Net present value

IGNOU MBA MS - 04 Solved Assignments July 2011 Course Code : MS - 04 Course Title : Accounting and Finance for Managers Assignment Code : MS-04/SEM - I /2011 Coverage : All Blocks Note: Answer all the questions and send them to the Coordinator of the Study Centre you are attached with. 1. Discuss and explain the relevance of the following accounting concepts a) Business entity b) Money measurement c) Continuity d) Cost e) Accrual f) Conservatism g) Materiality h) Consistency

GROUP ASSIGNMENT CASE 23: DANFORTH & DONNALLEY LAUNDRY PRODUCTS COMPANY Purpose of Meeting: To make capital budgeting decision with respect to the introduction and production of a new product, a liquid detergent called Blast. Need to consider what types and which cash flows should be included in capital budgeting analysis. D&D was producing and marketing two major product lines: 1. Lift-Off: Low –suds, concentrated powder. 2. Wave: Traditional powder detergent. Questions &

that inflow are reinvested at 80 percent of the internal rate of return This is a correct answer It is the difference in the reinvestment assumptions that can be significant in determining when to use the present value or internal rate of return methods. Under the net present value method, cash flows are assumed to be reinvested at the firm 's weighted average cost of capital Points earned on this question: 1 Question 2 (Worth 1 points) A project has initial costs of $3,000 and subsequent

Net present Value, Mergers and acquisitions FIN501 - Strategic Corporate Finance Net present Value, Mergers and acquisitions To start I would like to explain the difference and meaning of the present value of the future cash flows from an investment and the amount of investment. Present value of the expected cash flows is computed by discounting them at the required rate of return. For example, an investment of $1,000 today at 10 percent will yield $1,100 at the end of the year; therefore

Fin 3320 Practice Questions1 – Total Course 1. Your wealthy uncle has set up a special account that will give you $500,000 on your 35th birthday. Assuming you are age 21 (thus 14 years from receiving this), what is the present value of this gift if the appropriate discount rate is 8.0%? (Ch5) a. $170,231 b. $282,449 c. $442,619 d. $191,206 e. $734,664 2. You need $10,900 for the down payment on a new car. You presently have $5,000 in savings for which you expect to earn 6% (annual rate, compounded

Papa Geo’s – Restaurant Budget Proposal For 2012 - 2017 BUSN-278 [Term] Professor[name] DeVry University ------------------------------------------------- Table of Contents Section | Title | Subsection | Title | Page Number | 1.0 | Executive summary | | | | 2.0 | Sales Forecast | | | | | | 2.1 | Sales Forecast | | | | 2.2 | Methods and Assumptions | | 3.0 | Capital Expenditure Budget | | | | 4.0 | Investment Analysis | | | | | | 4.1 | Cash flows

per annum. The value of each of the firm 's shares is (A) (B) $12 (C) $120 (D) 16. $10 $100 In the Gordon model, the value of ordinary shares is the (A) present value of a constant, growing dividend stream. (B) actual amount each ordinary shareholder would expect to receive if the firm 's assets are sold, creditors and preference shareholders are repaid, and any remaining money is divided among the ordinary shareholders. (C) present value of a non-growing

investment.        B) present value of cash flows by the initial investment.        C) initial investment by the total cash flows.        D) initial investment by the present value of cash flows. 18. To avoid rejecting projects that actually should be accepted,        1. intangible benefits should be ignored.        2. conservative estimates of the intangible benefits’ value should be incorporated into    the NPV calculation.        3. calculate net present value ignoring intangible benefits

CORRECT?Answer | | | | | Selected Answer: | An NPV profile graph is designed to give decision makers an idea about how a project’s contribution to the firm’s value varies with the cost of capital. | Correct Answer: | An NPV profile graph is designed to give decision makers an idea about how a project’s contribution to the firm’s value varies with the cost of capital. | | | | | Question 9 2 out of 2 points | | | Which of the following statements is CORRECT?Answer | | | |

Washington State University Finance 325 Practice Problems 1. What is the net present value of a project with the following cash flows and a required return of 12 percent? Year 0 1 2 3 Cash Flow -$28,900 $12,450 $19,630 $ 2,750 2. What is the net present value of a project that has an initial cash outflow of $12,670 and the following cash inflows? The required return is 11.5 percent. Year 1 2 3 4 Cash Inflows $4,375 $ 0 $8,750 $4,100 3. A project will produce cash inflows of $1,750