...ECON 172 REPORT METHODOLOGY “What weights should society apply to cost and benefits occurring in future time periods relative to the present period?” INTRAGENERATIONAL DISCOUNTING * Consumption rate of interest cum shadow price of capital method (CRI-SPC Method) * The level of public investment should be based on individual preference for present consumption vs. future consumption * The marginal rate of time preference * Investment is simply a means of using resources that are potentially available for consumption now in order to increase consumption later * Individuals typically have a positive rate of time preference * They demand compensation when forgoing present for future consumption * SDR = rate of time preference * If the future increase in net benefits > present costs (via consumption rate of interest, CRI) = project passes a potential compensation test * Possible for the winners to compensate the losers * Still have sufficient gains to allow for pareto efficiency * Ex. Net return available to individual savers is 2% per year Project cost (to taxpayers) = $1M this year Net benefit = $3.2M in 50 years * forgoing current consumption of $1M and lending at 2%, return = $2.72M in 50 yrs * therefore, the $3.2M benefit will be preferred * If we ignore intragenerational redistributions, we can suggest that this project would improve social welfare * If individuals seek to maximize their own...
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...Since San Walton opened his first store in 1962, Walmart has grown into a global retailer with more than 4,000 store in the United States and more than 6,000 internationally. Walmart is comprised of three business segments, Walmart US, Walmart International and Sam’s Club. Walmart Global eCommerce works across all three segments. Walmart’s mission statement “We save people money so they can live better”, is not indicative of where its strategic focus areas are, but it does sound good for the average customer who has a limited budget. This mission statement leads directly into Walmart Global eCommerce goals which include combining online, social innovations with physical stores to give consumers “anywhere, anytime shopping experience” in addition to its organizational sustainability goal of creating zero waste, using only sustainable energy and selling products that sustain the environment which is important to all of Walmart’s segments including eCommerce. Walmart’s overall objective is to deliver shareholder value by increasing earnings per share, returns and maintaining strong stable returns on investment. According to Walmart CEO, Mike Duke, Walmart’s strategic focus areas are: •Making sure the company has the best retail talent at every level of the organization by recruiting, developing and retaining the best associates; •Delivering on the productivity loop that enables Walmart to operate for less so the company can drive prices even lower for its customers ...
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...Ladi Discount To: Mr. Theodor Von Hessen Chief Executive Officer, Ladi Discount From: John Faggit Business analyst, Ladi Discount Date: October 23, 2015 Subject: The development of consumer behaviour and the industry of discount stores and supermarkets in Denmark. As you requested on October 19, this briefing provides information about the current situation at the Danish market within the industry of discount stores and supermarkets as well as consumer behaviour. I here present a summary of the most important elements from my research. Key findings: The past 10 years we have experienced an increase in the consumption of the average Danish consumer on about 30 per cent. People are getting richer every year and therefore spend more money. During the last 15 years, the consumers’ spare time has been reduced by two hours in weekdays. They have less time to shop in stores and spend more time shopping online with the effect that there will be fewer “offline” shops. However, those remaining will become bigger (an average increase in area by 2-3 per cent the latest years). On that behalf, the location of shops and supermarkets is becoming even more important. In malls, and other places where there tend to be more people during the day, will become an attractive place to be located. How to attract customers will be vital in the future where clean concepts and interior design in shops will be essential to retain customers and attract new. The turnover of...
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...Le Hard Discount alimentaire Le Hard Discount Alimentaire L’historique du hard-discount alimentaire -L’historique Une forme de hard-discount (non alimentaire) est apparue en 1917 aux Etats-Unis. Cependant, le hard-discount alimentaire est réellement inventé en Allemagne dans la période post-seconde guerre mondiale (1947) par les frères Albrecht fondateurs d’Aldi. Après un échec dans les années 70, le hard-discount alimentaire arrive, véritablement, en France durant l’année 1988, par le lancement d’ED. A savoir, que la grande distribution ne croit pas en cette nouvelle forme de distribution. -Concept (Concept construit sur des prix bas, 20 % à 30% inférieurs aux GMS, accord solide et de longue durée avec les fournisseurs pour réduire les couts d’achats, marges réduites pour augmenter les volumes de vente.) -Définition « Un magasin hard-discount est un libre service alimentaire avec un personnel réduit, une présentation sommaire, un assortiment limité aux produits de base, des prix bas, peu ou pas de marques nationales, mais des produits sous marques de distributeurs ou des produits sans marque ». Le marché Pourquoi un tel succès ? Le phénomène est d'une simplicité désarmante : le pouvoir d'achat en chute libre entraîne l'explosion de la fréquentation des enseignes de l'alimentation « low cost » appelée plus fréquemment hard discount. Alors que ces derniers représentaient environ 13...
