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Capital Budgeting the Beta for

Words: 749 Length: 3 Pages Document Type: Case Study Paper #: 47241299







D 20 Lev







D 50 Lev







5. The only project that is unacceptable is Project D. At the 50% leverage level. This has a negative NPV. The other projects at each leverage level all have positive net present values. The following graph shows the NPVs for the different projects:

6. My objective in making this decision is to maximize firm value. The projects are mutually exclusive. I would use NPV as the main criteria. This means that Project B. is the most desirable, at the zero leverage level. Project A is the second-most desirable, against at the zero leverage level. Project C. is the third-most desirable. Project D. is the least desirable and at the 50% leverage level is unacceptable. I feel that it is best to use NPV has the criteria…… [Read More]

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Capital Resource Management Plan for

Words: 2195 Length: 8 Pages Document Type: Term Paper Paper #: 53743170

The recapitalization of the fleet is however in need to be changed in the meaning of adding new sources of income to ensure the adequate functioning of the fleet. In this order of ideas, the following are noteworthy for consideration:

a) Attracting more sponsorships

The targets of these actions would be large corporations or other significantly wealthy institutions. On the one side, these contributors would benefit in image and reputation from the support they offered to the fire department. The improved image would materialize in increased trust from the part of community and even higher sales levels. On the other hand however, the corporations would receive tax incentives for the sponsorships meaning as such that they would once again be remunerated for their financial support. Given these two benefits, it would be rather efficient to approach corporations for sponsorships and the success rates estimated for this endeavor are high.

b)…… [Read More]


Work, R.O., 2005, To take and keep the lead: a naval fleet platform architecture for enduring maritime supremacy, CBA Online,  last accessed on August 24, 2010

1998, Recapitalizing the navy: a strategy for managing the infrastructure, National Academic Press, ISBN 0309063353

2010, Recapitalization, Investopedia, terms/r/recapitalization.asp" target="_blank" REL="NOFOLLOW">
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Capital Budgeting the Projected Free

Words: 2188 Length: 7 Pages Document Type: Research Proposal Paper #: 50044804

But even with no cost savings whatsoever, this project has a positive NPV.

e can see, therefore, that the greatest area of sensitivity is with the terminal value. The terminal value at present is worth $143 million of the NPV. If we break down the variables that go into the terminal value, however, we notice that the cost savings are critical. If SGA expense is not reduced, then the terminal value is reduced to $67 million and the total NPV for the entire project ends up being $98 million. This figure is less sensitive to the change in cost of goods sold.

e should also consider testing combined sensitivity of our shakiest projections. Sales may not live up to expectations and cost savings might not occur. If we assume no net income and no additional cost savings, the project will have an NPV. If we assume that our expectations for…… [Read More]

Works Cited:

No author. (2009). Free Cash Flow. Investopedia. Retrieved May 13, 2009 from terms/f/freecashflow.asp" target="_blank" REL="NOFOLLOW">
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Capital Decision Making a Decision as a

Words: 794 Length: 3 Pages Document Type: Essay Paper #: 85363415

Capital Decision

Making a decision as a venture capitalist, whether as a director/adviser for a venture capital firm or as an individual investor looking for a substantial investment opportunity, requires a great deal of consideration on various levels. Before a decision to invest is made, a careful consideration of the quantitative and qualitative aspects of a company must be undertaken, and the potential payoff of any investment must be weighed against the risks identified both within the company and in its operating environment. The following paragraphs will present a brief analysis of two publicly traded companies that are well-established, yet are also potentially large investment opportunities for an entity with an appropriate amount of capital. The risks and current states of these companies will be assessed along with other details and information in order to determine which company represents the best investment.


pSividia Corp., founded in 1987, specializes in…… [Read More]


Yahoo Finance. (2011). PSVD. Accessed 2 June 2011. 

Yahoo Finance. (2011). SMED. Accessed 2 June 2011.
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Capital Is Described as the

Words: 768 Length: 2 Pages Document Type: Research Paper Paper #: 19565443

Therefore, the specific amount of debt within the firm has a strong impact on the determining the accurate weighted cost of capital. Actually, the determination of a firm's WACC is dependent on the debt value together with the value of equity.

