Essay on Managerial Finance Final Exam

The team also chose to calculate IRR as another method of evaluating the Super Project. Again

By computing the highest discount rate at which a project will have a positive NPV, the IRR method is supposed to assure that the actual rate of return on an accepted project is higher than the required rate of return.

Internal Rate of Return is a discount rate in which the net present value of an investment becomes zero. The investment should be accepted if the IRR is not less than the cost of capital. The IRR measures risk, by showing what the discounted rate would have to reach to lose all present value. Futronics Inc. investment would have an IRR of 14.79%. The investment should be accepted since it is greater than the 8% cost of capital. The 14.79% IRR shows the growth expected from the

1.What are conversion factors? Why were conversion factors developed? How do they impact on which bond is cheapest to deliver? Under what conditions would there be no cheapest to deliver? Explain in detail.

Horizontal analysis allows side by side comparisons on a year to year basis to determine the performance from one year to the next. The company decides on standards to compare the results of the analysis. Standards are researched by checking competitors, internet research of general industry guidelines or standards created from past experience in the company.

The difference between the MIRR and the IRR is that the IRR assumes that the cash flows are reinvested at the IRR, but the MIRR assumes the cash flows are reinvested at the firm’s cost of capital. The MIRR is better because it goes a step further and provides a clearer view of the future. The MIRR examines the reinvestment by determining what it does with the money it receives.

Warren Company makes candy. During the most recent accounting period, Warren paid $3,000 for raw materials, $4,000 for labor, and $2,000 for overhead costs that were incurred to make candy. Warren started and completed 10,000 units of candy, of which 7,000 were sold. Based on this information, Warren would recognize which of the following amounts of expense on the income

Banks are not the only financial intermediary from which corporations can obtain financing. What are the other intermediaries? How much financing do they supply, relative to banks, in the United Kingdom, Germany, and Japan?

Trade credit discount. Compute the approximate annual interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations?

-Martin Industries just paid an annual dividend of $1.30 a share. The market price of the stock is $36.80 and the growth rate is 6.0 percent. What is the firm's cost of equity?

Life insurance is meant to provide funds to replace a breadwinner's to protect and support dependents. Chad and Haley are dependents, not income providers. Therefore, the purchase of life insurance is unnecessary and not recommended. The Dumonts should use the money they would spend on policies for the children to increase their own coverage.

Which of the following is NOT normally regarded as being a barrier to hostile takeovers?

They have a very good balance between their debt financing and the assets they have on hand (dollartree.com, 2013). With a debt/equity ratio of 65.10% in 2013, this puts them in a good position for using the free cash flow they have to research and see what areas they could make improvements in. It seems that the most significant assets that Dollar Tree has is in their inventories. This is the largest part of their assets. They also have some intangible assets that account for about 35% of their total assets. The liabilities that Dollar Tree has are in the form of accounts payable. They do not have very much long term debt. Their long term debt accounts for less than 10% of the total liabilities.

The cash conversion cycle was 104 in 2004, 90 in 2005 and 124 in 2006. This is mainly attributed to the increase in accounts payable outstanding from 90 days in 2005 to 124 in 2006.

Financial Management is a critical aspect of any business in order to achieve a sustainable and efficient cash flow. It is essential in maintaining the link between a business’s future financial goals (profit maximization) and the resources that it has in order to achieve its objectives. Businesses demand certain common goals that increase a bussiness's all around achievement, Some of which involve; growth amongst assests, An increase in efficiency in all areas of the business whether it be management or not. And the ability to meet short term and long term debts. Finacial management undertakes the responsibility to implement and acheive these goals for the business using a range of strategies shaped to meet the needs of the business and