THE HIGHBROW
EXAMINING CULTURE AND THE ARTS.
JULY 13 2007 10:55 AM
The Croc Epidemic
How a heinous synthetic shoe conquered the world.
By Meghan O'Rourke
In the demi-monde of footwear, the term croc was once synonymous with elegancethe
reptile skin coveri
20. If we are trying to decide between two projects that will not be
replaced when they wear out, the proper capital budgeting method to
use is NPV. Both projects only have costs associated with them, not
sales, so we will use these to calculate the NPV o
18. To find the bid price, we need to calculate all other cash flows for the
project, and then solve for the bid price. The aftertax salvage value of
the equipment is:
Aftertax salvage value = $50,000(1 0.35) = $32,500
Now we can solve for the necessary O
15. To evaluate the project with a $400,000 cost savings, we need the OCF
to compute the NPV. Using the tax shield approach, the OCF is:
OCF = $400,000(1 0.35) + 0.35($185,000) = $324,750
NPV = $925,000 + 125,000 + $324,750(PVIFA20%,5) + [($58,500
125,00
7. The asset has an 8 year useful life and we want to find the BV of the
asset after 5 years. With straight-line depreciation, the depreciation
each year will be:
Annual depreciation = $440,000 / 8
Annual depreciation = $55,000
So, after five years, the a
26.
To find the initial pretax cost savings necessary to buy
the new machine, we should use the tax shield approach to find the
OCF. We begin by calculating the depreciation each year using the
MACRS depreciation schedule. The depreciation each year is:
D
23. At a given price, taking accelerated depreciation compared to straightline depreciation causes the NPV to be higher; similarly, at a given
price, lower net working capital investment requirements will cause
the NPV to be higher. Thus, NPV would be zer
13. First we will calculate the annual depreciation of the new equipment. It
will be:
Annual depreciation = $390,000/5
Annual depreciation = $78,000
Now, we calculate the aftertax salvage value. The aftertax salvage
value is the market price minus (or plu
b. To find the minimum number of cartons sold to still breakeven, we need
to use the tax shield approach to calculating OCF, and solve the
problem similar to finding a bid price. Using the initial cash flow and
salvage value we already calculated, the equ
24. At a given price, taking accelerated
depreciation
compared
to
straight-line
depreciation causes the NPV to be higher;
similarly, at a given price, lower net working
capital investment requirements will cause
the NPV to be higher. Thus, NPV would be
ze
Exposure to Interest Rate Risk (IRR)
Earnings Impact Measure
ALM policy establishes limits on the amount of interest rate risk
exposure a credit union is willing to assume. Exposure is normally
expressed as a change in potential earnings caused by a likel
Managing Assets
This Section provides direction on setting
policy constraints on the size and types of
loans and investments so as to make the best
use of available funds, maximize financial
margin while maintaining an appropriate
level of safety. The ass
11. The cash outflow at the beginning of the project will increase because
of the spending on NWC. At the end of the project, the company will
recover the NWC, so it will be a cash inflow. The sale of the equipment
will result in a cash inflow, but we als
Which of the following statements about banks' current accounts is incorrect?
.
Current accounts today generally pay interest.
.
Current accounts are a relatively stable source of bank funds.
Deregulation had a major impact on current accounts.
Current ac
Assignment Background
This capital budgeting analysis and professional report project is a required
component of the MBA 612 course and is also an activity you should save as part of
your personal MBA e-portfolio as an example & representation of work com
Sales are expected to increase by $1000k the first year and grow by 15% in years 2
and 3, then by 5% annually during the remaining 6 year life. Cost of goods sold is
forecasted to be 45% of the increased sales, and other selling and general
administrative
1. Word document professional report that provides the following:
2A. An overview and summary of the general capital budgeting
process and how it is implemented within organizations,
2B. A glossary of capital budgeting related concepts and terms
(alphabet
To maintain individual confidentiality to your individual MBA e-portfolio and to
also clearly acknowledge the teamwork experience (which employers
appreciate & value), each team member should include the following
statement on your individual e-portfolio
1. Excel spreadsheet analysis, with an NPV Profile graph, and NPV
Scenario / Risk Analysis Grids (see template). The NPV Scenario / Risk
Analysis Grids will present NPV values versus changing values of the cost
of capital, salvage value, and sales. Use th
This project will replace some existing equipment which currently has a book value
(BV) of $200k and an estimated market salvage value of $375k. The new project will
require new equipment costing $2000k, which will be depreciated straight-line to a
book v
2.
For tax purposes, a firm would choose MACRS because it provides for larger
depreciation deductions earlier. These larger deductions reduce taxes, but have no other
cash consequences. Notice that the choice between MACRS and straight-line is purely a
ti
1. PowerPoint presentation that summarizes the following from your Word
report:
3A. A brief overview and summary presentation of the general capital
budgeting process and how it is implemented within organizations,
3B. An introduction and summary presenta
6. The market structure of the banking sector has changed since deregulation of the financial
system during the 1980s. Which statement most closely reflects the current structure of the banking
sector in Australia?
A.
Foreign banks dominate in number and
12. Off-balance-sheet business for a bank refers to:
A.
a bank's income.
B.
a bank's contingent liabilities.
C.
assets that will appear on the forthcoming balance sheet.
D.
transactions recorded on the previous balance sheet.
13. Which of the following ab
Chapter 02 - Test Bank
Multiple Choice Questions
1.
Deregulation of the banking sector throughout the late 1970s and the 1980s sought to:
A.
reduce the reliance of major Australian companies on international capital markets.
B.
reduce the excess profits o
Pricing
ALM policy specifies that the pricing
of all loans and deposits offered
should be established so that overall,
a net contributions to earnings is
provided.
In order to ensure that deposit and
lending rates are sufficiently
responsive, policy may d