Finance

Solution Library


Prepare a CCA table with UCC and Annual Tax Shield

Question Nortel is considering the purchase of a new call routing system.  The system will cost $50M to purchase, an additional $7M to install, and will last for 30 years.  The CCA rate associated with the system is 6%, the firm’s margin tax rate is 20%, and the firm’s WACC is ... Read More

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Calculating the Highest Returns from Potential Projects

Question Your division has been allocated $15M for capital projects for the coming year.  You`ve been able to identify five potential projects, as outlined in the table below, each of which will last 10 years. Project Name   Initial Cost    Annual Cash Flows &nbs ... Read More

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Capital Cost Allowance for New Machine and Old Machine Being Sold Off

Question Your firm purchased a line of computer equipment for $1.5M four years ago. It is assigned a CCA rate of 20% and the firm has a tax rate of 35%.  At the end of this year (year 4 for the machine) you decide to sell the computer equipment and as a result you will terminate the asset pool ... Read More

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Determining Optimal Time for undertaking new product expansion

Question HV Inc. is trying to determine the optimal time to undertake a product expansion. The project will require an initial investment of $15M and the firm has a WACC of 3%. Theexpansion is estimated to last 8 years, and if it is undertaken today, the annual cash flows associated with it will be ... Read More

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Calculation of Capital Cost Allowance with net profit, tax rate and weighted average cost of capital

Question PAC Corp. is going to purchase a new line of technology. It will cost $4M and will be salvaged for $0.5M in six years. Due to the advanced nature of the technology, it can beclassified in one of two CCA categories, which have a CCA rate of 20% and 40%, respectively. Which CCA rate should y ... Read More

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Optimum Capital Structure and Weighted Average Cost of Capital

Question (a). The calculation of the Weighted Average Cost of Capital (WACC) is theoretically simple but practically difficult. Discuss. (b). Two-fifths of the total market value of Jefferson plc consists of loan stock with a cost of 10%. Nelson plc is identical to Jefferson except that its capital ... Read More

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Is Company's Primary Aim to Maximize Shareholders' Wealth or Share Price

Question a. The primary financial objective of a company is the maximization of the wealth of shareholders …per corporate finance theory.    However, this objective is usually replaced by the surrogate objective of maximization of the company’s share price.  &n ... Read More

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Personal Finance Investment Portfolio

Question First analyse your own situation and risk profile (character, life-style, time horizon, objectives, etc.), then reflect this is a portfolio of funds or ETF using the examples and providers chosen from David Costa’s book (you can also use any ETF available in the Morningstar database) ... Read More

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Report on Bank Relationship Management Cash Flow and Liquidity

Question There is a growing importance of bank relationship management. Imagine you work in the corporate finance or treasury department of a medium-sized firm that often struggles with cash flow and liquidity. Adequate cash flow and liquidity are critical to a company’s ability to maintain o ... Read More

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Financial Statement Analysis of Coca-Cola

Question Organization Analysis Project Outline: Financial Reporting •    Analysis of the regulatory environment of the country in which the chosen organization is based, identifying the major elements and regulations that affect financial reporting and how this may differ from ... Read More

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Importance of Risk Management and Basel II norms for Financial Institutions

Question Write on the Importance of Risk Management and Basel II norms for Financial Institutions Summary The question belongs to Finance and it is about risk management and Basel II norms for financial institutions. Today, risk management has become a norm and it is one of the guiding schools of ... Read More

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Banks are firms of a special nature. Discuss the statement

Question Banks are firms of a special nature. Discuss the statement descriptively. Summary The statement is from Finance and it is about banks and their special nature. Banks are those organizations which provide financial services, offer trading services and are also the best place to save cash ... Read More

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