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...1 Causality and the Diversification Discount 1 Introduction Does corporate diversification, i.e. the expansion of a firm’s business operations into unrelated areas, destroy shareholder value? The wealth effects associated with conglomerates have been controversially discussed in scholarly journals ever since the seminal papers of Lang and Stulz (1994) and Berger and Ofek (1995) suggested that diversification reduces shareholder value. Both find that conglomerates are attributed with a lower market value than a portfolio of comparable focussed firms operating in the same businesses as the conglomerate. This finding seemed to suggest the hypothesis of a “diversification discount”. In line with this Scharfstein and Stein (2000) postulate "it has become almost axiomatic among researchers in finance and strategy that a policy of corporate diversification is typically value reducing.” Yet, subsequently financial scholars have challenged this dogma of a diversification discount. They did so with respect to the method used (Mansi and Reeb (2002); Glaser and Müller (2010)) and the causal interference (Graham et al. (2002); Campa and Kedia (2002); Villalonga (2004)). Taking these latest developments into account, the empirical evidence on the value effects of corporate diversification is mixed. The controversy that has evolved around these wealth effects provides a suitable setting to investigate the pitfalls associated with causal analysis and interference in empirical...
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...My Personal Discount rate is... Discount rate refers to the interest rate that you are willing to pay on a given amount of money today to end up with a given amount of money in the future. Recently I requested an auto loan to buy a new or used car. I was very much interested with a Honda accord. I have $2000 in my saving account to be used as a down payment. During my window shopping I found it very difficult to find a car that I’m willing to pay for it. The main reason not to come into clear decision was which one of these cars will save me some money and spares my driving for longer time. Since I know how discount rate works, I have been able to make decisions easily than I expected. New 2015 Honda accord costs $24000 with zero mileage on it. The interest rate for this car over a period of five years is 1.49%. I f I put down payment of $2000, and then finance $22000. Therefore the total loan owed after five years will be approximated to $27000. On the other hand I have a used 2008 Honda accord for $11750 under interest rate of 17% for five years. After $2000 down payment, the total amount owed after five years is approximately to $23400. Based on the simple financial analysis above I found that the discount rate on a new car is much lower than that of the used car. This lead me to a better decision of choosing a new Honda accord over used one. New Honda accord has lower uncertainty compared to a used one. Over that period of time new Honda is more likely...
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...Chapter 4 Answers to Concept Review Questions 1. Managers need to understand how bonds and stocks are priced because (1) firms regularly issue stocks and bonds to raise money for investment (2) understanding how securities are priced is helpful when conducting an acquisition or a divestiture, (3) the stock price is an objective signal of how managers are performing, and (4) finance theory teaches that the goal of the manager should be to maximize the firm’s stock price. 5. The coupon rate equals the annual coupon payment divided by par value. The coupon yield equals the annual coupon payment divided by the bond’s market price. 6. A bond sells at a discount when the bond’s coupon rate is lower than the market’s required rate of return on the bond. 11. An issuer benefits from an option to call a bond, because such an option allows the issuer to lock in a more favorable interest rate if rates should fall.. The option to convert bonds into common stock benefits bondholders. Once the stock price rises high enough, the value of the bonds starts to behave like the stock’s value—the prices start to rise. So convertible bonds offer investors some minimal level of return plus a lot of upside potential. 13. The price of a Treasury note quoted as 98:10 is 98 10/32 percent of par value or $983.125. Answers to End-of-Chapter Questions Q4-1. What is the relationship between the price of a financial asset and the return that investors require on that asset, holding...