While debt capital is the lower cost source of capital, debt is usually borrowed from sources outside the multinational enterprises since subsidiaries tend to borrow directly from markets. Therefore, multinational enterprises don't highly leverage their capital structure because of the source of debt. Moreover, MNEs don't highly leverage their capital structure because this is one of the most complex aspects of financial decision making that is closely linked to other financial decision variables ("Leverage and Capital Structure," n.d.). These enterprises don't highly leverage because poor capital structure decisions can contribute to high cost of capital, which in turn lowers the net present value of projects and makes them increasingly…… [Read More]


"Cost of Capital." (n.d.). Chapter 14. Retrieved from University of Windsor website: 

Drake, P.P. (n.d.). The Cost of Capital. Retrieved from James Madison University website:
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Capital at Ameritrade Is One

Words: 1251 Length: 5 Pages Document Type: Term Paper Paper #: 56884754

Because Ameritrade's Initial public offering was in March of 1997, the time series is to short for estimating beta (August 1997), as the provided data will give inaccurate results. That's why in order to estimate beta for Ameritrade correctly we can refer to the finance data of the comparable companies. It means that we should choose companies, which have cash flows with similar risk indexes, as these companies will have same asset beta indexes. For running such test 14 different firms in 4 industries (investment services, Internet services, discount brokerage, internet) were chosen: A.G. Edwards, Bear Stearns, Lehman Brothers, MSDW, Paine Webber, . James, Merrill Lynch, Mecklemedia, Netscape, Yahoo, Charles Schwab, E*Trade, Quick & eilly, Waterhouse Investor Services.

We can use the following formula to calculate beta for the firms above:

In order to estimate reliable results we should choose firms, which specialize in brokerage services. Discount brokerage firms get…… [Read More]


Mitchell, Mark Stafford, Erik Cost of capital at Ameritrade, Harvard Business School April 26, 2001

Ameritrade, History 

Federal Government vs. Private Accounting
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NPV Mirr IRR Cost of Capital

Words: 725 Length: 2 Pages Document Type: Essay Paper #: 76171979

Capital Budgeting

einvestment rates are an embodied assumption in the NPV, I and MI methods because in each of those methods, the cost of capital for the company is typically used as the discount rate. The cost of capital for the company is going to be comprised of the different elements of the capital structure, but in each of those the reinvestment rate is a key factor. It is assumed that the cost of capital is the reinvestment rate under each of these methods, and this assumption introduces the potential for error.

The assumed reinvestment rate of MI is the cost of capital, but this is problematic for a couple of reasons. The first is that this does not take into account project-specific risk (Damodar, n.d.). Each project has its own risk. Thus, the reinvestment rate should not necessarily be the same rate that is used in an NPV, I…… [Read More]


"Chapter 10: Capital budgeting -- why it matters" (2014) Norwich University. In possession of the author.

Damodar, A. (no date) The components of risk. NYU Stern School of Business. Retrieved Jul 12, 2016 from
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Capital Asset Pricing Model and Arbitrage Pricing

Words: 3670 Length: 11 Pages Document Type: Essay Paper #: 4448460

Capital Asset Pricing Model and Arbitrage Pricing Theory:

Capital Asset Pricing Model (CAPM) is an arithmetical theory that describes the relationship between risk and return in a balanced market. The Capital Assets Pricing Model was autonomously and simultaneously developed by William Sharpe, Jan Mossin, and John Litner. The researches of these founders were published in three different and highly respected journal articles between 1964 and 1966. Since its inception, the model has been used in various applications that range from public utility rates to corporate capital budgeting. However, the initial introduction of the model was characterized by suspicious view from the investment community. This was largely because CAPM apparently indicated that professional investment management was hugely a waste of time. Due to its implementation problems and shortcomings associated with its relation to Arbitrage Pricing Theory, Capital Asset Pricing Model has continued to face constant academic attacks.

Overview of Capital Asset…… [Read More]


Banz, R.W (1981), 'The Relationship Between Return And Market Value of Common Stocks,'

Journal of Financial Economics, vol. 9, no. 1, pp. 3-18.

Cooper, R.A. & Cousins, J.K (n.d.), Capital Asset Pricing Model (CAPM), Reference for Business, viewed 11 January 2012,

Donovan, E. & Weinraub, H (2007), Capital Asset Pricing Model (CAPM) vs. Arbitrage Pricing
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Capital Accumulation in a Firm Most of

Words: 1879 Length: 6 Pages Document Type: Essay Paper #: 88200184

Capital Accumulation

In a firm, most of the capital source comes from accumulation. This concept of capital accumulation defines how wealth is generated for the company by adding up amount in cash or other forms of asset into the capital account. Capital accumulation is solely for increasing the profits on the possession of the firm and no other aims are attached with it other than bolstering the revenue holdings of the company. Capital accumulation is not connected with increment in labor input or output. It is dependent upon the existing company profits that the firm uses to maximize the existing capital. Assets that are in possession of the firm can be used to increase the capital by appreciating in their value or acquire assets that can be used to create further wealth. Other ways firms bring accumulation of capital into process is through acquiring shares or mutual funds. Capital accumulation…… [Read More]


Giddens, A. (1996). Capitalism and Modern Social Theory. Cambridge [u.a.]: Cambridge Univ. Press.

