Rate of return Essays & Research Papers

Internal Rate of Return Internal Rate of Return (IRR) Calculation of the true interest yield expected from an investment. Explanation of Internal Rate of Return. What is Internal Rate of Return? Definition The Internal Rate of Return (IRR) is the discount rate that delivers a net present value of zero for a series of future cash flows. It is an Discounted Cash Flow (DCF) approach to valuation and investing. As is Net Present Value (NPV). IRR and NPV are widely used to decide which...

Internal Rate of Return In investment decision analysis you may need to calculate internal rate of return. “Internal rate of return (IRR) is the discount rate that gives the project a zero NPV” (McLaney, 2006). It is a good choice to use for investment projects. There is a formula for the internal rate of return: (A is the lower discount rate and B is the higher rate, a is the NPV at the lower rate and b is the NPV at the higher rate.) For example the Net Present Value (NPV) is 88 when...

Ashley King Fin 534 Chapter 6 Hwrk Feb 2nd, 2014 1. You are considering investing in one of the these three stocks: Answer: B, B;A 2. Your friend is considering adding one additional stock to a 3-stock portfolio, to form a 4-stock portfolio. She is highly risk averse and has asked for your advice. The three stocks currently held all have b = 1.0, and they are perfectly positively correlated with the market. Potential new Stocks A and B both have expected returns of 15%, are in...

part one 1. Risk preferences Sharon Smith, the financial manager for Barnett Corporation, wishes to evaluate three prospective investments: X, Y, and Z. Currently, the firm earns 12% on its investments, which have a risk index of 6%. The expected return and expected risk of the investments are as follows: |Investment |Expected return |Expected risk | | | |index | |X |14% |7% | |y...

Accounting Rate of Return (ARR) ARR provides a quick estimate of a project's worth over its useful life. ARR is derived by finding profits before taxes and interest. ARR is an accounting method used for purposes of comparison. The major drawbacks of ARR are that it uses profit rather than cash flows, and it does not account for the time value of money. ARR is most often used internally when selecting projects. It can also be used to measure the performance of projects and subsidiaries within...

3 Factors that Influence Rate of Return Any bondholder, or any investor for that matter, will allow three factors to influence his or her required rate of return. The three factors are the following: real (pure) rate of return, inflation, and risk premium. These three factors equal the risk free rate which is the rate of return of an investment with no risk of financial loss. This is also the rate that investors would expect from an absolutely risk-free investment over a period of time....

LINEAR PROGRAMMING FORMULATION PROBLEMS AND SOLUTIONS 7-14 The Electrocomp Corporation manufactures two electrical products: air conditioners and large fans. The assembly process for each is similar in that both require a certain amount of wiring and drilling. Each air conditioner takes 3 hours of wiring and 2 hours of drilling. Each fan must go through 2 hours of wiring and 1 hour of drilling. During the next production period, 240 hours of wiring time are available and up to 140 hours of...

26) Company K is considering two mutually exclusive projects. The cash flows of the projects are as follows: Year | Project A | Project B | 0 | -$2,000,000 | -$2,000,000 | 1 | 500,000 | | 2 | 500,000 | | 3 | 500,000 | | 4 | 500,000 | | 5 | 500,000 | | 6 | 500,000 | | 7 | 500,000 | 5,650,000 | a. Compute the NPV and IRR for the above two projects, assuming a 13% required rate of return. b. Discuss the ranking conflict. c. What decision should be made regarding...

N ucor P reparation Questions 1. What have been the sources of Nucor’s competitive advantage so far (namely, up until 1986)? Do you think “business as usual” is likely to continue generating the same profits for Nucor? Why? 2. What are the technological risks associated with thin-slab casting? (What could go wrong and how bad would it be? You may find the spreadsheet posted with these preparation questions helpful here.) 3. What are the market risks associated with thin-slab casting?...

Harmonic Hearing 1) For both financing alternative, develop a model that shows forecasted revenues, expenses, profits, and free cash flows generated by Harmonic in years one through seven. -Model shown in chart below. • What is the terminal value of the company under each scenario? As you can see in the graph below, the terminal value for the company if it takes the equity route is about $106M, where if it takes the debt route its terminal value will be about $45M. • What cash payments...

UTD ID: NAME: UNIVERSITY OF TEXAS AT DALLAS SCHOOL OF MANAGEMENT FIN6310: INVESTMENT MANAGEMENT SOLUTIONS TO REVIEW QUIZ PROF. ARZU OZOGUZ SPRING 2013  Make, but state clearly, all the assumptions that you feel are necessary to answer any particular question.  To obtain partial credit, make sure you show all your work.  Please make sure you sign the Honor Pledge: I have neither given nor received any aid on this examination.________________ HELPFUL FORMULAS , , , , 1 , 1 , , 1 1...

Risk and Rates of Return – North Central Utilities Content 1.) Introduction 3 2.) Question 1 3 3.) Question 2 4 4.) Question 3 4 5.) Question 4 5 6.) Question 5 5 7.) Question 6 6 8.) Question 7 7 9.) Question 8 8 10.) Question 9 9 11.) Question 11 9 12.) List of References 11 13.) Appendix 12 1. Introduction In 1996, North Central Utilities (hereinafter NCU) is confronted...

