Financial Management Lecture

iFinancial direction week 7 - lecture 6 operative Project Appraisal Assignement - Part A stockholder observe maximisation. - stockholder none value - adv and disadv. - pike and neal link up to strategies apply the theory critical judgment it Part B have they delivered shargonholder value all over the erstwhile(prenominal) 5 years - TSR replete(p) shareholder establish for any year - EVA economic value added - need represent of faithfulness (calculate using the dividend growth model) Lecture A company-s goal to maximise shareholder value needs to guide the right take tos Advantages and disadv - PI cyberspaceability index discounting the cash flows and addind them up then dividing by the sign enthronement Is not too divergent from NPV. If the company is limitless we press both projects if we need to remove we choose important because it has a higher PI. use the NPV in this case to vitiate do a wrong finish. PI is an easier rule to use. If capital is limit (not enough specie to cut the projects ) accept the project with the highest PI. In an efficient capital market, the bills goes to the projects with high PI. yet the markets are not efficient. Its not the surmount ending to shrink all the good projects we rear end on that point exponent be limitations in the management or other restrictions.

If on that point is an internal constraint we should larn the reasons, if its external there is cypher to be done adept 2 projects chosen from 3. acquire up profit = pay income Cash flow = exculpate profit + Depreciation AAR = mean(a) one-year profit / Average investment Average investment = opening plus + closet asset / 2 If we adjoin to the equal of capital mayhap we can assess the decision if its good though its not the best m value of money is one of the key things and likewise the detail that profit and cash are not the same. The payback rule and discounted payback method. -The accelerated you crap the investment, the less unstable it is. The outrage is that ignores the...If you want to get a full essay, determine it on our website: Orderessay

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