Hunt, E.K., & Lautzenheiser, M. (2011). History of Economic Thought: A Critical Perspective. Armonk, N.Y.: M.E. Sharpe.

TR Jain, A.M. (2009). Development Economics. Chicago: FK Publications.
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Capital Project Results and Acceptability of the

Words: 2613 Length: 8 Pages Document Type: Essay Paper #: 9046436

Capital Project

esults and acceptability of the item for key stakeholders

Da Vinci is a lucrative product that has immense contributions to the delivery of health services in many health centres globally. The effectiveness of the product lies on its new entry into the modern market. Da Vinci production and use have enlightened the public and hospital fraternities on new approaches of managing surgery operations. The resultant effects that are going to be felt after using the product are more increasing and beneficial than using the old mechanisms. The innate objective of the tool will improve on delivery of surgery services in ways that are more safe, effective, and affordable to the public. Da Vinci was first introduced as a safe way of improving surgery operations in the hospitals. Moreover, the use of the product had not been made public. Now that the machine will be available in many health…… [Read More]


Athanasiou, T., Debas, H.T., & Darzi, A. (2009). Key topics in surgical research and methodology. Berlin: Springer.

Bahouth, M.N., Bahouth, M.N., Blum, K., & Simone, S. (2013). Transitioning into hospital-based practice: A guide for nurse practitioners and administrators. New York, NY:

Springer Pub. Co.

Gitman, L.J., & McDaniel, C.D. (2009). The future of business: The essentials. Mason, OH:
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Capital Requirement and Risk Behavior Arab African

Words: 12698 Length: 40 Pages Document Type: Case Study Paper #: 45533113

Capital Requirement and Risk ehavior

Arab African International ank

Midan ElSaray El Koubra, Garden City Caoro

The research will mainly dwell on the capital requirements and risk behavior of banks, more in particular the credit risk. The purpose of this research is to identify and analyze the relationship between capital requirements and the risk behavior of banks in Egypt

more in particular the Arab African International ank, which is the case study for this research. Secondly, the research will seek to investigate the impact of capital regulation on the banking behaviors and particularly on the levels of credit risk of banks operating in Egypt

The findings of the research show that there is negative relationship between capital requirement and banks' risk behavior; the findings also show there is empirical evidence to prove that capital regulations have a negative impact on credit risk of banks levels of credit risk of banks…… [Read More]


Aggarwal, R. And K. Jacques, (1998), a Simultaneous Equation Estimation of the Impact of Prompt Corrective Action on Bank Capital and Risk, New York, 12-23

Avery, R.B. And A.B. Berger, (1991), Risk-based capital and deposit insurance reform, Journal of Banking and Finance pp 847-874

Berger, A.N., Herring R.J. And Szego, G.P. (1995), the Role of Capital in Financial

Institutions, Journal of Banking and Finance pp 19, 393-430.
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Capital Budgeting the Aim of Hospitals Is

Words: 3028 Length: 11 Pages Document Type: Essay Paper #: 63314935

Capital Budgeting

The aim of hospitals is to measure and improve the quality of health care service for the patients. Patient satisfaction is the foremost concern. However, to run a hospital, there are a lot of other factors are also involved; e.g. managing cost, budgeting, optimizing operations and increase patient satisfaction level. In order to achieve the desired level of performance, the hospital needs to be up-to-date with the latest technology.

In this era of technological advancements, every company has to maintain all their records on computer because it saves time and needs less effort than manual work. Our hospital has digitalized their data but every department has its own data base. In order to optimize the operations, hospital requires having a central data base system.

As Schuhmann (2009) stated in his article that the recent economic crisis has made it difficult for hospitals finance their capital expenditures. The capital…… [Read More]


Bailey, C. (2012). The Cost Reduction Imperative. Becker's Hospital Review.

Cleverly, W.O., Cleverly, J.O., & Song, P.H. (2010). Essentials of Health Care Finance. Jones & Bartlett Learning.

