest rate the bank pays, and t is the time period (in years). Then PV = FV * [1 / (1 + i)t] = 4,200 * [1 / (1 + 0.05)1] = 4,200 * [1 / (1.05)1] = = 4,200 * [1 / 1.05] = 4,200 / 1.05 = 4,000

So, today the present value of my bank account is $4,000.00

- Suppose you have two bank accounts, one called Account ...

Introduction

In every investment decision, it is necessary to scrutinize the benefits and cost before venturing into it. An investor should evaluate the benefits he or she would get if they invested their capital in the project rather than depositing the cash in the bank to accumulate annual interest. A project manager is solely responsible to decide on behalf of his clients on the best project to invest from a pool of several and closely related benefits on behalf of his client. The key factors that the manager would consider are rate of return on investment, period it would take the ...

The production director of Wilmslow Ltd wants to schedule production for quarter 3 (the twelve weeks ending 17 September) and asks you to use the revised information to prepare the following: - The revised production budget for Alphas and Betas;

Closing stock is 5 days and 10 days of sales for Q4, for alpha and beta respectively, which is 20% more than the new estimated demand, so the Q4 estimated demand is 120% of 2000 and 2400 respectively =120/100*2000=2400 2400/12=200 units (12 weeks because each week is 5 days)..For Alpha

For beta;

=120/100*2400=2880 2880/6=480 ...

Inflation and Oil Prices

Inflation refers to persistent increase in the price level over time and is one of the most dangerous threats to an economy because if unchecked it will erode the purchasing power of a currency and if the monetary system of the country is destroyed, can ultimately force the individuals to adopt foreign currency.

There are two kinds of Inflation: Demand Pull and Cost Push Inflation.

Cost Push Inflation: A situation when inflation persists in the economy because of initial decrease in aggregate suppky caused by an increase in the real price of an important factor of production i.e wages and energy. Oil Crisis of 1970 is a suitable example of cost-push(supply shock ) ...

Business

Net present value is one of the most widely used financial methods for the investment appraisal. The first advantage of using the NPV method of investment appraisal is that it incorporates the time value of money. Moreover, the discount rate or cost of capital used in the calculation of NPV of any project is calculated after taking care of all the financial structure and tax adjustments of the business. This discounting factor also contains the risk and inflation adjustments which provide accurate time value of money. Another advantage of the NPV method of investment appraisal is that it uses ...

Time Value of Money:

Time value of money relates to the importance of having cash at hand today as opposed to the future. Mathematics of time value of money quantify the value of money be it in dollars, pounds or any other currency depending on the rate of return an investment earns. There are various reasons as to why cash at hand is preferable to future cash (Silver, 2011). The availability of investment opportunities at present: Opportunities do come ones in a lifetime. If an investment opportunity were available now, cash that is at hand would be essential in making that investment. However, ...

Project 1 (Table 1 on page 462, n=1-4, r=16%) Yr 1 $144,000 * 0.862069 = $124,138 Yr 2 $147,000 * 0.743163 = $109,245 Yr 3 $160,000 * 0.640658 = $102,505 Yr 4 $178,000 * 0.552291 = $98,308

PV of inflow of cash $434,196

Cost of Investment (400,000) NPV $34,196 Project 2 (Table 1 on page 462, n=1-4, r=16%) Yr 1 $204,000 * 0.862069 = $175,862 Yr 2 $199,000 * 0.743163 = $147,889 Yr 3 $114,000 * 0.640658 = $73,035 Yr 4 $112,000 * 0.552291 = $61,857

PV of inflow of cash $458,643

Cost of Investment (400,000) NPV $ ...

<Student’s name> <University>

Abstract

An important aspect of investment management in the form of investment is to identify and improve the economic efficiency of investments. In practice, there are two approaches to the definition and evaluation of real investment - cost and income. If we start from the quantitative estimates, up to recently, the economy was dominated by the cost approach, which was reflected in the manner of determining the economic effectiveness of capital investments and the principles of effective options for selection of investment projects based on the methodology of comparative effectiveness, which was ...

Part I

1. Time value analysis is the concept implemented when there is a necessity to identify future value of one unit of a currency supposed to be received in several years or the amount of money supposed to be received in future from one unit of currency invested today. The basic concept of time value of money analysis is that the value of alternative investments depends on the time when they will be exchanged. Interest rate may not cover inflation rate contributing to the differences between the present and future values of investments (Khan Academy, 2013). Time value analysis is a tool ...