LTA 1/04 • P. 9– 2 4 EVA LILJEBLOM AND MIKA VAIHEKOSKI* Investment Evaluation Methods and Required Rate of Return in Finnish Publicly Listed Companies ABSTRACT Financial literature advocates the use of the Net Present Value method for the evaluation of investments. Its key parameter is the required rate of return on equity, which is to be calculated using the Capital Asset Pricing Model or a similar model especially if the company is publicly listed. However, there is ample...

Table of Contents 1. Introduction 2 2. Literature review 3 2.1. ROI Case Study: IBM- November 2012 (Nucleus Research) 3 3. Methodology 4 4. Analysis 5 4.1. Adani Power 5 4.2. Torrent Power 6 5. Conclusion 7 1. Introduction An investment is an exposure of cash that has the objective of producing cash inflows in the future. The worthiness of an investment is measured by how much cash the investment is expected to generate. The analysis of Return on Investment (ROI) is a...

a. What are investment returns? What is the return on an investment that costs $1,000 and is sold after 1 year for $1,100? Investment returns is the expectation of earning money in the future on the amount of money invested. The return is the financial performance of the investment. The return is the difference between the amount invested and the amount you are returned after said investment. There are two ways to show return on investment. 1. By dollar return. Amount to be...

ANALYZING A PORTFOLIO a 58. You want your portfolio beta to be 1.20. Currently, your portfolio consists of $100 invested in stock A with a beta of 1.4 and $300 in stock B with a beta of .6. You have another $400 to invest and want to divide it between an asset with a beta of 1.6 and a risk-free asset. How much should you invest in the risk-free asset? a. $0 b. $140 c. $200 d. $320 e. $400 ANALYZING A PORTFOLIO d 59. You have a $1,000 portfolio which is invested in stocks...

Return On investment CONTENTS INTRODUCTION 6 The ROI Concept 6 Simple ROI for Cash Flow and Investment Analysis 7 Competing Investments: ROI From Cash Flow Streams 7 ROI vs. NPV, IRR, and Payback Period 10 Other ROI Metrics 11 LIST OF TABLES Table 1 6 Table 2 7 Table 3 8 Table 4 8 Table 5 8 Table 6 ………………………………....................... 9 Table 7 ………………………………...................... 10 Return on Investment: What is ROI analysis? Return on Investment (ROI)...

 ROI Project: Phase #1 Return on Investment (ROI): An examination of ROI financial analysis and its historical roots with the DuPont Company Return on Investment (ROI): An examination of ROI financial analysis and its historical roots with the DuPont Company Like it or not, with the current state of the economy, as well as, enforced implications of the Affordable Care Act, a large number of hospitals and healthcare agencies will close their doors for...

Alex Sharpe’s Portfolio Student Assignment 1. Returns and Risk Estimate and compare the returns and variability (i.e. annual standard deviation over the past five years) of Reynolds and Hasbro with that of the S&P 500 Index. Which stock appears to be riskiest? Reynolds appears to be the riskiest stock based on the returns and variability alone currently holding the highest average return out of two at 1.87%. With their higher return rate over the three they also hold the highest...

1. You are offered a T-note that pays $1,000 in 9 months (or 270 days) for $910. You have $910 in a bank that pays a 5% nominal rate, with 365 daily compounding. You plan to leave the money in the bank if you don’t buy the risk-free T-note. Which investment should you choose? Use the following all three solution methods to verify your answer. Greatest future wealth: FV Figure out FV of $910 left in a bank with 9 months, and then compare with T-note’s FV=$1,000 Inputs: N = 270, I/Y...

Risk and Return Assignment Questions 1. Suppose a stock begins the year with a price of $25 per share and ends with a price of $35 per share. During the year it paid a $2 dividend per share. What are its dividend yield, its capital gain, and its total return for the year? 2. An investor receives the following dollar returns a stock investment of $25: $1.00 of dividends Share price rise of $2.00 Calculate the investor’s total return. 3. Below are the probabilities for the economy’s...

1. Suppose you discover a treasure chest of RM10 billion in cash a. Is this a real or financial asset? Answer: Yes. 10 billion cash is the financial asset. This is because financial assets only obtain its monetary value from a contractual agreement of what it represents. In contrast, real asset itself has the physical value. b. Is society any richer for the discovery? Answer: No. This is because the cash does not contribute to the productive capacity of the economy. c. Are you...

Integrated Case 8-23 Merrill Finch Inc. Risk and Return Assume that you recently graduated with a major in finance. You just landed a job as a financial planner with Merrill Finch Inc., a large financial services corporation. Your first assignment is to invest $100,000 for a client. Because the funds are to be invested in a business at the end of 1 year, you have been instructed to plan for a 1-year holding period. Further, your boss has restricted you to the investment...