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...Dividend discount model The dividend discount model (DDM) is a way of valuing a company based on the theory that a stock is worth the discounted sum of all of its future dividend payments.[1] In other words, it is used to value stocks based on the net present value of the future dividends. The equation most always used is called the Gordon growth model. It is named after Myron J. Gordon, who originally published it in 1959;[2] although the theoretical underpin was provided by John Burr Williams in his 1938 text "The Theory of Investment Value". The variables are: is the current stock price. is the constant growth rate in perpetuity expected for the dividends. is the constant cost of equity for that company. is the value of the next year's dividends. There is no reason to use a calculation of next year's dividend using the current dividend and the growth rate, when management commonly disclose the future year's dividend and websites post it. Contents[hide] * 1 Derivation of equation * 2 Income plus capital gains equals total return * 3 Growth cannot exceed cost of equity * 4 Some properties of the model * 5 Problems with the model * 6 References * 7 Further reading * 8 External links | Derivation of equation The model sums the infinite series which gives the current price P. Income plus capital gains equals total return The equation can also be understood to generate the value of a stock such that the sum of its dividend yield (income) plus its growth...
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...REV: APRIL 12, 2007 PANKAJ GHEMAWAT Wal-Mart Stores’ Discount Operations In October 1985, Forbes declared Sam Walton the richest person in the United States. With his four children, he owned stock worth $2.8 billion. That put him $1 billion ahead of the next person on the list, H. Ross Perot. By the end of April 1986, Walton’s net worth had swelled by another $1.6 billion. Walton’s fortune consisted of a 39% stake in Wal-Mart Stores, a retailer that had focused historically on the Sunbelt. Although Wal-Mart had begun to diversify into other areas, discounting still accounted for 91% of the company’s sales in 1985 and 96% of its pretax profits. Wal-Mart had consistently led other discounters in both profitability and growth. Exhibit 1 summarizes Wal-Mart’s history over the past decade; Exhibit 2 compares its performance with that of its competitors. As a result of such comparisons, Wal-Mart’s market value in early 1986 was twice K mart’s, even though it was only a third as large. Analysts thought that Wal-Mart would overtake K mart as the largest discounter by the turn of the century, but they were divided over whether Wal-Mart stock remained a good buy at a price-earnings multiple of 26. This case describes discount retailing and the distinctive features of Wal-Mart’s discount operations. It also sketches the areas into which Wal-Mart was diversifying in the mid-1980s. Discount Retailing Discount stores emerged in the United States in the mid-1950s. They...
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...understanding of the functions of the office Correct use of memo format in Part C and tabulation of specific rules for answering a company’s telephone Accurate, clear and precise responses to each part of the question. Correct use of grammar spelling and sentence structure None in this case Candidate noted the requirements of the question and responded accordingly, thus was awarded full marks 1 2 3 Office Administration 2012 Exemplars from candidates’ responses to Paper 02 Question 7 7. (a) Identify three functions of the Marketing Office. (3 marks) (b) State three reasons why a clerk in the Sales and Marketing Department should maintain a mailing list. (3 marks) (c) (i) Explain the difference between a ‘trade discount’ and a ‘cash discount’. (2 marks) (ii) Mr. Charles Brown has sent the Sales Department at Pristine Attire an order for 25 shirts. The price list...
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...gratitude and appreciation to all those who gave us the possibility to complete this report. A special thanks to our lecturer, Madam Nurulhuda binti Abdul Zabar whose help, stimulating suggestions and encouragement, helped us to coordinate our project especially in writing this report. A special thanks goes to my team mate, who help to assemble the parts and gave suggestion about the trade and cash discount. Thank you my team mate for giving opportunity work together as a team. Last but not least, many thanks go to the head of the project, Jamal Fikri whose have given his full effort in guiding the team in achieving the goal as well as his encouragement to maintain our progress in track. I would to appreciate the guidance given by other supervisor as well as the panels especially in our project presentation that has improved our presentation skills by their comment and tips. ABSTRACT 2.1 TRADE DISCOUNT CUSTOMER RETAILERS WHOLESALERS/MANUFACTURES * THE PROCESS OF TRADE DISCOUNT IS BETWEEN RETAILERS AND WHOLESALERS. TRADE DISCOUNT IS DEDUCTION FROM THE LIST PRICE AND IT IS USUALLY GIVEN TO BUYERS FOR THE FOLLOWING REASONS : * TO CLEAR OLD OR SPOILT ITEMS * TO COMPETE WITH OTHER SELLERS * TO ENCOURAGE BULK PURCHASES 2...
