...come out two alternatives in order to help Sindy solve the dilemma she faced. The first alternative is expanding her business into middle and senior level segment after 2 years. By expanding the business, Sindy will able to get more profit. This is because the revenue that she will get from senior staff positions is higher compare to junior staff positions. The second alternative that we suggest is doing nothing. Doing nothing means that Sindy have to continue on what she do now and just focusing on the blue collar and junior staff positions. Alternative 1: Expand the business into middle and senior level segment after 2 years. Since on the first year of operation, Sindy are able to get an amazing profit as well as recovered all her investment in the business, there will be no problem for her to expand her business widely after two years. The reason we want Sindy to expand her business after 2 years, not after 1 year is because we want Sindy to gain more business knowledge and on the same time, save some money so that she will able to hire more sales people, HR professional and pay for leasehold improvement. In two years before expanding her business, it is important for Sindy to learn more on the recruiting agency business since she have to face a very competitive environment once she enters the middle and senior level segment. She will have to compete with various competitors which some of them may be a big company and have more experience in doing the business. Therefore...
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...Income Funds and Rs. 1,345 crores from Gilt Funds coupled with a substantially lower net inflow of Liquid Funds (Rs. 10,347 crores as against Rs. 24,577 crores last year). Inspite of 36 new equity schemes mobilising Rs. 11,756 crores, ten times more than in the previous year, the net mobilisation under equity schemes was only Rs. 7,247 crores, lower than in the previous year. May be, this is a temporary phenomenon reflecting the market realities and the scenario might change in the years to come. Yet, isn’t this a situation that needs to be analysed, lessons learnt and suitable measures taken ? Well, the industry has a challenge before it – a challenge to reach out to retail investors and to position the mutual fund products as a long term investment avenue for the household sector. This is an ongoing task, that we all have to undertake in a sustained manner. We extend our warm and cordial welcome to Mr. M. Damodaran, IAS, who has been appointed as Chairman of SEBI. We look forward to his guidance and support. Yours, A.P.Kurian Chairman May 5, 2005 SEBI UPDATE Circulars...
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...Automated Asset Management is also termed as IT asset management. IT asset management (ITAM) is the set of business practices that join financial, contractual and inventory functions to support life cycle management and strategic decision making for the IT environment. Assets include all elements of software and hardware that are found in the business environment. IT asset management (also called IT inventory management) is an important part of an organization's strategy. It usually involves gathering detailed hardware and software inventory information which is then used to make decisions about hardware and software purchases and redistribution. IT inventory management helps organizations manage their systems more effectively and save time and money by eliminating unnecessary purchases and wasted resources. Hardware asset management entails the management of the physical components of computers and computer networks, from acquisition through disposal. Common business practices include request and approval process, procurement management, life cycle management, redeployment and disposal management. A key component is capturing the financial information about the hardware life cycle which aids the organization in making business decisions based on meaningful and measurable financial objectives. Software Asset Management is a similar process, focusing on software assets, including licenses, versions and installed endpoints. Role of IT asset management in an organization The...
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...2. What is your decision regarding the 2 credit proposals? Why? Ashar Corporation: First of all, I am going to discuss the Ashar Business Credit Proposal. In this proposal, Ashar Industries Company, which is one of the largest steel companies worldwide, is asking for a $850 M credit in order to finance their acquisition of Zellmont SA, which would actually create the largest steel producer company of the world. This acquisition has not been recommended by the Zellmont board, and therefore it could be regarded as a hostile takeover at the moment. As it is seen on its financial statements, Ashar corporation has been a very healthy corporation during the past few years. We can see that they have a really stable Income Statement, with high figures regarding their revenues, EBIT, Net Income. Even though, there is a decrease of the figures from 2004 to 2005, if we check in the Balance Sheet, it can be justified by the acquisition of fixed assets and long-term debt and equity. This can be a worrying figure since the company has already long-term debt, but if we look out of the box, we should know that steel companies, in order to grow and maximize their profit, they need to acquire a lot of fixed costs, which will be the base for their operations. It can be a bit risky because if the value of the steel goes down, then the debt to asset ratio will increase. Although all these possible outcomes, and looking forward in the future of the steel industry, it is not really probable...
