Foundations of Finance: The Logic and Practice of Financial Management

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清华大学出版社有限公司, 2003 - Corporations - 566 pages
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new equipment is costing p750 000 would be purchased for the centre. Since the equipment would be electronic in nature and therefore subject to rapid obsolescence it would have no more than 6 year useful life and the salvage value after 6 years will be 36% of the original of the original cost of the equipment. The company require a return of 20% on all new centres.The CEO is a bit sceptical about the estimates and has heard people talking about capital budgeting techniques used under uncertainty. He asks you to use the certainty equivalent cash flows methods to determine if the service centre should be opened.To derive the certainty equivalent cash flows you deide to reduce the cash flows by 4%, 5%, 7%,8%, and 9%.
pula pula
service revenue 1, 000, 000
less cost of sales 350, 000
contributions margin 650, 000
less fixed expenses 430, 000
Advertising 150 000
rent 70, 000
salaries 110, 000
insurance 6,000
depreciation 80,000
other sundry expenses 14,000
net income 220, 000
How to calculate the cash follow.
Advise the CEO if the new service centre should be opened. Show the relevant working to support your recommendation to the CEO.
 

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very practical approach
it consists of good exercise for both practitonaire and academics

Contents

Part One The Scope and Environment of Financial Management
1
An Introduction to the Foundations of Financial ManagementThe Ties That Bind
3
Federal Income Taxation
9
Chapter
11
Ten Principles That Form the Foundations of Financial Management
15
All Risk Is Not EqualSome Risk Can Be Diversified Away
21
Chapter 2
23
The Financial Markets and Interest Rates
31
CapitalBudgeting Techniques and Practice
249
Capital Rationing
261
Cash Flows and Other Topics in Capital Budgeting
279
Options in Capital Budgeting
292
Cost of Capital
311
Cost of Capital
317
PepsiCo Inc
324
Part Four Capital Structure and Dividend Policy
345

of Corporate Securities Sold in the Capital Market
36
Flotation Costs
50
133
59
Efficient Financial Markets
65
Understanding Financial Statements and Cash Flows
71
Measuring Cash Flows
82
Evaluating a Firms Financial Performance
103
An Integrative Approach to Ratio Analysis
117
Part Two Valuation of Financial Assets
133
The Time Value of Money
135
Annuities
146
The Meaning and Measurement of Risk and Return
167
The Investors Experience
173
Chapter 7
187
Valuation and Characteristics of Bonds
199
Types of Bonds
200
The Bondholders Expected Rate of Return Yield to Maturity
213
Valuation and Characteristics of Stock
223
Valuing Preferred Stock
226
Part Three Investment in LongTerm Assets
247
Determining the Financing Mix
347
Financial Leverage
359
Firm Value and Agency Costs
372
Dividend Policy and Internal Financing
393
Alternative Dividend Policies
406
Part Five Working Capital Management and International Business Finance
423
ShortTerm Financial Planning
425
Limitations of the Percent of Sales Forecast Method
432
WorkingCapital Management
447
Multinational WorkingCapital Management
461
Current Asset Management
469
Evaluation of Costs of Cash Management Services
479
International Business Finance
503
Multinational WorkingCapital Management
518
Appendix A Using a Calculator
527
Compound Sum of 1
535
425
541
Indexes
557
Copyright

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Page 566 - Eurobond. A bond issued in a country different from the one in whose currency the bond is denominated; for example, a bond issued in Europe or Asia by an American company that pays interest and principal to the lender in US dollars. Eurodollar Market. This is a banking market in US dollars

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