Having five methods of valuation just gives the valuer the option of providing his client with the highest and best capital figure.’ With reference to the purpose of the five methods, discuss the validity of this statement.
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Having five methods of valuation just gives the valuer the option of providing his client with the highest and best capital figure.’
With reference to the purpose of the five methods, discuss the validity of this statement.
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- Describe the advantages and disadvantages of the six capitalbudgeting methods.Which of the following are acceptable criteria for determining the weights in the weighted average cost of capital? A. Market value of the capital structure and historical costs of financing. B. Using book values of the capital structure and the prior level of debt and equity. C. Market value of the capital structure and historical costs of financing. D. Using the after-tax cost of debt and the market value of the capital structure.In the case of HJ Heinz: Estimating the cost of Capital in Uncertain Times, Analyze the cost of capital. What are the steps used and calculations made by HJ Heinz? Are there any errors? What changes can be made to the cost of their capital recommendation? What are the reasons for the changes?
- The third step for making a capital investment decision is to establish baseline criteria for alternatives. Which of the following would not be an acceptable baseline criterion? A. payback method B. accounting rate of return C. internal rate of return D. inventory turnoverManagers can choose from several analytical techniques to help them make capital investment decisions. Each technique has advantages and disadvantages. Respond to the following in a minimum of 175 words: Provide an example or brief business case in which you can apply the NPV, IRR or payback concepts to make the most adequate financial decision. Select one of the techniques - NPV, IRR, or payback and explain why you would choose this technique as well as any disadvantages when compared to the others.The methods of evaluating capital investment proposals can be grouped into two general categories referred to as (1) methods that do not use present values and (2) methods that use present values. True False
- You have learnt three approaches that can be used in determining the discount rate in equity valuation: factor models, characteristic models and the implied cost of capital. 1. Describe the detail procedures in implementing the Capital Asset PricingModel (CAPM) in practice.You have learnt three approaches that can be used in determining the discount rate in equity valuation: factor models, characteristic models and the implied cost of capital. a. Explain each of the three approaches.Match the qualitative characteristics below with the following statements. 1. Relevance 2. Faithful representation 3. Predictive value 4. Confirmatory value 5. Comparability 6. Completeness 7. Neutrality 8. Timeliness a. Quality of information that permits users to identify similarities in and differences between two sets of economic phenomena. b. Having information available to users before it loses its capacity to influence decisions. c. Information about an economic phenomenon that has value as an input to the processes used by capital providers to form their own expectations about the future. d. Information that is capable of making a difference in the decisions of users in their capacity as capital providers. e. Absence of bias intended to attain a predetermined result or to induce a particular behavior.