...Doll company and need to decide which investment projects can create values for shareholders’ wealth so that the company can receive funding in the next five years. Student’s task is to evaluate proposed projects using the financial and qualitative information provided and to select projects to be approved for a given year’s investment plan using any evaluation criteria deem appropriate. Students are to submit the simulation online and to write a final report in a formal business format based on the simulation. Case Study Instructions: This is an individual assessment. You are acting as the CEO of New Heritage Doll company and you need to decide which investment projects can create values for shareholders’ wealth, so that the company can receive funding in the next five years. Your task is to evaluate proposed projects using the financial and qualitative information provided and to select projects to be approved for a given year’s investment plan using any evaluation criteria you deem appropriate. There is more detailed information provided in the case study and you also can: 1. Review the Preparetab where you’ll learn about New Heritage and its corporate strategy; 2. Navigate the Analyze tab to view detailed financial reports at the divisional and company levels. Here you can also evaluate projections for each of the available projects; 3. Proceed to Decide tab to submit your final project decisions for that year; 4. The simulation advances to the next year and presents...
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...Project Number: DZT0517 Stock Market Trading An Interactive Qualifying Project Report Submitted to the faculty of the Worcester Polytechnic Institute in partial fulfillment of the requirements for the Degree of Bachelor of Science by ___________________________________________ Meng-Yu Ni Date: August 2006 Approved by: __________________________ Professor Dalin Tang Project Advisor 1 Abstract Using the information from the internet and published books, a general understanding about stock market and trading strategies was obtained. The knowledge and trading strategies were applied in the market in a stock market simulation to get real-time trading experience. Experiences learned from using trading methods in this simulation will help me to become a better investor in the future. 2 Acknowledgement First, I want to thank my parents who gave me the opportunity to study at Worcester Polytechnic Institute in USA. Second, I would like to thank my advisor, Dalin Tang, who gave me advices, and help me during this whole project time. Thirdly, I want to thank Worcester Polytechnic Institute for giving me opportunity to do this project, which made me to learn more things from outside of classes by myself. Finally, I would like to thank all the people who gave me some help when I needed it. 3 Table of contents Abstract ........................................................................................................................... 2 Acknowledgement...
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...need to decide which investment projects can create values for shareholders’ wealth, so that the company can receive funding in the next five years. Your task is to evaluate proposed projects using the financial and qualitative information provided and to select projects to be approved for a given year’s investment plan using any evaluation criteria you deem appropriate. There is more detailed information provided in the case study and you also can: 1. Review the Prepare tab where you’ll learn about New Heritage and its corporate strategy; 2. Navigate the Analyze tab to view detailed financial reports at the divisional and company levels. Here you can also evaluate projections for each of the available projects; 3. Proceed to Decide tab to submit your final project decisions for that year; 4. The simulation advances to the next year and presents the financial results of your investments. The Case Study is a real-world case study, which will help you to know what’s going on in the real corporate world. Curtin University has bought the copyright from Harvard Business School and paid almost half of the Finance Simulation: Capital Budgeting, New Heritage Doll Simulation for each student. The simulation is a useful software and tool containing all information and calculations in order to help the CEO to make capital budgeting decisions. Curtin students only need to pay $7.50USD to use this simulation software. Please submit your simulation online and written document...
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...Bidding for Antamina FNCE 765 Fall 2014 Date: 11/05/2014 Project Background In June 1996, in the midst of a privatization wave, the Peruvian government decided to put the Antamina mine for sale, hoping to bring in a large amount of capital and the investments needed to proceed with the large scale development. Currently owned by Centromin, the largest state-owned mining company in the country, Antamina is located in a remote site several hundred miles north of Lima. Centromin management boasted of Antamina’s large polymetallic ore reserves, with an estimated range from 127 MT to 913MT. However, due to a lack of geological data on a large portion of the reserve, there is a need for further geological studies in order to better determine the actual amount of reserves. The purchaser of the property would need to conduct their own feasibility studies and bear the approximate $24M cost associated with the exploration. Bidders RTZ-CRA: The world’s largest mining group operating globally with a revenues of over $8B and a market capitalization of over $10B. It does not engage in currency or commodity price hedging as it believes that it’s global presence and broad product line diversifies its exposure to currency and commodity price fluctuations. Noranda Inc. Among the ten largest mining companies in the world and a market capitalization of $4 billion, Noranda’s mining segment is focussed almost all in Canada and the United States. Joint Venture between Inmet Mining...
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...financial and capital (both purchase of machine/plant and project) decisions. By eliminating extreme choice options in pricing, production and financing, Team E strove for consistency in an effort to maintain steady growth and find the optimal capital structure. We finished the simulation in fourth place as shown in Exhibit 1, which represented a 148% increase in Accumulated Wealth. Exhibit 1 - Accumulated Wealth Results $150.00 $120.00 $90.00 $60.00 $30.00 Team A Team E Team I Team O Team U One area of strength for Team E was having a clear, accurate picture of future quarters (outside of simulation-caused activities). This enabled us to know precisely what our plant and machine capacity was going to be and the related depreciation costs, and what principle and interest payments were going to be on existing debt. This, along with basic FinGame rules for Accounts Receivable, Accounts Payable, Warehousing Costs and S&A allowed us to create pro forma statements outside of FinGame for the current and all future quarters. Our most significant improvement was our ability to calculate demand elasticity. We made a modest attempt to calculate elasticity during the practice rounds, but when the results were inconsistent, we didn’t spend much more time on it. Once we got into the real simulation and realized that limiting plant and machine builds to...
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...Introduction Capital Budgeting is a process that allows businesses to assess whether their investment decisions like purchasing a new plant, constructing a new building, or engaging in a new venture is profitable enough to pursue. (Investopedia. 2015) When making crucial investment decisions, capital budgeting gives businesses a more informed way of deciding. This is because investment decisions are weighed in terms of the cash flows over the duration of the new venture or investment. This way, a company can have more visibility in terms of monitoring its cash flows for every period. Consequently, businesses can make an initial evaluation of pushing through a certain project or not. This is what makes capital budgeting very useful since companies...
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...risk-averse, does this mean they will not take risks? Explain. Risk averse corporate managers are not unwilling to take risks, but will require a higher return from risky investments. There must be a premium or additional compensation for risk taking. 3. When is the coefficient of variation a better measure of risk than the standard deviation? The standard deviation is an absolute measure of dispersion while the coefficient of variation is a relative measure and allows us to relate the standard deviation to the mean. The coefficient of variation is a better measure of dispersion when we wish to consider the relative size of the standard deviation or compare two or more investments of a different size. 4. Explain how the concept of risk can be incorporated into the capital budgeting process? Risk may be introduced into the capital budgeting process by requiring higher returns for risky investments. One method of achieving this is to use higher discount rates for riskier investments. This risk adjusted discount rate approach specifies difference discount rates for different risk categories as measured by the coefficient of variation or some other factor. Other methods, such as the certainty equivalent approach, also may be used. 5. if risk is to be analyzed in a qualitative way, place the following investment decisions in order from the lowest risk to the highest risk: a. new equipment (2) b. new market (5) c. repair of old machinery (1) d....
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...BU 473: Investment Management Spring 2012 Instructor Office Phone E‐Mail Office Hours Monday 7:00 – 9:50 PM Wednesday 4:00 – 6:50 PM Dr. Ning (Tony) Tang Faculty Assistant SBE 3253 519.884.0710 Ext. 2479 ntang@wlu.ca Office Phone Section H: Section J: (P2007) (SBE1210) Caroline Hissa SBE 2201 519.884.0710 Ext. 2059 Monday & Wednesday 11:30 AM – 12:30 PM or by appointment COURSE DESCRIPTION: This course is designed to help students understand the investment opportunities in the financial markets and the risk‐return relations among securities included in investment portfolios. Securities analysis, portfolio management, and modem portfolio theories are the focus of this course. REQUIRED TEXT: Investment Analysis and Portfolio Management, 1st Canadian Edition, by Reilly, Brown, Hedges, and Chang; Nelson Education, 2010. Other course materials can be downloaded from MyLearningSpace. COMPUTER AND SOFTWARE: Students are required to bring laptop computers to some of the lectures (at least one laptop per student group). Excel 2007 or higher version is required. Sessions that require the use of computers are indicated in Tentative Class Schedule on page 4. GRADING SCHEME: Example 2 Example 1 Mandatory Midterm Exam * 0.4(90% ‐ Optional) 0.4(90%‐45%)=18% 0.4(90%‐5%)=34% Comprehensive Final Exam 0.6(90% ‐ Optional) 0.6(90%‐45%)=27% ...
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...following terms: a. Project cash flow; accounting income b. Incremental cash flow; sunk cost; opportunity cost; externality; cannibalization; expansion project; replacement project c. Net operating working capital changes; salvage value d. Stand-alone risk; corporate (within-firm) risk; market (beta) risk e. Sensitivity analysis; scenario analysis; Monte Carlo simulation analysis. f. Risk-adjusted discount rate; project cost of capital g. Decision tree; staged decision-tree analysis; decision node; branch h. Real options; managerial options; strategic options; embedded options i. Investment timing option; growth option; abandonment option; flexibility option a. Project cash flow: The process of inflow or outflow of cash in any project is called cash flow. In project cash flow the increase in income results cash inflow on the other hand, expenditure results cash outflow. Accounting income: Accounting income is the result after deducting the total sales revenue from its expenses. The result of accounting income and cash flow differs in the financial statement because accounting income makes records of both cash and non cash transaction. While in cash flow only pure cash transaction are recorded. b) Incremental cash flow: Incremental cash flow is the additional cash that company may receive by taking a new project. If a company sees positive incremental of cash flow then it means the company can get additional cash flow in future, if new project is accepted. ...
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...Environmental Issues Simulation SCI/362 Managing Environmental Issues Simulation The relationship between the stakeholders in Week 4’s environmental issues simulation needs to equally considered and environmental justice must be applied to protect the indigenous peoples as well as the environment. The stakeholders must choose the best path forward on the project that will be beneficial to all parties involved and not just produce the most profits. Managing Environmental Issues: Simulation Background The Environmental Issues Simulation assesses the activities of the pharmaceutical company Colney and Pitts as they plan to expand new operations in Kenya that will hopefully assist them in developing drugs to treat prostate cancer. The company is a US firm based in California and will be dealing with the government of Kenya as well as the native Kikuyu people. Colney and Pitts anticipates gathering a rare plant named Pygeum from the tribal lands of the Kikuyu people to study its properties that have been used for generations in treating various medical issues of older tribal males. The simulation states that the company will be investing $250,000 into their research into the viability of using the Pygeum plant in their modern pharmaceutical products. The company projects its earnings from this new drug to be around $220 million a year. As a precaution, the International Center for Ethno Botanical Research will be monitoring the company’s project to protect the tribal...
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...associated with them is crucial to financial growth and success. Entities are continuing to find ways of leveraging risk by using different modeling tools to understand the source of risk, measure risk and transfer risk (Schwartz, 1996). Due to the expansion and growth of companies into new markets, risk has become an increasing concern for many businesses. It is clear through the recent market crash that more robust risk management tools must evolve with the changing investment practices that are taking place in today’s society. “The world’s financial markets have exploded with new products and new techniques such as derivatives and securitizations giving rise to huge new markets” (Epetimehin, 2012). If implemented strategically and used correctly, risk management tools can aid businesses in their journey of financial success and help them develop finely tuned investment planning and business strategies (Anonymous, 1983). It is critical for businesses to understand the risk associated with each transaction and investment made by establishing appropriate risk management systems to identify, measure, monitor, and control the risk (Ivanovic & Mjuacevic, 2004). Most importantly, there is a need for a change of attitude, strategy and mindset by the entire organization to effectively implement risk management...
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...many hospitals are faced with making and planning financial decision in order to succeed. The Elijah Heart Center analysis simulation shows how to direct finance so that the Elijah Heart Center will have the ability to make good use of the organization funds. Creating a good financial decision for Elijah Heart Center involves analyzing the financial problems that Elijah Heart Center faces while deciding on which course of action should be taken. They must be able to identify and analyze any potential financial problems in order to make financial decisions in take another course of action. In this paper I will show how analysis simulation can help Elijah Heart Center make good use of funds to the best of the organizations ability. The Elijah Heart Center is a Cardiac Care Hospital that is dealing with a significant amount of loss in their accounting issues. The finance Department has reported that the revenue is increasing at a rapid rate with the rising rate of new patients, but the profits are falling. A financial consultant was hired to analyze the financial indicator and make recommendation and options on how to changes the financial loss that it is experiencing During this simulation review options were introduced to me on cost cutting method to improve cash flow and loan options to support the problem of cash flow. The simulation provided me with information to work on the capital shortage issues and how to evaluate the funding option in order to purchase...
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...M2 CAPITAL BUDGETING RISK prof a s khalsa, iper pgdm 1 Nature of Risk Ç Risk exists because of the inability of the decision-maker to make perfect forecasts. Ç In formal terms, the risk associated with an investment may be defined as the variability that is likely to occur in the future returns from the investment. Ç Three broad categories of the events influencing the investment forecasts: 4 General economic conditions 4 Industry factors 4 Company factors 2 prof a s khalsa, iper pgdm Techniques for Risk Analysis Ç Statistical Techniques for Risk Analysis 4 Probability 4 Variance or Standard Deviation 4 Coefficient of Variation Ç Conventional Techniques of Risk Analysis 4 Payback 4 Risk-adjusted discount rate 4 Certainty equivalent 3 prof a s khalsa, iper pgdm Probability Ç A typical forecast is single figure for a period. This is referred to as “best estimate” or “most likely” forecast: 4 Firstly, we do not know the chances of this figure actually occurring, i.e., the uncertainty surrounding this figure. 4 Secondly, the meaning of best estimates or most likely is not very clear. It is not known whether it is mean, median or mode. Ç For these reasons, a forecaster should not give just one estimate, but a range of associated probability–a probability distribution. 4 prof a s khalsa, iper pgdm ...
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...FOT-320 | R&D Investment Decision | Memo to Claude Boucher – Director of Research and Development | In recent months, Brilux customers have hinted that combining ARTRAN, our flagship optical data service platform, with a new fibre optic transportation product would increase the market appeal of the Brilux portfolio. The investment required to bring this product (tentatively dubbed FOT-320) to market is still uncertain but clearly represents a major investment. Moreover, developing FOT-320 will tie up valuable human resources for twelve to eighteen months. . This memo attempts to provide numerical analysis of the variables associated with development costs and projected sales revenue to support a decision.Using the data given, we have built a simulation model that takes into account all of the variables and their uncertainty. The model predicts, using randomly generated values of the uncertainties, a cost of development and production (including the chance of failed customer testing) and a revenue volume (if the simulation leads to commercialization). These two amounts are compared and if the revenues (in 2002 dollars) are greater or equal to the costs, the simulation is deemed to favour the investment in developing FOT-320.The results of ten thousand such simulations were tabulated and the data indicates a 55% likelihood of successful return on investment (20% ROI, pre-tax). Our recommendation, then, is to invest the capital and resources necessary to develop...
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...Caledonia: Financial Analysis Catrina Sweers BUS401: Principles of Finance Ramzi Salloum April 30, 2012 Caledonia: Financial Analysis Taking on a new project or having an expansion done on an already existing facility takes time. There are several factors that need to come into play, centering mainly on capital-budgeting. As an analysts this is their main job; they need to be able to formulate the cash-flows statement for the project while figuring in such factors as risk, and depreciation, differential cash flows to determine if taking on the project is worth the monetary value as well as the risk. An analyst must also be able to measure the risk that is associated with the project and determine what effects it will have on the corporation. Also, an analyst must be able to not only consider the risk associated with systematic but also with contribution-to-firm when it comes to real life situations. Simulation provides an analyst with the opportunity to run a project through a variety of changes to key factors resulting in or as close to real life results. The project then can be put through a sensitivity analysis to see how sensitive the project will be to any changes that may take place. Capital Budgeting Capital budgeting can be a large fit to tackle. There are two separate options that a financial analyst can consider to focus on; cash flows and accounting profits. Both options have their pros and cons. For instance when it comes to accounting profits, this process...
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