Devraj, S., & Kohli, R. (2000). Information Technology Payoff in the Heath-care Industry: A Longitudinal Study. Journal of Management Information Systems, 41-67.

Finkler, S.A., Kovner, C.T., & Jones, C.B. (2007). Financial Management for Nurse Managers and Executives W.B. Saunders Company.
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Capital Adequacy Standards Capital Adequacy

Words: 640 Length: 2 Pages Document Type: Thesis Paper #: 17488457

EU nations have blamed deregulation in the U.S. sector for the credit crisis and subsequent recession, specifically the complex risk exposures not fully understood and assessed by banks and investors; poor and fraudulent underwriting standards; lack of investor and agency due diligence; a failure of transparency; and the structure of compensation schemes and incentives in the U.S. banking industry (Griffin 2008). The failure of the U.S. capital adequacy standards was apparent when even U.S. banks that possessed what would, under normal circumstances be adequate capital reserves were taxed in the subsequent panic, after Lehman Brothers was not 'bailed out' by the U.S. government and many lenders demanded a return on their investments.

The EU has always had more stringent liquidity risk management system. The current system requires all banks to have liquid assets that cover 100% of potential outflows over am eight-day period and 90% of potential outflows over a…… [Read More]


Capital adequacy. (2009). The Business Dictionary. Retrieved November 8, 2009 at 

Griffin, Conor. (2008, July 8). Basel II: Capital adequacy regulations and the credit crisis -- cause or cure? Chartered Accountants. Retrieved November 8, 2009 at htp:// -- THE-CREDIT-CRISIS-CAUSE-OR-CURE/

Risk-based capital guidelines; capital adequacy guidelines; capital maintenance: Asset-backed commercial paper programs and early amortization provisions. (2003, October).

Retrieved November 8, 2009 at
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Capital Budget in Recreation in

Words: 1338 Length: 5 Pages Document Type: Term Paper Paper #: 62456257

To solve these emerging needs of the company to satisfy the demand in the market, it is necessary to invest into expanding of the services offered and shifting the existing concept of the club. Firstly, it is necessary to expand the space occupied by renting out additional premises and organizing Spa procedures there. This will require also investment into necessary human resources, such as hiring Spa administrative and consultants specialists offering services for both women and men, and for both facials and body treatment to maximize the services mix. Costs for occupying this space, purchasing necessary equipment and hiring adequate staff so can exceed the current costs by ?450,000, so this is the incremental expense from proceeding with this services expansion programs. Cost to organize the fitness and Spa cafe, which is proposed to call at EnerGi Box, will amount to another ?100,000 annually. The final improvement step is investment…… [Read More]


Brayley, R.E., McLean, D. (1999). Managing Financial Resources in Sport and Leisure Service Organizations, Sports Publishing.

Mitchell, D. Coles, C. (2004) Establishing a continuing business model innovation process, Journal of Business Strategy, 25 (3), pp. 39-49.

D. Mitchell, C. Coles, Establishing a continuing business model innovation process, Journal of Business Strategy, Volume 25, No. 3, 2004, pp. 39-49.
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Capital Budgeting and Applied Technologies

Words: 628 Length: 2 Pages Document Type: Term Paper Paper #: 17290104

ith a strong customer and employee basis, the company envisions taking early leadership of the global market. This is also to be based upon management excellence on a local scale. The management team is envisioned to be capable of translating vision into performance on both a local and global scale, while also investing strategically to maximize profitability and performance.

d. In terms of Research and Development, Applied Materials has increased its investments despite economic downturns. The purpose of this was to increase its potential future profitability by providing advanced manufacturing systems for its customers worldwide. This proved to be a good strategy, as the company had build a broad product line that catered for nearly every chip manufacturing stage. In order to reach the next step; integrating systems to perform a specific process sequence, a new facility was needed, and 1997 saw the beginning of construction on the Equipment and…… [Read More]

With a strong customer and employee basis, the company envisions taking early leadership of the global market. This is also to be based upon management excellence on a local scale. The management team is envisioned to be capable of translating vision into performance on both a local and global scale, while also investing strategically to maximize profitability and performance.

d. In terms of Research and Development, Applied Materials has increased its investments despite economic downturns. The purpose of this was to increase its potential future profitability by providing advanced manufacturing systems for its customers worldwide. This proved to be a good strategy, as the company had build a broad product line that catered for nearly every chip manufacturing stage. In order to reach the next step; integrating systems to perform a specific process sequence, a new facility was needed, and 1997 saw the beginning of construction on the Equipment and Process Integration Center (EPIC).

