This financial management report delves into crucial aspects of corporate finance, offering a comprehensive analysis of capital budgeting techniques, portfolio risk and return, and capital structure decisions. The report begins by calculating the Internal Rate of Return (IRR) for a new machinery investment, followed by a critical evaluation of different capital budgeting methods, including Payback Period, Accounting Rate of Return (ARR), and Net Present Value (NPV). It then explores portfolio risk and return, calculating expected market return, market excess return, and the Sharpe ratio, along with a discussion on the Capital Market Line (CML) and Security Market Line (SML). Finally, the report addresses capital structure decisions, calculating the unlevered and levered value of a firm, along with the value of the tax shield on interest and cash flow to equity, providing a complete overview of financial management tools and their applications. The report concludes by emphasizing the importance of these techniques in making informed financial decisions.
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