FINANCIAL MANAGEMENT – I RISK AND RETURN ANALYSIS SUBMITTED TO DR. SUSHMA VISNANI BY ABHISHEK DAS AVANIKANT MISHRA DAUD QIDWAI ANKIT TRIPATHI APURBA PRASAD NATH CONTRIBUTION Our project deals with Banking industry. In the project the various banks which are taken into account are Allahabad Bank, Canara Bank, Punjab National Bank, State Bank of India, and Union Bank of India. Each of the group members took up each of the bank and did their respective analysis. The banks which...

Ch 4: Return on Invested Capital 1. Drivers of Return on Invested Capital ROIC = (1-Tax Rate)*((Price per Unit-Cost per Unit)/Invested Capital per Unit) A company with a competitive advantage will have a higher ROIC because it either can charge a premium price or can produce at a more efficient cost. The structure-conduct-performance (SCP) framework is the strategy model that underlies our thinking about what drives competitive advantage and ROIC. The structure of an industry influences...

MPU 3353 Personal Financial Planning in Malaysia Investment Basics: Understanding Risk and Return 10-1 Introduction     Risk is a fundamental component of investing. Risk must be understood and managed. In selecting securities, it is important to understand and measure market risk. Then securities can be selected by choosing securities with expected returns that exceed required returns. 10-2 Chapter Objectives To grasp the nature of risk and its sources and to relate risk to...

PART 1 INTRODUCTION TO INVESTMENTS FN 3220 Investments CONTENT 1. 2. 3. 4. 5. The Investment Environment Asset Classes and Financial Instruments How Securities are Traded Mutual Funds and Other Investment Companies Risk and Return Inflation and real rate of return Inflation rate (i): Rate of increase in price level Nominal rate of return (R): Percentage change in dollars, i.e. return unadjusted for inflation Real rate of return (r): Percentage change in buying power, i.e. return adjusted...

Return on Investment case study Table of Contents INTRODUCTION ................................................................................................................................. 2 Return On Investment ................................................................................................................... 3 PART 1............................................................................................................................................... 4...

1. Calculating Returns ( LO1, CFA1) Suppose you bought 100 shares of stock at an initial price of $ 37 per share. The stock paid a dividend of $ 0.28 per share during the following year, and the share price at the end of the year was $ 41. Compute your total dollar return on this investment. Does your answer change if you keep the stock instead of selling it? Why or why not? 2. Calculating Yields ( LO1, CFA1) In the previous problem, what is the capital gains yield? The dividend yield? What...

Risk and return are most important concepts in finance. Risk and return concepts are basic to the understanding of the valuation of assets or securities. Return expresses the amount which an investor actually earned on an investment during a certain period. Return includes the interest, dividend and capital gains: while risk represents the uncertainty associated with a particular task. In financial terms, risk is the chance or probability that a certain investment may or may not deliver the...

 Chapter 11 Exercises 11-5 Return on Investment (ROI) Provide the missing data in the following table for a distributor of Martial arts products: 11-9 Return on Investment (ROI) and Residual Income Relations A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing information in the table below: 11-18 Return on Investment (ROI) and Residual Income “I know headquarters wants us to add that...

Homework ES 1. (TCO 8) The historical returns on large-company stocks, as reported by Ibbotson and Sinquefield, are based on: (Points : 3) the largest 20 percent of the stocks traded on the NYSE. the stocks of the largest 10 percent of the publicly traded firms in the U.S. all of the stocks listed on the NYSE. the stocks of the 500 companies included in the S&P 500 index. 2. (TCO 8) If the financial markets are efficient, then: (Points : 3)...

 Raising the Interest Rate Principles of Finance Introduction After years of declining interest rates, we are facing a dilemma; should the Federal government increase rates to contain inflation, or keep rates low to boost the US economy? Increases in consumption of oil, metals, materials, and food, both foreign and domestic, are increasing demand. Prices are rising on a global scale as demand increases. Additionally, the US is experiencing rising costs for healthcare and education....

Case # 15 Teletech Corp   Table of Contents   1. Introduction Teletech Corporation is headquartered in Dallas, Texas. The company defines itself as a “provider of integrated information movement and management.” Teletech has two main business segments: Telecommunications Service, Which provided long-distance, local, and cellular service to business and residential customers, and secondly, the Products and Systems segment, which engaged in the manufacture of computing...

Solution to Problem Set 1 1. You are considering various retirement plans. Your goal is to have a lump sum of $3,000,000 available (‘in the bank’) when you retire at age 67. The various plans, with their payment schedules, are listed below. In each case, calculate the payment(s) that must be made into the plan to ensure that you have the $3,000,000 available. For each plan, you may assume that your opportunity cost of funds is 6% per year; for each plan, you may assume that the phrase...

TELETECH CORPORATION, 1996 Raiders Dials Teletech Wake-up Call Needed Says Investor New York (AP)---The reclusive billionaire Victor Yossarian has acquired a 10 percent stake in Teletech Corporation and has demanded two seats on the firm’s board of directors. The purchase was revealed yesterday in a filing with the Securities and Exchange Commission, and separately in a letter to Teletech’s CEO, Maxwell Harper. “The firm is misusing its resources and not earning...