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...Runway Discount (“Runway”) is an online retailer that sells discounted high-end fashion. Runway employed a customer refer-a-friend program, that is existing customers can refer friends and get $25 credit for the next purchase of merchandise. In order to get the $25 referral credit, it must meet two of the requirements: first, the referral credit will occur when an existing customer referred a new customer and the new customer have purchased merchandise on Runway’s website. Second, the existing customers can redeem the $25 after a new customer purchase merchandises and the $25 can only apply to future purchases of the existing customers. In addition, this refer-a-friend program is open to all Runway existing customer and it doesn’t need any initial purchase or existing purchase of existing customers. The $25 is the...
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...Pricing and Conditions (SD-BFPR) Release 4.6C ™ HELP.SDBFPR Pricing and Conditions (SD-BF-PR) SAP AG Copyright © Copyright 2000 SAP AG. All rights reserved. No part of this brochure may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. Microsoft , WINDOWS , NT , EXCEL , Word and SQL Server are registered trademarks of Microsoft Corporation. IBM , DB2 , OS/2 , DB2/6000 , Parallel Sysplex , MVS/ESA , RS/6000 , AIX , S/390 , ® ® ® AS/400 , OS/390 , and OS/400 are registered trademarks of IBM Corporation. ORACLE is a registered trademark of ORACLE Corporation, California, USA. INFORMIX -OnLine for SAP and Informix Dynamic Server Informix Software Incorporated. ® ® ® ® ® ® TM ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® are registered trademarks of UNIX , X/Open , OSF/1 , and Motif are registered trademarks of The Open Group. HTML, DHTML, XML, XHTML are trademarks or registered trademarks of W3C , World Wide Web Consortium, Laboratory for Computer Science NE43-358, Massachusetts Institute of Technology, 545 Technology Square, Cambridge, MA 02139. JAVA is a registered trademark of Sun Microsystems, Inc. , 901 San Antonio Road, Palo Alto, CA 94303 USA. JAVASCRIPT is a registered trademark of Sun Microsystems, Inc., used...
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...received from Metropolitan Bank. Although, the requirements of Southern Bank and Trust Bank seem to be rigid, the more monies that he receives can however be used in the firm’s expansion as well as paying off some of the company’s liabilities. As a result, Jones will be allowed more flexibility in the operations of the business. He will then be able to increase his assets in the form of inventory and capital, which in turn will result in his business being in a better position to finance its operations. In addition, Jones Electrical will be able to benefit from the trade discounts which are offered by his suppliers because this arrangement would allow him to pay his creditors. With respect to the early payment discount of only 2%, it is advisable that the Company, continue to credit its supplies and make alternative arrangements with respect of repayment to its suppliers. The company needs cash and the discount of the 2% does not put the company in a better financial position. It is always important to inject equity so that your company will be able to increase its assets, which will eventually lead to an increase in sales and revenue. Another issue is that with respect to the proposed growth of the company, Jones had predicted forecasting in sales to increase significantly therefore the urgent need for a very large cash flow into the company would help significantly. Evaluate solutions Pros Cons Should Jones Electrical decide to accept the loan from Southern Bank and Trust...
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...Capital Budgeting Assignment 2 Ebony N. Robinson FIN 534: Financial Management January 30, 2011 Professor: Dr. Glenn L. Stevens Strayer University Abstract The Net Present Value rule states that when making an investment decision, choose the project with the highest NPV. If the objective is to maximize wealth, then “the NPV rule always gives the correct answer (Berk and DeMarzo, 2011).” According to the text, we use the NPV rule to evaluate capital budgeting decisions, making decisions that maximize NPV (Berk and DeMarzo, 2011). Determining which projects to accept or reject is based on whether or not the project has a positive NPV. NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account. Based upon the principle of this rule, a project with a positive NPV is accepted because it ensures that the future value of that same dollar will be greater. The following scenario is provided to evaluate Bauer Industries’ project to manufacture lightweight trucks. Bauer Industries is an automobile manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight trucks. Bauer plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental free cash flow projections (in millions of dollars): | ...
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