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How and why does working capital affect the incremental cash flow estimation for a proposed large capital budgeting project? Explain.
Several large projects require additional working capital. This investment in additional working capital develops into part of the initial investment. This investment is recovered in the last part of the project's life. There may be some impulsive increase in current liabilities associated with a project however the change in net working capital, if any, is probable to be a positive value requiring an increase in the initial investment of that amount.
Why is the coefficient of variation a better risk measure to use than the standard deviation when evaluating the risk of capital budgeting projects? The coefficient of variatio
Ask I have included a simple capital investment problem which is in Course Documents. We are going to use the same numbers for several classes and look at some of the ways that cap
Use of Beta to Partition Risk The total risk or variability in earnings can be attributed to two classes of factors: Marketwide factors which create variability in all
Determination of spread Daily interest rate = 5.11/ 365 = 0.014% per day Variance of cash flows = 1000 × 1000 = $1000000 per day Transaction cost = $18 per transaction
Assume there exists a nontradable asset with a perfect positive correlation along with a portfolio T of tradable assets. How will the nontradable asset be priced? The nontradable
What is the difference between the Euronote market, the Euro-medium-term-note market, and the Eurocommercial paper market? Answer: Euronotes are short-term notes guarantees by
Question: Consider the following information: Stock A Stock B Beta 0.8 1.4 Share price, $
Q. Security Required in Bank Finance? 1) Hypothecation: Under this arrangement, the borrower is provided with working capital finance by the bank against the security of mova
Two years ago, Randburg Ltd needed to accumulate a total of R250000 by the end of 5 years to acquire new imported machinery. To do so Randburg Ltd makes quarterly-annual deposits i
Assume Intel''s stock has an expected return of 26% and a volatility of 50%, while Coca-Cola''s has an expected return of 6% and volatility of 25%. If these two stocks were perfect
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