...Foreign Subsidiary Investment Plan Case: Multinational Capital Budgeting China & Australia Hypothetical Incorporated MBA AF 626 Fall 2011 International Financial Management Professor XX XX XX XX XX Table of Contents PART I – Analysis: Australia vs. China A. Country Analysis 1. Economic Environment 3 2. Social Environment 10 3. Political Environment 12 B. Industry Analysis 1. Aluminum Industry in Australia 17 2. Airline Industry in China 18 PART II-Capital Budget Analysis 1. Weighted Average Cost of Capital 19 2. Net Present Value 20 3. Scenario Analysis 21 PART III – Conclusion: Investment Decision 23 References 24 Appendixes 26 PART I – Analysis: Australia vs. China A. Country Analysis I. Economic Environment Australia Australia is a market oriented financial system which includes the world’s 13th largest economy and the 9th highest per capita Gross Domestic Product (GDP), with almost two consecutive decades of growth and the unemployment rate falling to a generational low. As a result of nearly three decades of structural and policy reforms, Australian’s economy has proven to be a competitive player in the increasingly integrated global markets. In terms of country risk, Australia’s favorable attitude towards private enterprise and its well-protected property...
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...Venture Capital (VC) | Starting and growing a business always require capital. There are a number of alternative methods to fund growth. These include the owner or proprietor’s own capital, arranging debt finance, or seeking an equity partner, as is the case with private equity and venture capital. Private equity is a broad term that refers to any type of non-public ownership equity securities that are not listed on a public exchange. Private equity encompasses both early stage (venture capital) and later stage (buy-out, expansion) investing. In the broadest sense, it can also include mezzanine, fund of funds and secondary investing. Venture capital is a means of equity financing for rapidly-growing private companies. Finance may be required for the start-up, development/expansion or purchase of a company. Venture Capital firms invest funds on a professional basis, often focusing on a limited sector of specialization (eg. IT, infrastructure, health/life sciences, clean technology, etc.). The goal of venture capital is to build companies so that the shares become liquid (through IPO or acquisition) and provide a rate of return to the investors (in the form of cash or shares) that is consistent with the level of risk taken. With venture capital financing, the venture capitalist acquires an agreed proportion of the equity of the company in return for the funding. Equity finance offers the significant advantage of having no interest charges. It is "patient" capital that...
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...problem………………………………………………………………………………………………………………..5 High level of solution…………………………………………………………………………………………………………..5 Benefits of solving the problem…………………………………………………………………………………………..9 Business Approach……………………………………………………………………………………………………………..11 Business process changes……………………………………………………………………………………………………11 High level implementation plan …………………………………………………………………………………………11 Business practices used to augment the solution………………………………………………12 Conclusion and overall recommendations………………………………………………………..12 Summary approach…………………………………………………………………………………....12 Abstract The Capital Group is one of the leading investment management companies. After many years of evolving, they are now at 23 office locations around the world. . The company manages money for government, any pension plans as well as equity investments. Most of the company clientele are clients which are trying to invest for their retirement. Capital Group describe themselves as a private investment company, which is able to invest through all markets making it their independent charter and balance sheet. There are four different types of benefits and compensation plans when being part of The Capital Group. There is compensation and bonuses, Health and life, retirement and savings and time away from work. There are two annual compensation in bonuses aside from the competitive salaries they have to offer. The health and life benefits are available immediately from the start...
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...of Income • Calculating Income Tax Payable • Taxation of Investment Income • Tax-Deductible Items Related to Investment Income How are Investment Gains and Losses Calculated? • Disposition of Shares • Disposition of Debt Securities • Capital Losses • Tax Loss Selling What are Tax Deferral Plans? • Registered Pension Plans (RPPs) • Registered Retirement Savings Plans (RRSPs) • Registered Retirement Income Funds (RRIFs) • Deferred Annuities • Tax-Free Savings Accounts (TFSA) • Registered Education Savings Plans (RESPs) • Pooled Registered Pension Plans (PRPPs) What are Tax Planning Strategies? Summary 25•2 © CSI GLOBAL EDUCATION INC. (2013) LEARNING OBJECTIVES By the end of this chapter, you should be able to: 1. Describe the features of the Canadian income tax system, calculate income tax payable, and differentiate the tax treatment of interest, dividends and capital gains (and losses). 2. Calculate capital gains and capital losses and assess strategies for minimizing tax liability. 3. Describe and differentiate the different tax deferral plans and their uses. 4. Identify basic tax planning strategies and discuss their advantages. TAXES AND INVESTMENTS It is often said that there are only two certainties in life: death and taxes. Taxes are a reality of life for Canadians and they affect many personal and investment decisions. Complicating matters is the differential tax rates for income, dividends, and capital gains, not to mention continually changing legislation...