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...future prices and trends by collecting and estimate the past prices and information. However, there are some conflict points on the momentum strategies performance, and it is a technical tool with multiple economy factors needs to be considered into. Why do momentum strategies exist? Refer to both behavioural and market-based argumentations. Momentum strategies are the stock analysis stool exists in the financial evaluation process, also in funds and currency investment. According to Chan, Jegadeesh, and Lakonishok J (1996) said, "it is a strategy that buying stocks in a high returns over the past three to twelve months, and selling those that had the poor returns over the same period." In the other words, the outperform stock will remain well but the underperform stock will continually worse (Fama & French, 1992). From the views from market- based argumentation, massive of evidence find that the momentum strategies are profitable for financial investment. For example, Aharoni, Ho and Zeng (2012) had a test in the profitability of momentum strategies in Australia stock market, which be found that the...
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...THE COST OF CAPITAL, CORPORATION FINANCE AND THE OF INVESTMIENT In the business world we make investment for two main reasons or either of them that can be for the maximization of our profite from a business or it can be for the maximaization of the market value of the assets. Businesses generally aquire the assets if the perceives that the particular asset can help in increasing the profit of the organisation. According to the theory the acquisition of the asset can help to increase the profit only if the returns arising due to that asset are more than the interest costs arising due to that asset. On the individual level when we are cosidering the purchase of any asset we should also consider the risk factor associated with that asset. Profit maximization and value maximization they both have more or less same meanings and implications. But if the case is of uncertainity then the profit maximization has no meanings, it remains meaningless for the investors. When the situation is uncertain then in that case the market value maximization becomes the basis for the theory of investment, if this notion is kept in mind then every time when we are going to make a decision to invest or not we should simply keep one thing in our mind that can be the basis of the decision, that is if we aquire the particular asset will it help to increase the value of the firm’s share? If in response of this question we comes on this point that yes it will result in increase in the value of the firm’s...
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...Foundations of the Net Present Value Rule Figure 2-1 illustrates the problem of choosing between spending today and spending in the future. Assume that you have a cash inflow of B today and F in a year's time. Unless you have some way of storing or anticipating income, you will be compelled to consume it as it arrives. This could be inconvenient or worse. If the bulk of your cash flow is received next year, the result could be hunger now and gluttony later. This is where the capital market comes in. It allows the transfer of wealth across time, so that you can eat moderately both this year and next. The capital market is simply a market where people trade between dollars today and dollars in the future. The downward-sloping line in Figure 2-1 represents the rate of exchange in the capital market between today's dollars and next year's dollars; its slope is 1 + r, where r denotes the 1-year rate of interest. By lending all your present cash flow, you could increase your future consumption by (1 + r)B or FH. Alternatively, by borrowing against your future cash flow, you could increase your present consumption by F/(1 + r) or BD. Let us put some numbers into our example. Suppose that your prospects are as follows: |Cash on Hand: |B = $20,000 | |Cash to be received 1 year from now |F = $25,000 | If you do not want to consume anything today, you can invest $20,000 in the capital market at, say, 7 percent. The rate of...
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...STOCKHOLM SCHOOL OF ECONOMICS Master thesis within Finance Evaluating the Performance of Socially Responsible Investment Funds: A Holding Data Analysis H. Camilla Stenström* Jessica J. Thorell** Abstract: This paper investigates the performance of regular mutual funds compared to Socially Responsible Investment (SRI) mutual funds, over the time period of January 2001 to September 2007. The paper extends the research on the performance of SRI funds by using holding data of regular funds to create replicating portfolios. In the replicating portfolios, unethical investments are excluded according to a norm-based screening list, hence creating artificial SRI funds. The replicating portfolio returns are then used as a benchmark to compare against the SRI funds’ and regular funds’ returns. Results from the study indicate that an exclusion of companies according to norm-based screening can improve a fund’s performance. However, when looking specifically at the fund management of SRI funds, the results point towards inferior performance compared to regular funds. Key Words: Socially Responsible Investment (SRI) funds, ethical investments, holding data analysis, norm-based screening PhD Stefan Engström 13:15-15:00, December 14, 2007 Room 349, Stockholm School of Economics Tutor: Presentation: Venue: * 19873@student.hhs.se ** 19924@student.hhs.se H.C. Stenström and J.J. Thorell ACKNOWLEDGEMENTS Special thanks to tutor PhD Stefan Engström for all support and guidance...
