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Financial Decision Making: Project Selection and IPO

Please see the attached file and help so that I can learn from these problems.

SAMPLE QUESTION 1

Your company is considering three mutually exclusive projects. Project A will expand the existing business operations in the current location. Project B will expand the existing business operations to the adjacent county. Project C will expand into a new business operation that is not related to current business operations. Surprisingly, the projected financial cash flows and the analyses of these two projects yield exactly identical results:

Project A Project B Project C
NPV @ 15% $12,100 $12,100 $12,100
IRR 25% 25% 25%
Payback 2.7 yrs 2.7 yrs 2.7 yrs

How should your company determine which project to select? Are there non-financial considerations that should be taken into account? Are there additional financial analyses that should be performed?

SAMPLE QUESTION 2

Select any Initial Public Offering (IPO) of your choice. Use the Internet to identify the following characteristics of your selected IPO:
a. Initial offering price
b. Price 1 month after offering
c. Current market price
d. Number of shares outstanding at the time of the IPO
e. Number of shares outstanding 1 month after offering
f. Current number of shares
Explain why the IPO was successful or not

SAMPLE QUESTION 3

Provide an example of when a merger or an acquisition, rather than an IPO, is a more appropriate way to grow.

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The response addresses the queries posted in 1027 words with references.
//Before writing about the Initial Public Offer (IPO) and merger of HLL with TOMCO, it is essential to know about the 'Mutually Exclusive Projects'. One should know about the main factors that should be considered, while analyzing any of the projects in an effective manner.//

Sample Question 1

There are three mutually exclusive projects; it means that only one can be accepted. All of them serve different purposes. Project A will expand the existing business in the current location, Project B will expand the existing business in a new location and Project C will expand into a new business. In this case, several other factors need to be considered. First of all, the company should consider the phase in which the business is. (Pandey, 2007) If the business is in an expansion phase and it has enough scope to expand operations in its existing place of business, it should accept Project A. While, if the company is in expansion phase, but there is no scope of expansion in the existing place of business, it can accept Project B. If the company wants to diversify and expand into a new business and it has the resources to fund an entirely new venture, it can accept Project C.

Another factor that should be considered is the life of the project; that is; the time till the project is expected to earn and give returns. The project, which has the longest life or which gives returns for the longest period of time should be accepted.

Also, the initial investment should be considered. If the life of the ...

Solution Summary

The response addresses the queries posted in 1027 words with references.

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