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...A PRIMER ON VENTURE CAPITAL IN MAINE . Charles J. Spies III Chief Executive Officer Timothy P. Agnew Principal Author The Finance Authority of Maine and Masthead Venture Partners would like to acknowledge and thank Governor John E. Baldacci, former Governor Angus S. King, Jr. and the Maine Legislature, who have consistently supported the efforts of Maine entrepreneurs, and the programs and services of the Finance Authority of Maine. Through their determination and support, Maine has developed perhaps the best array of programs and services for financing fledgling technology-based businesses of any state in the nation Copyright 2003 Finance Authority of Maine. All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means without the prior written permission of the Finance Authority of Maine. Finance Authority of Maine, 5 Community Drive, P.O. Box 949, Augusta, ME 04332-0949 Tel: (207) 623-3263 or (800) 228-3734 TYY: (207) 626-2717 E-mail:info@famemaine.com Web Site: www.famemaine.com April 2003 2 TABLE OF CONTENTS PAGE CHAPTER 1: CHAPTER 2: CHAPTER 3: CHAPTER 4: CHAPTER 5: CHAPTER 6: CHAPTER 7: APPENDIX A: APPENDIX B: INTRODUCTION .................................................................................. 1 WHAT VENTURE CAPITAL IS (AND IS NOT)...................................... 3 HOW VENTURE CAPITAL INVESTORS WORK ................................... 6 HOW TO APPROACH VENTURE INVESTORS...
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...Part A: BUDGETING PROCESS 1. Definition [1] * A budget is the financial blueprint or action plan for an organization. It translates strategic plans into measurable expenditures and anticipated returns over a certain period of time * Budgeting is the process of creating and preparing an organization for the future. 2. Objectives[2] * The budget provides a yardstick for future results can be compared; * It allows management to plan and forecast in the areas of capital adequacy in work and or other types of scarce resources available; * Budget may direct cost of capital towards the most beneficial; * Budget support planning and control income and expenditure for maximum profit can be achieved; * It acts as a guide for management decisions when unforeseen conditions affect the budget; * It support for decentralization of responsibilities for each of the managers involved. With the establishment of the budget, the relevant managers will better understand what the company expected from them. So there is a congruence of objectives between the company and employees. 3. Classification of budgets [3] A series of budgets are linked together in a Master Budget. The major parts of Master Budget are Income Statement budgets and Balance Sheets budgets as follow: 4.1 Income statement budgets: * Sales budget: indicates for each product the quantity of estimated sales and (2) the expected unit selling price * Production budget: ...
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...forecasting – Financial Planning – Time Value of Money (NP) Nature of Financial Management: Meaning: Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise. Nature Scope/Elements 1. Investment decisions includes investment in fixed assets (called as capital budgeting).Investment in current assets are also a part of investment decisions called as working capital decisions. 2. Financial decisions - They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby. 3. Dividend decision - The finance manager has to take decision with regards to the net profit distribution. Net profits are generally divided into two: a. Dividend for shareholders- Dividend and the rate of it has to be decided. b. Retained profits- Amount of retained profits has to be finalized which will depend upon expansion and diversification plans of the enterprise. Get MBA study materials, articles, order business templates and stock market updates from or http://www.easymbaguide.in/ or www.easymbaguide.jimdo.com or www.easymbaguide.blogspot.com. Give your valuable feedback easymbaguide@gmail.com. Join easymbaguide@yahoogroups.com to get updates Objectives of Financial Management The financial management is...
