of the Australian Security Exchange (ASX) listed company‚ Woolworths Ltd (WOW). Historical data is utilised with the Retention Growth Model to estimate the expected perpetual semi-annual growth rate of the company’s dividends. The Capital Asset Pricing Model is used to estimate the required rate of return for this company and the current expected share price is calculated using the Constant Dividend Growth Model. All data can be found in the appendices. The results of the analysis show that the
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Open DocumentAfter doing some research‚ Guillermo identified some possible investment options that would improve his businesses ’ financial condition. A capital budget evaluation will help to determine which capital investment decisions will provide the greatest returns. Choosing the right techniques could is very important to the success of the project and organization. An overview of each possible technique provide it this paper before explaining how the how the recommendation was made. After considering
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Open Documentfor $12‚000 per year. The project will require $50‚000 in fixed assets with expected salvage of $10‚000 at the end of the project (depreciate straight-line to salvage value) and an initial $10‚000 increase in NWC. Your marginal tax rate = 34% and the required return = 15%. What is your minimum bid? NPV = 0 = -60‚000 + OCF(PVIFA15%‚3) + 20‚000(PVIF15%‚3) NPV = 0 = -60‚000 + (NI + Dep)(2.2832) + 20‚000(0.6575) NPV = 0 = -60‚000 + [(S – VC – FC - Dep)(1 – T) + Dep](2.2832) + 13‚150.32
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Open Documentinclude: C. Business risk and financial risk 3.) The real risk-free rate is affected by a two factors: E. Time preference for income for consumption and the set of opportunities available in the economy. 4.) Two factors that influence the nominal risk-free rate are: A. The relative ease or tightness in capital markets and the expected rate of inflation 5.)The total risk for a security can be measured by its: C. Standard Deviation or returns 6.) Which of the following is an underwriting function? B. Risk-bearing
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Open DocumentChoice: Conceptual Easy: Required return Answer: e Diff: E [i]. An increase in a firm’s expected growth rate would normally cause the firm’s required rate of return to a. Increase. b. Decrease. c. Fluctuate. d. Remain constant. e. Possibly increase‚ possibly decrease‚ or possibly remain unchanged. Required return Answer: d Diff: E [ii]. If the expected rate of return on a stock exceeds the required rate‚ a. The stock is experiencing supernormal
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Open Documentgiven the following long-run annual rates of return for alternative investment instruments: * US Government T-Bills 3.5% * Large-cap common stocks 12.1% * Long-term corporate bonds 6.2% * Long-term government bonds 5.6% * Small-capitalization common stock 14.6% The annual rate of inflation during the period was 2.9%. Compute the real rate of return on these investment alternatives. 2. The following are the monthly rates of return for TECO Electric and Gold Hill
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Open Documentof his money at an annual interest rate of 6%‚ the rest at 9% annual rate. The return on these two investments over one year is $1‚440. How much does he invest at each rate? Solution Paul made two investments totaling $15‚000. The percentage return on the first investment was 7% annually‚ while the the percentage return on the second one was 10% annually. If the total return on the two investments over one year was $1‚350‚ how much was invested at each rate? Ben invested $30‚000‚ part
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Open Document(required return) for calculating the net present value of a project ’s cash flows? - it will help us determine the Cost of capital or discount rate which we can use to calculate NPV‚ in other terms the numerator will never change (FCF)‚ only the denominator will based on the cost of capital 3. What is the estimate of the risk-free rate that should be employed in calculating the cost of capiual for Ameritrade ’s proposed investment? - the risk free rate should be the T-bills rate or the average
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Open Documentbetween different variables in relation to one year returns within the superannuation industry. | Contents 1.0 Introduction 2 2.0 Outliers 3 3.0 Historical Analysis 4 4.0 Current Data (One Variable Analysis 5 5.0 Bivariate and Trivariate Analysis 6 5.1 Impact of Investment Strategy on One Year Returns 6 5.2 Impact of Three Year Returns on One Year Returns 8 5.3 Impact of Investment Strategy and Three Year Returns on One Year Returns 10 6.0 Conclusion 11 7.0 Appendix 12
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Open Documentinstallments of Rs. 1‚50‚000 for six years. What is the rate of interest to the firm? Ans. Particulars Cost of Machinery Down Payment Financed Repayment in equal installment Total paid interest Rate of interest Rate of interest per annum Interest cost Ref a Yr 0 800‚000.00 b c=a-b d=6*150‚ 000 150‚000.00 650‚000.00 900‚000.00 e=d-c 250‚000.00 f=e/c g=f/6 38.46% 6.41% h 21 250‚000.00 Principal i=d-h Outstanding Year wise j interest rate Rate of interest k 1 650‚000.00 650‚000.00 Yr 1 Yr 2
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