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...both of these uses quantitative information. Cumulative information will also be incorporated to answer the objective and research hypothesis in a scientific and logical way. Statement of the problem: The business problem for the purposes of the research assignment is: Will an investor buy shares in Nedbank or FNB? If an investor owns shares in Nedbank or FNB, will he keep it or rather sell it? As an investor, the primary goal is to find the investment that will give you the highest return with the lowest risk. Investors also looks for the investments that can be bought at a discount in order to deliver a higher return on sales when sold, but also to sell the investment at a premium in order to deliver a higher return on the sale of the investment. To calculate whether the investor is investing at a discount or premium or selling at a discount or premium the investor needs to determine the intrinsic value of the chosen investment and compare the calculated value with the market value. To determine the intrinsic value of an investment the investor needs to look at the discounted cash flow techniques, the DDM, and Free cash flow to equity (FCFE). An in-depth analysis includes a thorough inspection of the financial statements of a company as well as...
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...international economies and political systems. The ingredients contributing to China's high exports growth rate over the past two decades have, for example, been very different from those that have contributed to high growth in countries as varied as Malaysia and Malta. Nonetheless, the bottom line has been their ability to take into advantage the current economic challenges. This paper explores approaches to overcoming the current global economic challenges and or opportunities to attain desired export targets. Yet, based on experiences throughout the world, several basic principles seem to underpin greater exportation prosperity. These include investment (particularly foreign direct investment), the adoption of modern technology, strong governance culture, sound macroeconomic policies, an educated workforce, and research and investment into emerging market economies. Furthermore, a common denominator which appears to link nearly all high-growth in exports countries together is their participation in, and integration with, the international economy. There is substantial evidence, from countries of different sizes and different regions, that as countries "globalize" an onus of gains to the firms and the citizens accrue. For instance, in the form of access to a wider population, market...
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...Apache Questions 1. What risks does Apache face? Do they differ by country of property type? Do the risks of the major integrated oil companies differ from those faced by Apache or other independents? How does Apache’s operating strategy affect its risk exposures? 2. What is Apache doing now to manage risk? What risks are they attempting to hedge? What are its competitors doing? 3. What are the potential hazards Apache faces if it manages risk? 4. As a member of Apache’s board, how would you recommend they proceed? If they decide to manage risk, what steps should they take? Which risks should they shed? Which risks should they retain/keep? Should they manage some types of risks but not others? Some types of investment decisions but not others? How should FAS 133 affect their strategy? Case Study Questions Each team is required to address the four questions posted above. You should view your case report as a report to senior management or the board of directors. It is to provide the decision makers with all relevant information of a particular case and your policy recommendation, using the assigned questions as a guide. There is no formal size limit for a case report, but you should keep in mind that conciseness and clarity make reports more convincing and will be rewarded accordingly. In particular, a summary of the facts from the case should not include the facts that are not relevant to your analysis. An important part of this exercise...
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...1. INTRODUCTION 2.1. COUNTRY OF JAPAN Japan is an island nation in East Asia. Located in the Pacific Ocean, it borders China, North Korea, South Korea, Russia, Taiwan, the Sea of Japan, the Sea of Okhotsk, and the East China Sea. It is an archipelago of 6,852 islands, most of which are mountainous and many are volcanic. The government system is a parliamentary government with a constitutional monarchy. The chief of state is the Emperor and the head of government is the Prime Minister. Japan has a market economy in which the prices of goods and services are determined in a free price system. Japan is a member of the Asian Pacific Economic Cooperation (APEC). Japan's main export goods are cars, electronic devices and computers. Most important trade partners are China and the USA, followed by South Korea, Taiwan, Hong Kong, Singapore, Thailand and Germany. Japan has a surplus in its export or import balance. The most important import goods are raw materials such as oil, foodstuffs and wood. The industries of Japan are manufacturing, construction, distribution, real estate, services, and communication are Japan's major industries today. Agriculture makes up only about two percent of the GNP. Most important agricultural product is rice. Resources of raw materials are very limited and the mining industry rather small. Japan's service sector accounts for about three-quarters of its total economic output. Banking, insurance, real estate, retailing, transportation, and telecommunications...