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...Principles of Managerial Finance Solution Lawrence J. Gitman PART 5 Short-Term Financial Decisions CHAPTERS IN THIS PART 14 Working Capital and Current Assets Management 15 Current Liabilities Management INTEGRATIVE CASE 5: CASA DE DISEÑO Find out more at www.kawsarbd1.weebly.com 372 Last saved and edited by Md.Kawsar Siddiqui Principles of Managerial Finance Solution Lawrence J. Gitman CHAPTER 14 Working Capital and Current Assets Management INSTRUCTOR’S RESOURCES Overview This chapter introduces the fundamentals and describes the interrelationship of net working capital, profitability, and risk in managing the firm's current asset accounts. The chapter then focuses on the management of three major current asset accounts⎯cash, accounts receivable and inventory. A brief discussion of general inventory management policies, international inventory management, and several specific inventory management techniques: ABC, economic order quantity (EOQ), reorder point, materials requirement planning (MRP), and just-in-time (JIT). The key aspects of accounts receivable management are discussed: credit policy, credit terms, and collection policy. The chapter also discusses the additional risk factors involved in managing international accounts receivable. Examples demonstrate the effect of changes in credit policy. Also discussed is the impact of changes in cash discounts PMF DISK This chapter's topics are not covered on the...
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...VENTURE CAPITAL -- AN OVERVIEW OF THE BASIC ISSUES AND CHALLENGES FOR ENTREPRENEURS A NETPRENEUR.ORG SPECIAL REPORT AUGUST 2001 PREPARED BY: ANDREW J. SHERMAN, ESQ. ANDREW J. SHERMAN, ESQ. MCDERMOTT, WILL & EMERY 600 13TH STREET, N.W. WASHINGTON, D.C. 20005 (202) 756-8610 (202) 756-8087 (FAX) AJSHERMAN@MWE.COM (E-MAIL) WDC99 474195-1.T06139.0012 INTRODUCTION At several recent Netpreneur.org Coffee & DoughNuts events, including the May 23rd program on Ratchets, Cramdowns and Other Scary Venture Capital Terms as well as the recent Startup.com film event on July 17th, many members of our Netpreneur community posed questions on the fundamentals of structuring venture capital transactions, including many that time prevented the panel from addressing. Clearly there is a lot of interest in this topic among our region's technology entrepreneurs, but there is also a lot of confusion. Rather than deal directly with the dozens of specific questions posed at these two events, this Netpreneur.org special report will provide an overview of some case concepts which I hope will be helpful to you in the growth and financing of your business. OVERVIEW AND HISTORY OF VENTURE CAPITAL Today's institutional venture capital industry has its roots at the turn of the twentieth century, when wealthy families like the Rockefellers and DuPonts provided risk capital to small growing companies. Following World War II, a few institutional venture capital companies were formed, the most...
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...much more value to the relationship than the traditional approach of just being a product provider. The senior management team at Adamjee Life is well equipped to deliver in all areas of a partnership and comes with years of international experience. Our long term commitment to the insurance market in Pakistan ensures that the needs of our customers are always taken into account. These needs may vary from product development; addressing the exact requirements of the clients to servicing strategies, retaining clients and to understand their various businesses so that our value proposition stimulates growth in their business. Adamjee Life's diverse portfolio of products includes savings, health, loan protection as well as group life plans that cater to all needs of the customer. Our technical expertise lies not only in Pakistan but also in South Africa through our collaboration with Hollard Life Assurance Co. Ltd. Hollard is the largest private insurance group in South Africa. It has invested sizeable amounts in emerging markets and has 26 years of experience in designing and rating of insurance products that provide Adamjee Life with valuable consumer and market insight and gives it the capability to provide complete solutions to the customers insurance requirements. | | | | CORE VALUES Our commitment is to • Make a difference in the...
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...Financial Statements of THE ALGONQUIN COLLEGE OF APPLIED ARTS AND TECHNOLOGY Year ended March 31, 2005 THE ALGONQUIN COLLEGE OF APPLIED ARTS AND TECHNOLOGY Financial Statements and Supplementary Schedules Year ended March 31, 2005 Auditors’ Report Statement of Financial Position.....................................................................................................2 Statement of Operations ...............................................................................................................3 Statement of Changes in Net Assets ............................................................................................4 Statement of Cash Flows ..............................................................................................................5 Notes to Financial Statements ......................................................................................................6 Supplementary Schedules Schedule A - Revenue ..........................................................................................................24 Schedule B - Academic Expenditures ..................................................................................25 Schedule C - Educational Resources Expenditures .............................................................25 Schedule D - Student Services Expenditures.......................................................................26 Schedule E - Administrative Expenditures...............................