THE DIRECT D E T E R M I N A T I O N of RISK-ADJUSTED DISCOUNT RATES and LIABILITY BETA RUSSELL E. BINGHAM T H E H A R T F O R D FINANCIAL SERVICES G R O U P Table of Contents Page 2 3 5 7 8 11 12 13 14 14 15 16 17 17 18 Subject Abstract 1. Summary 2. Total Return Model 3. After-Tax Discounting 4. Derivation of Risk-Adjusted Discount Rate and Liability Beta Figure l : Baseline Risk / Return Line vs Leverage 5. Liability Beta Figure 2: Equity vs Liability Beta Figure 3: Equity Beta...

Which one of the following statements is correct concerning annual percentages rates (APRs)? Answer: The APR is equal to the monthly interest rate multiplied by 12 Give an interest rate of zero percent, the future value of a lump sum invested today will always: Answer: remain constant Answer: II and IV A firm created as a separate and distinct legal entity that may be owned by one or more individuals or entities is called a: corporation The capital structure of a firm refers to...

Homework #1 Financial Management Prof. S.J. Kim BIZ2119-07 Fall, 2012 1. What is the difference between accounting income and cash flow? Which do we need to use when making decisions? 2. Why is there a difference between the interest rates on AAA corporate bonds and U.S. Treasury notes? 3. Your father is about to retire. His firm has given him the option of retiring with a lump sum of $50,000 in ten years or an annuity of $8,000 for ten years. Which is worth more now, if the...

Credit Policy Decisions Christian L. Proulx Axia College of University of Phoenix Credit Policy Decisions Collins Office Supplies is considering a more liberal credit policy to increase sales, but expects that 9 percent of the new accounts will be uncollectible. Collection costs are 5 percent of new sales, production and selling costs are 78 percent, and accounts receivable turnover is five times. Assume income taxes of 30 percent and an increase in sales of $80,000. No other asset buildup...

Commercial Real Estate Return Performance: A Cross-Country Analysis by David C. Ling and Andy Naranjo* *Department of Finance, Insurance, and Real Estate Warrington College of Business University of Florida Gainesville, FL 32611-7168 Phone: (352) 392-0153 Fax: (352) 392-0301 March 2000 Latest Revision: December 2000 We thank Piet Eichholtz, Pat Hendershott, Charles Ward, two anonymous referees, and participants at the Maastricht-Cambridge Property Investment Symposium for valuable...

P8-1 a) Expected Rate of Return $ $ $ Y 55,000 6,800 55,000 X Previous Market Value Cash Flow Current Market Value X 20,000 $ 1,500 $ 21,000 $ Y 12.50% 12.36% X: rt = (Ct + P rt = ($1,50 rt = 0.125 = b) Both investments are equally risky. Keel should recommend Investment X because it has a Pt - Pt-1) / (Pt-1) Y: rt = (Ct + Pt - Pt-1) / (Pt-1) 0 + $21,000 - $20,000) / ($20,000) rt = ($6,800 + $55,000 - $55,000) / ($55,00 = 12.5%...

CHAPTER 5: INTRODUCTION TO RISK, RETURN, AND THE HISTORICAL RECORD PROBLEM SETS 1. The Fisher equation predicts that the nominal rate will equal the equilibrium real rate plus the expected inflation rate. Hence, if the inflation rate increases from 3% to 5% while there is no change in the real rate, then the nominal rate will increase by 2%. On the other hand, it is possible that an increase in the expected inflation rate would be accompanied by a change in the real rate of interest....

How Good Are Private Equity Returns? This article by Robert Conroy and Robert Harris researches the historical successfulness of investments in firms from the private sector as opposed to investments in firms traded publicly. The article begins by referencing how private equity investment has grown from what they believe is a correlation to huge management fees, reduced transparency and concern over job loss. More institutions are taking this path in search of higher returns and...

b 1. Your grandmother invested one lump sum 17 years ago at 4.25 percent interest. Today, she gave you the proceeds of that investment which totaled $5,539.92. How much did your grandmother originally invest? a. $2,700.00 b. $2,730.30 c. $2,750.00 d. $2,768.40 e. $2,774.90 d 2. Forty years ago, your father invested $2,500. Today that investment is worth $107,921. What is the average rate of return your father earned on his investment? a. 8.50 percent b. 9.33 percent c. 9.50...

Question 1 ( 5 points) In a world with no frictions (taxes, etc.), value is created by how you finance a project. True. False. Question 2 (5) The return of equity is equal to the return on debt of a project/firm Always true. Never true. Sometimes true. Question 3 (10 points) Moogle, Inc. is in the same business as Google, Inc., but has recently retired all its debt to become an all-equity firm. Its return on equity has dropped from 12.25% to 10.60% as a result of this. Google, Inc....

Time Value of Money Exercise 1. If you invest $1000 today at an interest rate of 10% per year, how much will you have 20 years from now, assuming no withdrawals in interim? 2. a. If you invest $100 every year from the next 20 years starting one year from today and you earn interest of 10% per year, how much will you have at the end of the 20 years? b. How much must you invest each year if you want to have $50000 at the end of the 20 years? 3. What is the present value of the...

