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The Discounted Cash Flows Model

Should Paul Stone take the discount? Lengthen the cash conversion cycle.

Paul Stone can get 3/15, net 65 from his suppliers. Paul would like to delay paying the suppliers as long as possible because his cash account balance is very low, but his Dad, a famous financial expert, recommends that he borrow from his local bank at 10% and pay early to take advantage of the discount. Which of the following s

Match the definitions on the left with the answers on the right.

Match the definitions on the left with the answers on the right. 1. ___ Aging of Accounts Receivable A. Evaluate liquidity by dividing current assets by current liabilities 2. ___ Balance Sheet B. A report of the sales, costs, and net income of the company for a period of time (usually annually) 3. ___ Cash Discount C. Abil

Evaluating investments: Screening, Ranking, and Discounting

I have read through my textbook and searched the web. I feel like this is a trick question. Which one is a true statement and why? Why the others are false. Which of the following statements is correct? a. Screening is the process of finding the best among available acceptable alternatives. b. Ranking is the process of de

This question deals with review of the financial management policies and practices of Johnson and Johnson over the past two years. Also it calculates the important financial ratios.

Calculate the FINANCIAL & MARKET RATIOS for the year ended 31/12/07 & 31/12/06 Critically evaluate and comment on the results - Spotlight the areas the management should focus more - Calculate k (cost of equity) by applying both the Gordon's Growth Model and the CAPM. - Calculate the cost of each component of Capital for

Intrinsic Value vs Market Value, Opportunity Cost Rate

Q1-3, What is a firm's fundamental, or intrinsic, value? What might cause a firm's intrinsic value to be different than its actual market value? Q2-2, What is an opportunity cost rate? How is this rate used in discounted cash flow analysis, and where is it shown on a time line? Is the opportunity rate a single numbe

Choosing a project's discount rate

For a company which earns 10 Percent on its call account deposits,borrows longterm at 12 percent and its main investments are in the form of call account deposits,what will be the best DISCOUNT RATE to use in project evaluation NPV,as an alternative to using WACC? How can such a rate be justified?

PV of costs of machines for Bison

Bison Mfg. is considering two options for purchasing comparable machinery. Machine 1 will cost $27,500 plus an annual maintenance fee of $1,500 per year for four years. Machine 2 will cost $25,000 with a varying maintenance charge. The estimated cost of maintenance is $1,000 in the first year, $3,000 in the second year, a

Valuation in Mergers

Problem 25-1 Valuation: Vandell's free cash flow (FCF) is million per year and is expected to grow at a constant rate of 5% a year, its beta is 1.4. What is the value of Vandell's operations? If Vandell has $10.82 millions in debt, What is the current value of Vandell's stock? (Hi nt Use the corporate valuation model o

In game theory analysis, what is a "dominant strategy"?

1. In game theory analysis, what is a "dominant strategy"? 2. A firm's most recent annual dividend was $2 per share; its shares sell for $40 in the stock market, and the company expects its dividend to grow at a constant rate of 5% in the foreseeable future. Using the dividend growth (Gordon) model, what would you estima

What impact does the number of years until maturity have on the value of a bond?

1. What impact does the number of years until maturity have on the value of a bond? 2.List three capital budgeting methods (decision rules) and rank them from least to most useful. Defend your ranking. 3. Should capital budgeting projects be evaluated on their pre-tax or after tax cash flows? Why? 4. What is a stockhold

Office King Corp

This is a problem in managerial accounting. Can you give me some direction? Problem: Office King Corp. makes three different models of paper shredders including the waste container that serves as the base. While the shredder heads are different for three models, the waste container is the same. The number of waste containers

Discounted Cash Flow Analysis

Trying to find the present value of the cash flows with a discount rate of 11% componded quarterly. Year Cash Flow 1 $ 900 2 850 3 0 4 1,140

What should XYZ pay today to buy ABC?

XYZ, Inc. has an offer to buy ABC & Sons. XYZ thinks ABC can produce cash flows of $5k, $9k, & $15k over the next three years (respectively). After that, XYZ thinks ABC will be worthless. Using a 14% rate of return, XYZ must make it's purchase decision now. What should XYZ pay today to buy ABC? Please use Excel (prefera

Working Capital and Financing

Please help me complete and submit a 3,500-4,200-word Capital Structure Analysis Report. For this report, use Target. This report will consist of three sections: a. Working Capital Management Section 1) Identify which of the liquidity or efficiency ratios were under-performing relative to industry standard or were deterioratin

Corporate Valuation - Dozier Corporation

Question: Dozier Corporation is a fast-growing supplier of office products. Analysis project the following free cash flows (FCS) during the next 3 years after which FCF is expected to grow at a constant 7 percent rate. Dozier's cost of capital is WACC = 13% Time 1 2 3 Free Cash Flow -$20

Financing Growth Question

A leading retailer finds itself in a financial bind. It doesn't have sufficient cash flow from operations to finance its growth, and it is close to violating the maximum debt-to-assets ratio allowed by its covenants. The Vice-President for Marketing suggests: "We can raise cash for our growth by selling the existing stores and l

Cash Rebates on Electronics

Among the cash managment techniques used by most business are those that slow down their bill payments. A good example for this is "Cash Rebates" offered on household items like computers and other electronics 1) Are these practices sound business decisions? Are they ethical? Explain 2) What percentage of the rebaates offe

Acquisition Decisions at Kellogg's

Kellogg Co. agreed to acquire Keebler Foods Co. for $3.86 billion, or $42 per share. How would discounted cash flow analysis be used in analyzing such a major acquisition decision? What were Kellogg's objectives in the acquisition? What kinds of qualitative issues could enter into the decision?

Forecast model for sales

I need to create a forecast model for sales through operating income for Microsoft. The information needs to come from (

Calculating the WACC for Amazon

Describe how the Weighted Average Cost of Capital (WACC) is calculated in Evaluate the effectiveness of this approach.