Corporate Finance Exam Mba Essay

The financial mangers goal is acquisition, financing, and management of assets. The challenges are investment, financing, and asset management decisions.

Finally, in order to complete a more accurate comparison between the two projects, we utilized the EANPV as the deciding factor. Under current accepted financial practice, NPV is generally considered the most accurate method of predicting the performance of a potential project. The duration of the projects is different, one lasts four years and one lasts six years. To account for the variation in time frames for the projects and to further refine our selection we calculated the EANPV to compare performance on a yearly basis.

IRR uses all cash flows and incorporates the time value of money. When evaluating independent projects, IRR will always lead to the same decision as NPV. Because IRR assumes that cash flows will be reinvested at the internal rate of return, which is not always or even usually the case, it can rank mutually exclusive projects incorrectly. With certain patterns of cash flows, the IRR equation has more than one solution, which confuses the decision rule. IRR is slightly more

1.What are conversion factors? Why were conversion factors developed? How do they impact on which bond is cheapest to deliver? Under what conditions would there be no cheapest to deliver? Explain in detail.

1. This is a closed book exam. You may only have pens, pencils and a calculator at

Time Elapsed | 3 hours, 39 minutes out of 4 hours and 30 minutes. |

1. This question addresses the effect of Microsoft’s software capitalization policy on its financial statements. Ignore any potential tax effects.

1. (10 pts.) Discuss how organizational architecture and corporate culture are related. Use an example of a real-life firm and discuss how its corporate culture blends with its organizational architecture.

Similarly, Karaoke Beach Pub ranked first in terms of IRR and NPV. Evaluation using IRR might have multiple values and assumes that interim cash flows can be reinvested at the IRR, which may not be as accurate as desired. Using NPV for project evaluations can show actual economic gain with respect to the time value of money. However, it is not appropriate for comparing projects with different lifetimes. Thus, the four criteria are still not sufficient to arrive at a conclusion.

Most corporate financing decisions in practice reduce to a choice between debt and equity. The finance manager wishing to fund a new project, but reluctant to cut dividends or to make a rights issue, which leads to the decision of borrowing options. The issue with regards to shareholder objectives being met by the management in making financing decisions has come to become a major issue of recent times. This relates to understanding the concept of the agency problem. It deals with the separation of ownership and control of an organisation within a financial context. The financial manager can raise long-term funds internally, from the company’s cash flow, or externally, via the capital market, the market for funds

1. Tutti’s Sandwich Shop has the following information regarding costs at various levels of monthly sales. Help Tutti separate her costs into fixed costs and variable costs so that she can predict and evaluate costs at varying levels of guests served.

of a microbrewery is a brewer that produces less than 10,000-15,000 barrels per year. This

A project may have more than one IRR, especially when returns of an investment yield negative cash flows following positive cash flows.

The world of business has undergone radical and dramatic changes in the last decade changes that present extraordinary challenges for the contemporary manager. A manager is an organizational member who is responsible for planning, organizing, leading, and controlling the activities of the organization so that the goals can be achieved. According to a widely referenced study by Henry Mintzberg, managers serve three primary roles: interpersonal, informational, and decision-making. Management is process of administrating and coordinating resources effectively and efficiently in an effort to achieve the goals of the organization.

NPV and IRR: When examining the NPV and the IRR of the Merseyside project, the numbers were very attractive. It had a positive net present value and an IRR above 10 percent. By these numbers, along with others,