EPIC represents the first facility of its kind in the semiconductor industry, in its capacity as a dedicated 200mm pilot line integration facility. Specifically, the Center enables the company's customers to make their technology transitions with greater speed and ease. To do this, the Center enables them to evaluate and integrate new manufacturing systems in advance of installing these. This provides the company with an important leading edge in the global marketplace. To accomplish this was a challenge on multiple levels that did not end with the Center opening its doors in 1998. Indeed, in order to adhere to its central aims, engineers for the center had to effectively implement systems by which they could set up their systems as often as once per month and make quick modifications according to differing requirements.
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Working Capital

Words: 963 Length: 3 Pages Document Type: Essay Paper #: 26699868

Working capital provides an important indication of a firm's short-term financial health. Calculated as the difference between current assets and current liabilities, working capital tells whether an organization is able to cover its short-term liabilities (Sagner, 2010). If current liabilities exceed current assets, then it means a firm may have difficulty meeting its financial obligations in the next 12 months. Firms avoid such a scenario by effectively managing cash flow, cash balances, inventory, accounts payable, and accounts receivable. In this paper, the working capital structures of two companies are compared: Costco Wholesale Corporation (Costco) and Microsoft Corporation (Microsoft). The former is a retailer while the latter is a technology firm.

Working capital has three major components: accounts receivable, inventory, and accounts payable (Sagner, 2010). Accounts receivable are part of the company's current assets. They basically denote cash the company expects to receive in the short-term as a result of products…… [Read More]

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Paid-In Capital it Is Important to Keep

Words: 1158 Length: 4 Pages Document Type: Essay Paper #: 10991725

Paid-In Capital

It is important to keep paid-in capital separate from earned capital (retained earnings) because they are two different forms of capital. For the investor, it is important to understand the differences between the two. Paid-in capital is the capital that the stockholders have paid into the business. Earned capital is the capital that has accumulated from the firm's earnings (Kieso, eygandt and arfield, 2007). Thus, the latter is a measure of how much money the firm has made while the former is a measure of how much money the firm has raised.

It is important to keep these two forms of capital separate because they derive from two different activities. On the cash flow statement, for example, paid-in capital would be a financing cash flow while earned capital would be a combination of operating and investing flows. By maintaining a clear distinction between the two, the exact nature…… [Read More]

Works Cited:

Kieso, D.E., Weygandt, J.J., & Warfield, T.D. (2007). Intermediate accounting, (12th ed.). Hoboken, NJ: John Wiley & Sons.
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Superior Living Working Capital Is the Current

Words: 976 Length: 3 Pages Document Type: Essay Paper #: 2078976

Superior Living

orking capital is the current assets less the current liabilities (Kennon, 2012). The working capital is an important metric because it can have a significant effect on the company's short- and long-term decision making. The working capital is affected by the cash position, the inventories and the receivables, along with the short-term liabilities. The current ratio is simply the working capital in ratio format, the current assets divided by the current liabilities (Loth, 2012). If a company has insufficient working capital, this can represent a constraint on operations. The company may need to plow all capital it earns into servicing the liabilities, leaving little for capital projects. Additionally, working capital and current ratio are measures that creditors use to evaluate how much credit to give a company. Often, these measures are also used in the company's restrictive covenants in loans as well.

Aside from the current ratio, there…… [Read More]

Works Cited:

Kennon, J. (2012). Working capital. Retrieved February 28, 2012 from 

Loth, R. (2012). Liquidity measurement ratios. Investopedia. Retrieved February 28, 2012 from university/ratios/liquidity-measurement/ratio1.asp#axzz1ngRuHybg" target="_blank" REL="NOFOLLOW">
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Amazon Capital Decisions

Words: 2243 Length: 6 Pages Document Type: Essay Paper #: 86977773

There are many firms that exist and operate within the capital management realm. Some companies operate and expand via their internal income and operations. There are other firms that are not currently self-solvent. However, the latter is commonly able to expand through capital investment and fundraising. The goal with such firms, of course, is to ramp up business levels, pricing structures and so forth so as to get to a profit at some point, even if it takes a few years. Indeed, many firms start off relying on capital investment and resource allocation at first and then become able to expand organically with no outside support, budgeting or investment. While firms like Amazon are a behemoth right now, there was a time where their operations and capital structures were quite thin internally and thus they needed a lot of investment and support through the capital investment and budgeting process.

