Assignment on Corporate Finance Management

Added on - 28 May 2020

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Running head: CORPORATE FINANCIAL MANAGEMENTCorporate Financial ManagementName of the Student:Name of the University:Authors Note:
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
CORPORATE FINANCIAL MANAGEMENT2Question 1:a) Compute the net present value of the project:Year0123Sales360,000415,800480,249Variable cost216,000244,728277,277Depreciation60,00060,00060,000Salvage value40,000Inspection fees3,000Profit84,000108,072182,972Tax12,60016,21127,446Total cash flow131,400151,861215,526Working capital24,000Capital investment310,000131,400151,861239,526NPV98,874.37b) 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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