Teletech Corporation 1. What is a hurdle rate? How do you use it in a project evaluation? Hurdle rate is the minimum amount of return on a project the company is willing to accept before starting a project. It is used in project evaluation to evaluate the amount of return on the project. A common method for evaluating the hurdle rate is apply the discounted cash flow method to the project, like net present value. 2. How does Teletech Corporation currently use the hurdle rate? They...

Nguyen Duc Thuan ID: 1349672 FIN 3331 – Risk & Return Assignment 1. Answers: The expected return of this stock is: E[RJ] = 0.2(12%) + 0.35(18%) + 0.3(-10%) + 0.15(10%) = 7.2% The standard deviation is: 2J = 0.2(0.12 – 0.072)2 + 0.35(0.18 – 0.072)2 + 0.3(-0.1 – 0.072)2 + 0.15(0.1 – 0.072)2 = 0.0135 J = = 11.63% 2. Answers: The average return and standard deviation of Large co. stock return is: Sum of Large co. stock = -14.69 – 26.47 + 37.23 + 23.93 – 7.16 + 6.57 = 19.41 Mean =...

The cash flow, return and risk characteristics of private equity * † Alexander Ljungqvist Stern School of Business New York University and CEPR Matthew Richardson Stern School of Business New York University and NBER First draft: November 14, 2002 This draft: January 9, 2003 We are grateful to an anonymous institutional investor for making the data used in this study available, and to Eric Green for many helpful discussions and suggestions. We also thank the Salomon Center at NYU...

Total Cost of Ownership: This is defined as the an approach for measuring financial returns which involves consideration of all the additional costs required to support and maintain the item purchased for its full useful life and adding such costs to the purchase price (Reh, n.d). Calculating TCO No general formula for calculating TCO exist the general principle is Purchase Costs + All other additional costs. In IT investments some additional costs might be cost of maintenance, support...

Internal Rate of Return (IRR) and Net Present Value (NPV) are both powerful tools used in business to determine whether or not to invest in a particular project; both methods have its pros and cons. If given a choice I would choose NPV, because of the potential to anticipate profitability. As it is assumed that the objective of a firm is to create as much shareholder wealth as possible for its owners through the efficient use of resources, the preferred method in determining whether or not to...

Return on Investment (ROI) and Total Cost of Ownership: A Comparison Introduction When a business decision is made to make an investment, the need for metrics arises to decide the profitability of the investment. These metrics can be measured before an investment is made to gain an insight into expected returns or they can be measured at regular intervals, (quarterly or yearly) to analyse the profitability of the investment. There are quite a few metrics that are used to calculate...

Return on Investment In Information Technology: A Guide for Managers Anthony M. Cresswell Center for Technology in Government University at Albany, SUNY 187 Wolf Road, Suite 301 Albany, NY 12205 Phone: (518) 442-3892 Fax: (518) 442-3886 E-mail: info@ctg.albany.edu www.ctg.albany.edu August 2004 ©2004 Center for Technology in Government The Center grants permission to reprint this document provided this cover page is included. CENTER FOR TECHNOLOGY IN GOVERNMENT—RETURN ON...

How can risk influence risk premium? How are risk and return related? Risk and return are the fundamental basis upon which investors make their decision whether or not they should invest in a particular investment. How they are related and the influence between the two, is the decision making process that all investors must weigh up. This essay will show how risk can influence risk premium, outlining their relationship and how risk and return are related. Within any investment there is a...

Case Study: How to Calculate Return Profits on Rental Property Investment make more money through rental income property investment Property Profile Property Type : Serviced Apartment Size : 821 square feet Purchase Price : $ 235,900.00 Down Payment : $ 23,590.00 Home Loan Amount : $ 212,310.00 Home Loan Installment : $ 1,173.00 per month Gross Rental : $ 2,200.00 per month Expenses : $ 832.37 per month * Service Charges = $ 164.05 * Sinking Fund = $ 16.79 * Quit...

P 3–4: Just One, Inc. Just One, Inc., has two mutually exclusive investment projects, P and Q, shown below. Suppose the market interest rate is 10 percent. The ranking of projects differs, depending on the use of IRR or NPV measures. Which project should be selected? Why is the IRR ranking misleading? Using the IRR method will result in project Q being selected over P due to its higher rate of return. Using the NPV method would result in choosing project P because of its higher NPV....

COKE vs. PEPSI Finance Case Write-up In this writing, we will discuss about WACC, EVA, their uses in evaluate a firm's performance… and apply into a particular case of comparing performance of Coca Cola and Pepsi based on the past and forecasted data. 1.Definitions of EVA and its strengths and limitations Economic value added (EVA) has been getting plenty of attention in recent years as a new form of performance measurement. An increasing number of companies are relying heavily upon EVA...

 Caledonia Products Integrative Problem FIN/370 April 7, 2014 Christine Gordon Caledonia Products Integrative Problem Caledonia Products recently acquired a new financial analyst assistant. Before “unleashing” the new assistant into a solo position Caledonia Products has set a huge task. The new assistant has to take under consideration a new investment, of creating and distributing a new product. The new project would last five years and cost a total of $1,000,000 over the...