Analysis…… [Read More]

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Six Basic Capital Budgeting Questions

Words: 808 Length: 2 Pages Document Type: Essay Paper #: 73760341


One of the biggest differences between new capital projects and renewal/replacement projects is that the variables are less known. The cash flow for the next few years is subject to a higher degree of uncertainty, but so too is the risk profile for the project. The latter is especially important when the project is in an entirely new business, and the firm has very little concrete information to go on. The reality is that for renewal projects, there is a lot more certainty about everything, and that makes a difference in the capital budgeting process because the numbers are more reliable and the company knows that the discount rate appropriately reflects the risk associated with that project. It must be cautioned, however, to remember that incremental cash flows only should be incorporated into the calculation for renewal projects, not money that has already been committed to the project (Investopedia,…… [Read More]


Investopedia (2016). Applying NPV analysis to project decisions. Investopedia. Retrieved July 19, 2016 from exam-guide/cfa-level-1/corporate-finance/applying-npv-net-present-value-project-decisions.asp" target="_blank" REL="NOFOLLOW">
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Hasbro Capital Budgeting Case

Words: 723 Length: 5 Pages Document Type: Essay Paper #: 66014895

Finance Project

There are only a couple of key assumptions used in the creation of the NPV data. First, with respect to fixed costs, the wording "will increase by 3.8% over the life of the project" is ambiguous. We need an actual figure for each year. It is assumed therefore, in the interests of being conservative, that the word "annually" was accidentally omitted and fixed costs will increase 3.8% each year over the life of the project.

The sunk costs, it must be stated, were omitted from this calculation as they are not an incremental cash flow (Investopedia, 2015).

There is nothing stated about the return of working capital at the end of the project, so it is assumed that this money vanishes into the ether at the end of the project, because returning it would substantially increase the value of the project. Whether the working capital is returned at…… [Read More]


Fernandez, P., Ortiz, A. & Acin, I. (2015) Discount rate (risk free rate and market risk premium) used for 41 countries in 2015: Survey. IESE Business School. Retrieved December 4, 2015 from

Investopedia (2015). Complete guide to corporate finance. . Investopedia. Retrieved December 4, 2015 from walkthrough/corporate-finance/4/capital-investment-decisions/incremental-cash-flows.aspx" target="_blank" REL="NOFOLLOW">
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Cost of Capital

Words: 567 Length: 2 Pages Document Type: Term Paper Paper #: 17073198

Financial Concepts

Your calculated WACC. ( Market value of equity and debt are given in thousands)

isk-Free ate


Expected return on the market

Credit Spread

Market value of equity

Market value of debt

Marginal Tax ate

Percentage of Debt

in capital structure

Percentage of Equity

in capital structure

Cost of Equity = 8.80%

Capital Asset Pricing Model Formula (Cost of Equity)

F + Beta (Market isk Premium)

Cost of Debt Formula

isk Free ate + Credit Spread

Cost of Debt= 5.0%

Weighted Average Cost of Capital (WACC)

Cost of debt (1- tax rate) * Percentage of debt + Cost of Equity* Percentage of equity

How data was used to calculate WACC. This would be the formula and the formula with your values substituted.

WACC = (E/E+D) rE + D/(E+D) rD (1-TC)

(5% * (1- .4)) * 14.29% + (8.80%* 85.71%) = 7.971%

Sources for your data

Sources of the…… [Read More]


1) Cheremushkin, Sergei Vasilievich (December 21, 2009). "How to Avoid Mistakes in Valuation -- Comment to 'Consistency in Valuation: A Practical Guide' by Velez-Pareja and Burbano-Perez and Some Pedagogical Notes on Valuation and Costs of Capital."

2) Frank, Murray; Shen, Tao (2012). "Investment, Q, and the Weighted Average Cost of Capital"
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Weighted Average Cost of Capital and Performance of Kohls

Words: 1197 Length: 3 Pages Document Type: Capstone Project Paper #: 17570684

Kohls Corp

Kohls is a well-known department store with a head office based in Wisconsin (Kohls, 2016). To assess the financial performance of the organisation, including its cost of capital, the latest set of available accounts were utilise, this was the 10k issued in 2016, four financial year ending 31 December 2015 (Kohls, 2016). The paper starts by examining the cost of capital for the organisation, and then considers the value of its operations.

