Finance de La Torre

How do free cash flows and the weighted average cost of capital interact to determine a firm’s value?

Corporate finance is important to all managers because it allows a manager to be able to predict the funds the company will need for their upcoming projects and think about ways to organize and acquire those funds.

Sole Proprietorship: This is a type of business is where the business and the owner are one in

n. WACC has market interest rates and market risk aversion, firms debt/equity mix and firm’s business risk which all go to cost of debt and cost of equity which both areas end up at the value.

Under an ABC system, the allocation of costs to products is achieved through at least four analytical steps. Firstly, costs are grouped into activity levels. Secondly, cost drivers are

Plyer's Shareholders' Equity at Book Value for 2015 = $ 1,580,000 - $ 375,000 –

* Valuar activos intangibles como son las patentes, proyectos y la gente que dirige a la compañía.

Several internal factors can influence the valuation of a company, however, in the subsequent are some factors that will assist management in protecting its shareholders. The first reason is the desire to generate profits for the company, as a profitable firm will attract investors. Secondly, the need to improve the management of a company can lead to valuation as the information can be used to spur growth. Valuation will assist in understanding some of the factors affecting the value of the company such as client relationships, financials, image, technology employees, and marketing. Proper management is implemented after identifying the issues affecting the organization’s value. Thirdly, communicating to the public accurate and current information is essential in attracting investors and maintaining transparency, which builds the company image.

The cost of OS-367 may have increased under the ABC system due to the fact that it the cost of the product needed to be increased to cover all the overhead costs. Activity based costing allocates costs to different areas based on the actual product and service in relation to consumption. Traditional cost allocation allows the company to divide the costs by department and utilizes volume- based information to determine the allocations. Therefore, OS-367 may be the only product that needs a certain machine to be produced and the cost of that machine would be allocated to this certain product. In this scenario, it increased the overhead costs and total cost allocated (ABC), thus the cost per unit needed to be increased. The increase in cost per

3) What is the weighted average cost of capital and why is it important to estimate it? Is the

TABLE OF CONTENTSQuestion 1a ……………………………………………………………………………………………………………………….3b ……………………………………………………………………………………………………………………….3c ……………………………………………………………………………………………………………………....4Question 2 …………………………………………………………………………………………………………………………………5Question 3 …………………………………………………………………………………………………………………………………6Question 4 …………………………………………………………………………………………………………………………………6References …………………………………………………………………………………………………………………………………7QUESTION 1a.Calculate the cost of the activities for France.

It consists of weighting and combining the weights of the ten factors and to evaluate implementing ABC. The potential benefits of ABC can be analyzed in advance along two separate dimensions. And there are ten mediating factors (Pricing Diversity, Support Diversity, Common Processes, Cost Allocation, Growth of Indirect Costs, Pricing Freedom, Fixed Expense Ratio, Strategic Considerations, Cost Reduction Effort, Analysis Frequency) can guide management in determining the answers. The fist five factors (PD, SD, CP, CA, FG) based on the probability. The second dimension of the model seeks to establish decisions. lY axis potential for ABC due to cost distortion---PD.SD.CP.CA.FG lX axis proclivity to use cost information in decision---PF.FE.SC.CR.AF To start management must analyze and responses to two key questions: 1. For a given organization, is it likely that ABC will produce costs that are significantly different from those that are generated with conventional accounting, and does it seem likely that those costs will be "better"? 2. If information that is considered "better" is generated by the system, will the new information change the dependent decisions made by the management? After finish these questions managers of company can discuses the ten factors that support or reject implementation. Finally, the combined weighted scores are plotted as a point on one of the four quadrants of a graph.Plotting the Answers--- Use Contingency Grid Method The steps in the

The Following involves the analysis of the costing techniques followed by the company along with its Budgeting system. It also involves the Investment appraisal analysis for the given data.

* Please choose either the CAPM estimate or the DDM estimate for cost of equity based on your answer to Question 3.

Household and corporations have different credit conditions; they both channel funds from savers to borrowers, this is known as the flow of funds. Funds are transferred from savers who have a surplus of credit to borrowers who have a deficit. Although both take part in saving and borrowing, households are typically the savers and businesses are typically borrowers.