Financial Management Lecture

iFinancial management week 7 - lecture 6 operational Project Appraisal Assignement - Part A stockholder cheer maximisation. - stockholder hold dear - adv and disadv. - pike and neal links to strategies apply the possibleness unfavorable judgment it Part B have they delivered sh areholder value all over the past 5 long time - TSR total shareholder establish for every year - EVA stinting value added - need represent of equity (calculate using the dividend harvest model) Lecture A company-s goal to maximise shareholder value needs to choose the right take tos Advantages and disadv - PI cyberspaceability indicator discounting the hard cash flows and addind them up then dividing by the initial enthronization Is not too different from NPV. If the company is limitless we endeavor both projects if we need to choose we choose important because it has a higher PI. use the NPV in this case to vitiate making a wrong finish. PI is an easier rule to use. If capital is confine (not enough capital to constrict the projects ) accept the project with the highest PI. In an efficient capital market, the money goes to the projects with high PI. yet the markets are not efficient. Its not the best decision to undertake all the good projects we can on that point business leader be limitations in the management or other restrictions.

If thither is an internal constraint we should check the reasons, if its external there is zero to be done just 2 projects chosen from 3. hap up profit = net income Cash flow = terminate profit + Depreciation AAR = come Annual profit / Average investment Average investment = opening asset + water closet asset / 2 If ! we relate to the equal of capital perhaps we can assess the decision if its good though its not the best m value of money is one of the key things and also the detail that profit and cash are not the same. The payback rule and discounted payback method. -The immediate you break the investment, the less risky it is. The outrage is that ignores the...If you want to get a full essay, order it on our website: OrderEssay.net

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