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...also the fourth largest sector in terms of foreign direct investment (FDI) inflows in the country. The two main reasons responsible for boom in the real estate industry in India include liberalization of Government policies, which has decreased the need for permissions and licenses before taking up mega construction projects and the expanding industrial sector.Urbanisation and increasing household income are some of the major factors that influence demand for residential real estate and growth in the retail sector.Market Size/ Growth ProspectsThe Indian real estate market size is expected to touch US$ 180 billion by 2020. Infact, the demand is expected to grow at a compound annual growth rate (CAGR) of 19 per cent between 2010 and 2014, with tier I metropolitan cities projected to account for about 40 per cent of this.Growing infrastructure requirements from sectors such as education, healthcare and tourism are providing numerous opportunities in the sector. Further, India is going to produce an estimated two million new graduates from various Indian universities during this year, creating demand for 100 million square feet of office and industrial space. In addition, presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational bases in India thus, creating more demand for corporate space.InvestmentsForeign investors are looking forward for investment in Indian real estate...
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...in service: 200 500 x 200 = 100,000 Total Incremental Cost *Then, we calculate the Profit - The difference between the Incremental Revenue – The Incremental cost $ 660,000- $ 100,000 = $ 560,000 Incremental Profit Initial outlay=cost of lift + preparing and installing cost =2,000,000 + 1,300,000 = 3,300,000 The before-tax cash flow is then: Year 0: -3,300,000 Year 1-20: 560,000 Before-tax NPV is then -3,300,000 + 560,000 ( 1/1.14 + 1/1.142 +…+ 1/1.1420 ) =-3,300,000 + 560,000 x 6.62313055 =-3,300,000 + 3,708,953.11 = 408,953.11 Because the NPV is positive, it is then a profitable investment. 2. The After Cash Flow = 100%- 40% = 60% Net Income = $ 560,000 60% x $ 560,000 = $ 336,000 = The After Tax Cash Flow The rate of return will drop to 8% The NPV factor for 20 years @ 8% = 9.8181. To find the tax savings on the investment I multiply the investment amount of $3.3 million times the tax rate of 40% to find the tax savings of $1,320,000.00. The NPV of the after tax cash flow is taking the after tax net income ($336,000) 336,000 x 9.8181 = 3,298,881 Tax savings: 3,300,000 x 40% = 1, 320,000 To determine the NPV of the tax savings: Tax savings ($1.32 million) x NPV factor (6.62313055) = $8,742,532.33 =...
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...since they would earn less in revenue for every $ exported. Further with a free currency and no capital controls, the ease of investing and removing capital would make the Brazilian stock market (which as it is, is very small) more susceptible to foreign capital. b. Medium term (1-2 years)? In the medium term, the movement in the real would dependent on several factors such as: global sentiments, status of the euro crisis, relative attractiveness of other market (such as Mexico, Africa, South East Asia) etc., However it would be ideal if the real was stable in the range of R$2 +/- 10% This would ensure stability in the economy and capital markets. A strong currency would encourage imports while a weak currency would discourage investments. Further a weak currency would also make the corporates in Brazil nervous as they will need to pay more reals for every $ of debt on their books. Would these be adverse developments for Brazil? Why? I think it is important to have stability in the currency before allowing it to float freely. Brasil is still an emerging economy and needs to have a scrupulous approach to its currency & monetary policy. It not only needs foreign capital for development but also needs to have a balanced current account. Further given the financial crisis Brasil went though in 80s due high inflation any sudden change could be detrimental. 2. Were the newly elected Brazilian President Dilma Rousseff and he...
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