How can we estimate that firm is going to benefit, Financial Management

Assignment Help:

Ho can we estimate that firm is going to benefit from projec

To calculate how firm is going to benefit from project we need to calculate whether firm is earning the required rate of return or not. Though the problem is that projects would have different time frames of giving returns. One project can be giving returns in just two months, another can take two years to start yielding returns. If both projects are offering the same %age of returns when they start giving returns, one which gives earnings earlier is preferred.

This is a simple case and is easy to solve where both projects require same capital investment, however what if the projects required different investments and would give returns over a different period of time? How do we compare them? Solution is not that simple. What we do in this case is bring down returns of both the projects to present value and then compare. Before we study about present values, we have to first understand future value.

 


Related Discussions:- How can we estimate that firm is going to benefit

Analyze the corporate financial statements, You are currently an Analyst wo...

You are currently an Analyst working for a finance publication firm and as part of your responsibilities; you are required to provide a monthly forecast and analysis of certain com

Explain compound value of an annuity, Q. Explain Compound Value of an Annui...

Q. Explain Compound Value of an Annuity? Compound Value of an Annuity: - Annuity demotes to the periodic flows of equal amounts. FV = A {(1+i)n - 1}/i Instance: - Mr. X i

Factors considered in assigning a credit rating, Credit rating agenci...

Credit rating agencies carry out credit rating. Companies appoint these agencies to assign credit rating for their corporate issues. The rating agencies may condu

MIS, evaluation and maintenance of MIS

evaluation and maintenance of MIS

Describe puttable-convertible-foreign bonds and eurobonds, Describe the Put...

Describe the Puttable, Convertible, Foreign and Eurobonds. With puttable bonds the release date is under control of the holder (that is the opposed of the callable bond case)

WEALTH.., What is the fastest way to be rich?

What is the fastest way to be rich?

Show example on cross currency swap, 1. Of course a swaption will be needed...

1. Of course a swaption will be needed. The major reasons being that Bond A is callable after 3 years and matures in 4 years whereas Bond B matures in 5 years. It is understandable

Caselet 2, Suggestion regarding Credit limit. Should it be approved or not,...

Suggestion regarding Credit limit. Should it be approved or not, what should be the amount of credit limit that electronics give to Booth Plastics.

Planning and controlling the various business activities , Explain and crit...

Explain and critically evaluate : a)  The relevance of committed fixed costs in deciding the optimal mix of products to maximum a company's profit and the importance of relevant

Pay back period (pbp) , Pay Back Period (PBP) : This is the most popula...

Pay Back Period (PBP) : This is the most popular method employed by industrial practitioners for ranking investment projects. This is described as the "period required for a pr

Write Your Message!

Captcha
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