Calculating Beta for Compuware Corporation Financial websites tend to calculate beta on securities differently for publicly traded companies. Beta is merely an estimable measure of an assets’ risk in relation to the market. Because each website has their own underlying assumptions, they compute beta to have different values. In some cases, the variance in beta is as large as 0.50. To find out what underlying assumptions websites used to compute their betas, we performed a series of...

KATLIN ANN M. FERNANDEZ SHUI FABRICS DEFINE THE PROBLEM IN THE CASE Shui Fabrics is a joint venture business between an American Company, Rocky River Industries and Shanghai Fabric Ltd. from China. The goal of the company is to produce dye and coat fabric to sell to China and international sportswear manufacturers.The problem in this case is that Ray Betzell, the general manager of a joint venture between Rocky River Industries and Shanghai fabrics is torn between two companies. The...

Returns and Standard Deviations of Local Markets Examining whether or not diversifying your domestic portfolio with international investments is a question that has been posed since true financial globalization began in the latter part of the 20th century. In this case we were presented with a situation where a large investor voiced his concerns with his investment expert about investing in foreign financial instruments. The client was concerned with investing abroad when the home markets...

1. Are the four components of Marriott’s Financial Strategy consistent with its growth objective? Marriott's sales grew up by 24% and its return on equity stood at 22% in the year 1987, the sales and earnings per share has doubled over the previous year as stated in the case study. The company operates in three divisions: lodging, contract services and restaurants which represents 41%, 46% and 13% of sales in 1987 respectively. Marriott is determined to develop and to enhance its position in...

I have clarified the last question in the case for chapter 7. This doesn't change the question, but rather clarifies the intent of the question. The question asks for you to comment on how Dan could have done a better job based on the behavioral guidelines for the collaborative approach. You will find these guidelines at the end of the chapter, and these guidelines deal with the roles of initiator, responder, and mediator. I have re-written to question below to clarify the intent of...

FedEx Corporation Complete the following exercise (Research and Application 11-30) and submit to your instructor. The questions in this exercise are based on FedEx Corporation. To answer the questions you will need to download FedEx’s Form 10-K for the fiscal year ended May 31, 2005 (file date July 14, 2005). You do not need to print this document to answer the questions. Required: • What is FedEx’s strategy for success in the marketplace? Does the company rely primarily on a customer...

WAYSIDE INN INC CASE STUDY 2. Company Analysis Wayside Inns was formed in 1980 as the successor to United Motels Enterprises, a company that operated several franchised motels under licensing agreements from two national chains. Wayside has been experiencing brisk business and is currently operating at near full capacity. To capture more business Wayside is considering a 40-room expansion for the motel. We shall evaluate the company using a SWOT analysis. Threats - Competitors are...

When choosing our risk free rate, we decided to base it off of the assumption that the project would last 5-10 years. The 5 year bond yield is 6.22% and for 10 years 6.34% (Exhibit 3) which averages out to a risk free rate of 6.28%. Prevailing Yields on U.S. Government Securities (August 31, 1997) | | Annualized Yield to Maturity | | | | | 3-Month T-Bills | 5.24% | | 1-Year Bonds | 5.59% | | 5-Year Bonds | 6.22% | | 10-Year Bonds | 6.34% | | 20-Year Bonds | 6.69% |...

MCS Assignment on Calculation of EVA for ACC Company {draw:frame} Group members: *Company Profile*: The corporate and registered offices are at Cement House, Mumbai. The company has two subsidiaries namely Bulk Cement Corporation India which caters to bulk cement requirements and ACC Machinery Company which manufactures machinery and equipment for use in chemicals and cement industries. It has associations with Yanbu Cement Company, Saudi Arabia for operating and managing their...

Case Solution Cost of Capital at Ameritrade | | • Executive summary: Formed in 1971 and listed in March 1997, Ameritrade has been one of the most successful players in the deep- discount brokerage sector. Ameritrade’s two major sources of revenue, Transaction income (brokerage commissions, clearing fees, and payment for order flow) and Net interest revenues that were generated from net...

 Name: Tung Son Nguyen ID: 1418366 (Bold letters below are my answers) FIN 3331 – Risk & Return Assignment 1. You are given the following probability distribution of returns for stock J: A probability of .2 that the return will be 12%; a probability of .35 that the return will be 18%; a probability of .3 that the return will be -10%; and a probability of .15 that the return will be 10%. What is the expected return of this stock? What is the standard deviation rounded to the nearest...

Background The Teletech Corporation operated in two business segments: Telecommunications Services (TS), and Products and Systems (P&S). Though Teletech was a dominant service provider in the area, the company has been experiencing a downtrend of earning growth and stock prices due to keener competition and worse performance in certain segment. Problems statement Teletech has been using economic profit as a measure of value creation at the segment and business-unit level and net present...

Return on Investment in Talent Management: Measures You Can Put to Work Right Now A Human Capital Institute Position Paper - September, 2004 Sponsored by By David Creelman Return on Investment in Talent Management 1 Return on Investment in Talent Management: Measures You Can Put to Work Right Now Key Points: 1. Attempts to put a dollar value on “human capital”, the way we would do for items like inventory, have not been successful. 2. There are good, proven, practical measures like...

MBA 203: Problem Set 4 Cost of Capital at Ameritrade Due: Wednesday, November 28, 2012, by 9:00 a.m. The course material covered in weeks 4 and 5 should be sufficient for doing this problem set. The questions below are for the Cost of Capital at Ameritrade case in your course packet. You can find the data for this case on the course website in a spreadsheet named Ameritrade.xls. Please turn in your problem set solutions by posting them to bSpace as an Excel file or pdf file. Upload a single...

1. Which of the investment alternative: Provides the highest returns to the client? Provides the highest profits to Stuart&Co.? In order to find the right result for each question, I suppose the client of each situation will invest $10,000. I will make a lot of calculations to support my opinion. The process listed as Exhibit1, Exhibit2 and Exhibit 3. Both Alternative A and C will provide the highest returns to the client depending on the period of investment. In this case, A has the highest...

Shui Fabrics: Critical Analysis of a Global Problem Introduction Shui Fabrics is a China based fabric company that is a 50%-50% joint venture between a Chinese company and U.S. Textile manufacturer. At present, it produces dye and coat fabric for both domestic as well as international market. There will be a discussion of differences between American and Chinese perspectives on Shui Fabrics' ROI by using the Global project dimensions. Along with this, a strategy will be also discussed to...

Automotive Builders, Inc.: The Stanhope Project Saad Ahmed Benjamin Baer Alket Koci James Sanchez Overview ABI started as the Farm Equipment Company after World War I. The company began using diesel engine parts for their tractors. The company saw progressive growth and became a multimillion-dollar company by 1940. During World War II the company became a producer tanks and trucks for the military. Once the war was completed the company began to establish itself as a producer...

Kirkpatrick-Philips Model Knowing there is a definitive need to measure the impacts of a large corporate cost like learning it is fitting to have an industry acceptable model for doing so. This model is actually one that has been in existence since the 1950’s but continues to be accepted today using technology and creativity to maximize its benefits for the modern corporation. In 1959, Donald L. Kirkpatrick, PhD, published a series of four articles called “Techniques for Evaluating Training...

Question 1 Your finance text book sold 53,250 copies in its first year. The publishing company expects the sales to grow at a rate of 20 percent for the next three years, and by 10 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in year 3 and 4. (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answers to the nearest whole number.) Number of copies sold after 3 years...

 Economics 101 Summer 2008 Independent Learning @ WLC Instructor: Dr Jack Kapoor Assignment #4 Individual Investment Plan Dawn M Russo To begin assignment four, I created three long-term financial goals: 1. Emergency Fund: 6 months to 1 year of gross income. 2. College Funding: Two children, ages 6 and 11 years old. 3. Retirement Plan: Including provisions for the possible Social Security program...

Annuities # 2 Time Value of Money (TVM) Understanding how the time value of money works can be most easily explained by taking your initial investment let us say $10 by the end of year five it could be worth $100. This means you have earned $90 in the last five years. Next year, you invest $10 and at the end of year five it is worth $80 because interest has not accumulated on the time that was lost between year 1 and year 2. My example of this is that my fiancé put $3000 in each of...

Jason Hurley FINA 3144, Dr. Glegg Financial Markets Excel Project Part 1: 1. The bond prices are all different due to the coupon payments and the years left to maturity all being different for each bond. Since each bond’s coupon rate is different, it has a direct effect on the coupon payments for each bond, which makes each bond price different. 2. The duration for each bond tells you what is the total percentage increase or decrease each year for the weighted values of each...

Financial Decision Making Final Project Case analysis: Marriott Corporation Introduction and background The Marriott Corporation, an American firm, was founded in 1927 by J.Willard Marriot.The company began as a small beer stand and soon began to sell food and provided lodging that expanded rapidly. With the help of his wife Alice, the family owned business had 45 restaurants in nine states by 1940 and grew into one of the leading service companies. The Company has three major...

Ratio analysis The ratios for years 2008-2012 are divided into the following groups: profitability, liquidity, gearing, employees and growth rates. Profitability ratios ROCE ROCE started with a pleasing increase of 12.32% in 2009, however began to fall; decreasing by 32.14% from 2009 to 2011. Finally in 2012 the ratio increased again by 10.7%. The target ROCE is often 15-30%, so ASOS exceed the target return rate every year, with exception of 2011 (France, 2013). ASOS therefore shouldn’t have...

Chapter 5: Performance Evaluation To evaluate the performance of BRAC bank Limited the following parameters are considered in the next part of the paper. 1. Asset 2. Deposit 3. Investment 4. Operating Profit 5. Capital Adequacy 6. Loans & Advance 7. Non-funded Income 8. Revenue per Employee 9. Operating Cost per Employee 10. Cost to Income Ratio 11. Operating Cost as a Percentage of Loans and Advances 12. Fund Management 13. Earning Per Share...