Cost of Capital

Capital within any organisation is made up of two elements; debt and equity. Debt consists of money that has been borrowed from third parties, which will need to be repaid (Howells and Bain, 2007). Debt may be short or long-term, with the borrower paying interest and/or fees for the use of money from a third party (Elliott and Elliott, 2015). Generally, the higher the level of proportional debt carried by phone, the greater…… [Read More]


Bodie, Z., Kane, A. and Marcus, A. J. (2014) Investments. London: McGraw Hill Higher Education.

Drury, C. (2015) Management and Cost Accounting. London: Cengage Learning.

Elliott, B. and Elliott, J. (2015) Financial Accounting and Reporting. London: Pearson.

Howells, P. G. A. and Bain, K. (2007) Financial Institutions and Markets. London: Longman.
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Capital Opening Summary it Is

Words: 789 Length: 3 Pages Document Type: Essay Paper #: 66402872

This would involve winding down investment banking to focus on venture capital. A second option is to start a fund in Russia, with local partners there, to capitalize on that country's telecommunications market. The company could be split under the second scenario into three different divisions. The third option is to retain the status quo, which has generally been successful, but offers limited upside compared to the other options.

t is recommended that the first option be undertaken. There are a few good reasons for this. The third option offers limited upside. As the up-front cost of technology increase for telecommunications providers, Columbia's principles are going to be increasingly unable to meet the capital requirements. So this option is superior to the status quo. The investment banking option can be cut, but do not feel that it needs to be, especially when the second option involved hiring professional management to…… [Read More]

It is recommended that the first option be undertaken. There are a few good reasons for this. The third option offers limited upside. As the up-front cost of technology increase for telecommunications providers, Columbia's principles are going to be increasingly unable to meet the capital requirements. So this option is superior to the status quo. The investment banking option can be cut, but I do not feel that it needs to be, especially when the second option involved hiring professional management to run the investment banking arm.

The second option, overall, is too complex to be executed right now. Columbia has been successful because the principles have expertise the subject area and take a hands-on approach. They are the classic "value-added" venture capitalists, whose input dramatically increases the value of the investment. Operating in Russia or South America takes the principles outside of their comfort zones. Within a couple of days of this meeting, the risks inherent in Russia will become apparent, and even if the partners wanted to invest in Russia they would have scrapped the program on account of the financial crisis. South America, of course, had its own financial crisis in 1999.

The instability of the emerging markets, and the lack of familiarity of the principles with these markets means that they are taking on far too much risk. In addition, there are the risks associated with moving from a simple, flexible organizational structure to one characterized by complexity, joint ventures, uncertain chains of command and investments in businesses the principles have little experience with. Thus, the second option is too risky. Under the first option, the principles can make one or two strategic investments overseas to move slowly along the learning curve. It is recommended, therefore, that Columbia accept outside capital in order to facilitate growth, but also as retain control of the company and provide more opportunities to the younger partners.
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Capital One's External Environment and

Words: 1825 Length: 6 Pages Document Type: Essay Paper #: 20143354

International Position

Capital One has a good position in the Canadian and British markets. The international credit card business accounts for 11.3% of total revenue in the credit card operating segment (2009 Capital One Annual Report). Capital One does not have retail banking in Canada but does have it in the UK, although that part of the business is relatively minor. In credit cards, the UK business declined 14.6% in 2009 while the Canadian business increased 9.8%, reflecting the states of those two respective economies during the downturn.


The recent acquisitions by Capital One fit well within the company's strategy. Capital One has maintained its monoline focus on consumer lending with its expansion into retail banking. In addition, the company has expanded slowly, giving its management time to absorb the new banks and gain the knowledge and experience needed to increase the pace of such expansions in the future.…… [Read More]

Works Cited:

Capital One 2009 Annual Report. Retrieved May 16, 2010 from

MSN Moneycentral:: Capital One. (2010). Retrieved May 16, 2010 from 

O'Hara, T. (2005). Capital One to buy New Orleans bank. Washington Post. Retrieved May 16, 2010 from 

Schultz, J. (2010). What the credit card act means for you. New York Times. Retrieved May 16, 2010 from
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Capital Purchase Costing 5 000 Company Benefit

Words: 2954 Length: 11 Pages Document Type: Essay Paper #: 25264020

capital purchase, costing $5,000, company benefit . Examples include a X-ray machine, MI processor, software filing patient records, a research library, large item company . o Identify management goals expenditure support

Capital purchase

The health care field is becoming presented with more and more pressures in today's society. There are numerous changes in the social and economic environments, which become combined to generate new pressures for the health care providers. The life expectancy of the population increases, generating increased needs for medical care for several years. Then, the Baby Boomers are retiring, causing a demanding generation, used to financial resources and access to services, to turn to the medical care sector for more services. The policies regulating the field also change as do the demands and expectations of patients.

