Difference between purchase price and the net asset value

Assignment Help Financial Management
Reference no: EM131047539

Goodwill is an accounting entry equal to the difference between purchase price and the net asset value of the acquired assets. As a business manager, what do you believe goodwill represents? How could the factors that goodwill represents actually contribute to improving the combined firm's future cash flows?

Reference no: EM131047539

Questions Cloud

Businesses seeking working capital-survey : Read the journal article, “Businesses Seeking Working Capital-Survey.” Based on the information presented in the article, discuss the following: How should a business use working capital analysis? Which is more important to the short-term lender: the..
Feed manufacturer and purchase corn on regular basis : Suppose you are a feed manufacturer and purchase corn on a regular basis. You would like to protect against rising prices. You purchase a September corn futures contract at $3.70/bushel today and assume when you buy corn from your supplier in August,..
Leave an endowment for your heirs : You wish to leave an endowment for your heirs that goes into effect 50 years from today. You don’t want to be forgotten after you pass so you wish to leave an endowment that will pay for a grand soirée yearly and forever. What amount would you like s..
Use the present value formula : Think of something you want or need for which you currently do not have the funds. It could be a vehicle, boat, horse, jewelry, property, vacation, college fund, retirement money, etc. Select something which costs somewhere between $2,000 and $50,000..
Difference between purchase price and the net asset value : Goodwill is an accounting entry equal to the difference between purchase price and the net asset value of the acquired assets. As a business manager, what do you believe goodwill represents? How could the factors that goodwill represents actually con..
Effective annual return on its consumer loans : Tai Credit Corp. wants to earn an effective annual return on its consumer loans of 14.9 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers?
Growth rate in earnings per share : 3 years ago, Weed Go Inc. earned $1.33 per share. Its earnings this year were $2.31. What was the growth rate in earnings per share (EPS) over the 3-year period? State your answer as a percentage to two decimal places (e.g. 16.38%). The % sign is not..
Expected rate of return on a stock with beta : Investors expect the market rate of return this year to be 20.00%. The expected rate of return on a stock with a beta of 1.4 is currently 28.00%. If the market return this year turns out to be 18.00%, how would you revise your expectation of the rate..
Purchase an investment that will generate annual cash flows : You have the opportunity to purchase an investment that will generate annual cash flows of $11,982 per year for the next 28 years. If your required rate of return on this investment is 23.45%, how much is the investment worth?

Reviews

Write a Review

Financial Management Questions & Answers

  Portfolio without having to accept a lower expected return

How can investors reduce the risk associated with an investment portfolio without having to accept a lower expected return?

  On a statement of cash flows of a financially healthy

On a statement of cash flows of a financially healthy company, net income should ordinarily be:

  Construct a contingency graph for a long pound straddle

Construct a contingency graph for a long pound straddle. Construct a contingency graph for a short pound straddle.

  What is the required return on the companys stock

Bruer, Inc., is expected to maintain a constant 5.30 percent growth rate in its dividends, indefinitely. Required: If the company has a dividend yield of 3.80 percent, what is the required return on the company’s stock?

  Calculate the default risk premium on bonds

NikkiG’s Corporation’s 10-year bonds are currently yielding a return of 6.75 percent. The expected inflation premium is 1.15 percent annually and the real risk-free rate is expected to be 2.50 percent annually over the next ten years. Calculate the d..

  What is the expected dividend per share

DPS Calculation Warr Corporation just paid a dividend of $1.50 a share (that is, D0 = $1.50). The dividend is expected to grow 7% a year for the next 3 years and then at 5% a year thereafter. What is the expected dividend per share for each of the ne..

  Debt and assets ratio

Beaverton Corporation has debt/assets ratio of .25, its cost of debt is 7% and that of equity 12%. The tax rate of Beaverton is 30%. The company is not growing and it has a dividend payout ratio of 100%. Its dividend per share is $2.5. Beaverton has ..

  The firms invoice their products in their local currency

Assume the Hong Kong dollar (HK$) value is tied to the U.S. dollar and will remain tied to the U.S. dollar. Last month, a HK$ = 0.25 Singapore dollars. Today, a HK$ = 0.30 Singapore dollars. Assume that the firms invoice their products in their local..

  About the present value of the annuity

A 20-year annuity pays $1,200 per month and payments are made at the end of each month. If the interest rate is 13% compounded monthly for the first eight years and 7% compounded monthly thereafter, what is the present value of the annuity? What woul..

  Consider how an organization must manage cash-receivables

Consider how an organization must manage cash, receivables, and inventory. Which of the three variables is the most important to manage? Is one more susceptible to fraud and errors than the others? Explain your answer. How would a misstatement in eac..

  Define the importance of time value of money

Define the importance of time value of money including compounding (future value), discounting (present value) and annuities. Why do organization leaders need to understand these concepts?

  Raise additional capital to fund its upcoming expansion

Klose Outfitters Inc. believes that its optimal capital structure consists of 70% common equity and 30% debt, and its tax rate is 40%. Klose must raise additional capital to fund its upcoming expansion.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd