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Assignment on Corporate Finance Management

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Added on  2020-05-28

Assignment on Corporate Finance Management

   Added on 2020-05-28

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Running head: CORPORATE FINANCIAL MANAGEMENTCorporate Financial ManagementName of the Student:Name of the University:Authors Note:
Assignment on Corporate Finance Management_1
CORPORATE FINANCIAL MANAGEMENT1Table of ContentsQuestion 1:.................................................................................................................................2a) Compute the net present value of the project:........................................................................2b) Depicting the relevant use of multivariate models over CAPM model:................................2Question 2:.................................................................................................................................3a) Evaluating the synergies identified from the mergers of Heinz and Kraft:...........................3b) Providing relevant testing of the merger in equation:............................................................5Reference and Bibliography:......................................................................................................9
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CORPORATE FINANCIAL MANAGEMENT2Question 1:a) Compute the net present value of the project:Year0123Sales 360,000 415,800 480,249 Variable cost 216,000 244,728 277,277 Depreciation 60,000 60,000 60,000 Salvage value 40,000 Inspection fees 3,000 Profit 84,000 108,072 182,972 Tax 12,600 16,211 27,446 Total cash flow 131,400 151,861 215,526 Working capital 24,000 Capital investment 310,000 131,400 151,861 239,526 NPV 98,874.37 b) Depicting the relevant use of multivariate models over CAPM model:The multivariate models such as Arbitrage pricing model is mainly an adequate optionfor over CAPM models, as it uses more than one factors to analyse the data. The relevantCAPM model only uses beta as its factor, which has different types of limitations. Moreover,CAPM model mainly uses beta to determine the future returns that might be generated from aparticular stock. On the other hand, Arbitrage pricing model uses more than one factor, whichhelps in gauging into the return provided from a particular stock.
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