In such a context, the health care institutions find themselves in a position in which they have to be better managed…… [Read More]


Brown, M., 1992, Health care information: strategy, structure and process, Jones & Bartlett Learning

Daft, R.L., 2009, Organizational theory and design, 10th edition, Cengage Learning

Finkler, S.A., Ward, D.M., Calabrese, T., 2011, Accounting fundamentals for health care management, 2nd edition, Jones & Bartlett Publishers

2012, Absolute Medical Equipment, last accessed on June 29, 2012
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Capital Decision-Making it Presently Little

Words: 1647 Length: 6 Pages Document Type: Research Paper Paper #: 48549268

" (Kinnunen, 2004) the work of Kaplan and Schroar (2003) states findings that the past performance is highly relative to capitals flows to private equity funds.

The work of Mishra, Kemmerer, and Shenoy entitled: "Managing Venture Capital Investment Decisions: A Knowledge-ased Approach" relates the building of a causal map of the investment decision through use of interviewing venture capitalists and then converting this information into a "causal ayes net" which are stated to be "especially suited for domains characterized by a high degree of uncertainty." (Mishra, Kemmerer, and Shenoy, 2001) This technique has also been utilized in developing artificial intelligence and even used "in medical diagnosis, modeling portfolio risk and return, and new product development..." And are based on "probability theory." (Mishra, Kemmerer, and Shenoy, 2001) This method is reported to be one that increases the likelihood of gaining an understanding of the decision-making process of Venture Capitalists (VCs) and…… [Read More]


Kaplan, S. & Schroar, a. 2003. Private Equity Performance: Returns, Persistence and Capital Flows. MIT Sloan Working Paper No. 4446-03; AFA 2004 San Diego Meetings.

Cochrane, John H. The Risk and Return of Venture Capital. Working paper, University of Chicago, 2001.

Kinnunen, Harri (2004) Institutional Investor's Decision Making Criteria for Investing in Venture Capital Funds. Frontiers of E-Business Research 2004. Online available at 

Patel, Pankaj and D'Souza, Rodney (2008) Uncovering Knowledge Structures of Venture Capital Investment Decision Making. A Working Paper for SBA Office of Advocacy. Jan 2008. Online available at
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Accounting Capital Accounting and Budgeting Questions NPV

Words: 870 Length: 3 Pages Document Type: Essay Paper #: 98923524


Capital Accounting and Budgeting Questions


When a firm has different potential projects or investments, they will want to assess their options to ensure they make the best choice. However, comparing different types of projects or investments can be difficult, especially if the projects have different terms to maturity and/or different risk profiles. A useful tool is that of net present value (NV). Net present value allows different types of project to be compared on a like for like basis.

The net present value calculation takes all of the forecast future net cash flows of a project (the revenue less all the costs), and then discounts them into today's value. The discounting allows the firm to assess what the value of the future cash flows will be in today's money. The rate of discount applied will usually be the cost of capital for the firm, but where there is…… [Read More]

Political risk manifest in a number of ways, they may be in the policies and laws that a government enacts, political instability and even aspects such as competition regulations. These will all impact on the potential level of risk associated with an investment. When undertaking capital budgeting, for a project to be viable, where there is an additional risk it is necessary for there to be a risk premium to justify taking that additional risk. The introduction of different types of policies, regulation or laws by government, may impact on the overall value of an investment, and in some cases may be severely detrimental. For example, in some countries there may be a risk of nationalization which the company may lose a significant amount of its investment (Mintzberg et al., 2008). Likewise, the amount of value in investment may create, especially if it is targeting markets, will be impacted by the competitive conditions, which in turn influenced significantly by government policies and attitudes.

Transfer pricing

Transfer pricing refers to pricing of internal transactions, for example when goods are sold by one company to another company in the same group, or possibly transfers between divisions. When undertaking capital budgeting, the potential benefits and risks associated with transfer pricing will need to be considered. A project may be viable due to the economies which can be gained from in-house, or in group supply. Likewise, the potential benefits may also be limited in terms of national regulation and the way in which transfer pricing is controlled. Transfer pricing will impact on the costs and potential profits that are assessed when examining potential investments or projects. The security of the