Corporate Governance and Accountability

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 Corporate Governance and Accountability Essay

п»їWeek almost 8

Capital Cost management and Money Flows

Read Moles ain al Section 11, Damodaran Chapter 6

Assessment case study in Damodaran Section 5& 6th

http://pages.stern. nyu. edu/~adamodar/New_Home_Page/ACF3E/appldCF3E. htm

Questions – please send your completed document upon Turnitin by 4 pm Wed., Dec. 18. Consist of all fundamental calculations inside your word document, but twenty-four hours a day email me an excel file: e. [email protected] ac. uk. Try not to go over 5-6 webpages in your term document.

1 . Explain so why incremental after-tax free funds flows happen to be relevant in evaluating task management. How will you calculate these people for a job? (10 marks)

2 . Talk about five general rules to get incremental after-tax free cashflow calculations and explain why cash goes stated in nominal (real) funds terms needs to be discounted by using a nominal (real) discount price. (15 marks)

3. Quickly explain two methods of contrasting projects with different useful lives. (10 marks)


a) Whizzo Limited is looking at 3 impartial projects which can be expected to last 10 years every single and generate the following net present ideals and inside rates of return:

Job X

Job Y

Task Z

Net Present Benefit

$2, 000, 000

-$600, 000

$1, 500, 1000

Internal Rate of Return

25. 0%

12. 0%

20. 0%

The company uses a price cut rate of 15% to gauge its purchase projects. What should the organization do, and why? (5 marks)

b) Firm DASAR is taking into consideration investing in a new project due to the expected embrace sales the coming year. ABC has got the following two mutually exclusive assignments. The total annual discount price used for the projects is definitely 12%. Which will machine if the firm select at this low cost rate, and why?

End of Year

Project A

Project M


-$100, 000

-$50, 000


$60, 1000

$40, 500


$50, 000

$30, 000


$40, 1000

(15 marks)

(TOTAL 20 marks)

5. You are the CFO of SlimBody, Incorporation., a store of the fitness machine Slimbody6В® and related components. Your company is taking into consideration opening up a fresh store in Los Angeles....