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...CAPITAL BUDGETING: ADVANTAGES AND LIMITATIONS. SEPTEMBER 2012 CHAPTER ONE INTRODUCTION 1.0 Background Study Capital budgeting is the process by which firms determine how to invest their capital. Included in this process are the decisions to invest in new projects, reassess the amount of capital already invested in existing projects, allocate and ration capital across divisions, and acquire other firms. In essence, the capital budgeting process defines the set and size of a firm’s real assets, which in turn generate the cash flows that ultimately determine its profitability, value and viability. In principle, a firm’s decision to invest in a new project should be made according to whether the project increases the wealth of the firm’s shareholders. For example, the Net Present Value (NPV) rule specifies an objective process by which firms can assess the value that new capital investments are expected to create. As Graham and Harvey (2001) document this rule has steadily gained in popularity since Dean (1951) formally introduced it, but its widespread use has not eliminated the human element in capital budgeting. Because the estimation of a project’s future cash flows and the rate at which they should be discounted is still a relatively subjective process, the behavioural traits of managers still affect this process. Capital budgeting is a process...
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...THE BASICS OF PRIVATE EQUITY With its bright performance in 2010, Indian PE has re-emerged in good shape from the turbulent times of the global credit meltdown and subsequent economic retrenchment. Deal activity has rebounded more quickly than in other Asia-Pacific markets, the exit markets are healthier than ever and capital continues to pour into an expanding number of domestic and international PE funds. Investment in P.E. firms adds value and managerial capacity in companies that are in need of rejuvenation and intend to compete in the global environment. Value addition is the main feature of investment. What is Private Equity? In finance, private equity is an asset class consisting of equity investments in companies that are not traded on a public stock exchange. Investments typically involve a transformational, value added, active management strategy. Private equity is medium to long-term finance provided in return for an equity stake in potentially high growth unquoted companies. Private equity provides long-term, committed share capital, to help unquoted companies grow and succeed. Private equity is a broad term which commonly refers to any type of non-public Ownership Equity securities that are not listed on a public exchange. At the start of a business, owners put some funding into the business to finance assets. Businesses can be considered for accounting purposes to be sums of liabilities and assets (also known as the accounting equation). After...
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...Students Name Teachers Name Date Task 1 The investment project in consideration for Fantasy Airlines is worth for £350 million for an estimated ten years of their life. There are majorly two large plane manufacturers Airbus and Boeing, considering the history of safety we decide to pursue Boeing as the supplier of these aircrafts. Since Fantasy Airlines is a public limited company therefore, debt, preferred shares and equity options are available to Fantasy Airlines to finance this fleet purchase. Considering the advantages and disadvantages of all options, we will review our results separately with every option available. Basic investment appraisal techniques that will be used in the analysis will include: • Net Present Value • Accounting Rate of Return • Internal Rate of Return • Payback Period • Profitability Index The following assumptions are necessary for our investment analysis: • Option 1: Cost of capital (in case of debt) = 1.15% • Option 2: Cost of capital (in case of equity) = 1.5% • Option 3: Cost of capital (in case of preferred shares) = 1.25% • Option 4: Weighted average cost of capital (in case of 50% debt, 25% preferred shares and 25% equity) = 1.18% Net Present Value Net present value is capital budgeting technique, which emphasizes that the bottom line net present value should be positive after all obligations are met. Option with highest net present value...
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...the depreciation of capital good a cost of society? In what ways does a person’s health depreciate? Depreciation is the way to track the wear and tear of assets over time. Now, only those assets which are defined as being capital goods can depreciate. The capital goods will provide value or generate income for the company over a period of time normally greater than one year. The depreciation of capital goods requires knowing three different variables: the original cost of the asset, the salvage value of the asset and the life expectancy of the asset. All three of these variables help the organizations or companies to determine the amount to write policies off against income on an annual basis. Based on that, the cost for the society for the use or availability of this service or technology will be established. So the investment for example on a new instrument or new technology will be recuperated thru the years of use as income, and this income would be obtained from the users (customers). At the end, the company will obtain the total investment plus some income from that investment if used by customers to obtain good health. The health is treated as a stock which degrades over time in the absence of "investments" in health, so that health is viewed as a sort of capital. Unfortunately the depreciation rate increases with age similar to any instrument or technology. It is more difficult to achieve or maintain the same level of health capital or stock as we age...
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