The definition of the efficient frontier says that “the efficient frontier represents the set of portfolios that has the maximum rate of return for every given level of risk, or the minimum risk for every level of return.” I plotted standard deviation on x axes and Returns on y axes to interpret efficient frontier. Exhibits also include these and the graphs you asked for as graph2: In our study, we concentrated on the optimal portfolios, the one which has the lowest volatility or risk, for...

Waltz on the Danube Executive Summary The purpose of this case is to establish the viability of the €75 million shopping center project located along the Danube River in the city of Gyor. As the director of Hungarian operations for ECE Projektmanagement Dr. Philipp von Wilmowsky had worked for two years on the 30,300 square meter shopping center. So while Gyor lack significant a shopping center thus creating a site that had great potential there were several major questions that would...

Group Case 1: Ameritrade – Cost of Capital Executive Summary: As a deep-discount brokerage, Ameritrade planned to improve its competitive position by price cutting, technology enhancements, and increased advertising in mid-1997. Before initiating the plan, Ameritrade needed know whether the investment returned more than it cost. We were hired to estimate the cost of capital correctly. The key question is to find suitable comparable firms to estimate Ameritrade’s asset beta, since it was a...

THE UNIVERSITY OF HULL The Business School HKU SPACE Level 6 Examination 1 August 2010 Current Issues in Finance Date : 1 August 2010 Time Allowed : 2 hours Answer THREE questions – At least ONE question from each section. Standard calculators (non-programmable) may be used. Tables are attached. Do not open or turn over this exam paper, or start to write anything until told to by the Invigilator. Starting to write before permitted to do so may be seen as an attempt to...

VALUE-BASED MANAGEMENT CONTROL PROCESSES TO CREATE VALUE THROUGH INTEGRATION A LITERATURE REVIEW ANNE AMEELS e-mail: anne.ameels@vlerick.be PROF. DR. WERNER BRUGGEMAN e-mail: werner.bruggeman@vlerick.be GEERT SCHEIPERS e-mail: geert.scheipers@bmcons.com D/2002/6482/18 VALUE-BASED MANAGEMENT: AN INTEGRATED APPROACH TO VALUE CREATION A LITERATURE REVIEW ANNE AMEELS e-mail: anne.ameels@vlerick.be PROF. DR. WERNER BRUGGEMAN e-mail: werner.bruggeman@vlerick.be GEERT SCHEIPERS e-mail:...

Show your work. The first 7 questions are worth 5 points each. 1. Which form of the efficient market hypothesis implies that security prices reflect all information contained in past prices? Weak 2. Holden Bicycles has 1,000 shares outstanding each with a par value of $0.10 each. If they are sold to shareholders at $19 each, what would the capital surplus be? $18,900 3. You own 1,000 shares of a stock. You can cast your 1,000 votes for a single director. What kind of voting does the...

Report prepared for Peter Sharpe Prepared on 1 June 2012 This report is made to provide suggestions to Peter Sharpe about the local Redcliffe gift shop and whether he should invest into it or not by using the following financial ratios: Gross Profit, Net Profit and Rate of Return on Owner’s Equity. The Gross Profit Ratio tells the business the relationship between gross profit and sales and the amount is used to cover the operating costs of the business. This ratio is calculated by finding...

Wk5 problem set Problem 5.17 Growth rate: Your finance textbook sold 53,250 copies in its first year. The publishing company expects the sales to grow at a rate of 20 percent each year for the next three years and by 10 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in years 3 and 4. Draw a time line to show the sales level for each of the next four years. 1) 53250 x 1.20 = 2) 1st Year = 63900 x 1.20 = 3) 2nd year = 76680 x 1.20 =...

Definition of 'Return On Investment - ROI' A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. The return on investment formula: In the above formula "gains from investment", refers to the proceeds obtained from selling the investment of interest....

Rana, Erec C. Management Dynamics SHUI FABRICS: A CASE STUDY I. PROBLEM Low return on investment is the main problem of Shui Fabrics as to US standards. It has stuck to 5% for three years and the Rocky River President expects 20%. II. OBJECTIVE To increase the return of investment of Shui Fabrics to 20% or better. III. ANALYSIS OF RELEVANT FACTS 1. Shui Fabrics is a 50-50 joint venture between the US textile...

SOCIALLY RESPONSIBLE INVESTMENT: IS IT PROFITABLE?∗ PHOEBUS J. DHRYMES Columbia University July 1997; revised June 1998 1 What is Socially Responsible? Before we can answer the question we posed in the title, we need to define just what is “socially” responsible. Evidently, the meaning varies with time and place, since social responsibility is defined by a group’s cultural and ethical values. For example in the middle ages lending with interest was not considered ethical, let alone...

1.) Currently Teletech Corporation uses 9.30% as their hurdle rate and satisfied with the intellectual relevance of a hurdle rate as an expression of the opportunity cost of money by the managers. As a result the firm’s share prices are inactive. Their price-to-earnings ratio is also below investor’s expectation in comparison to the company’s risk. The relationship between risk and return is important to take into consideration. The constant hurdle rate results in a flat line and doesn’t...