Rate of return Essays

83% Did you use arithmetic or geometric averages to measure rates of return? We used arithmetic average to determine the annual rate of return. As rate of return calculated using arithmetic average gives higher return compared to geometric average, investors are more likely to estimate their future return based on arithmetic average measure. Hence we use arithmetic average to measure the rate of return to match the expected rate of return required by investors. What type of investments would you value

to use capital budgeting techniques to determine which projects are deserve for an investment. Projects that have higher return on a period of time will be choose to invest such as investment property, develop projects and potential long-term investments. Management will first assess the prospective of project's life time cash inflow and outflow to determine whether the return of the project will generate sufficient profit to make it worthwhile.

in human capital by individuals .The position of the demand curve is determined by the rate of return to a particular person on each additional money unit of investment. The position of the supply curve shows the ejective marginal financing cost to him, measured by the rate of interest on each additional money unit invested. The person will go on investing in education until the rate of return equals the rate of interest, at which point an equilibrium (the desired level of education) is reached.

providing a benchmark before any further tactical or market timing positioning of securities. Diversification could occur across asset classes and geographically too meaning international stocks, allowing for construction of asset combinations with return and volatility characteristics that are acceptable to many investors with different risk tolerance levels and investment goals. When selecting securities to invest in another way of diversifying is to buy securities in the same asset class that are

It forms part of the capital structure of the Company. It affects the firm’s capital structure, Interest rates, risks and the market’s overall attitude towards risk. The capital structure are sources of financing for business projects which can either be in form of debt or equity. Most small companies will opt for short term debt as opposed to large companies

cutting back on redundant marketing costs? Couldn't we spare the cost for pediatric patients in developing countries by only cutting 12% of our profit margin? Couldn't we consider lowering the price for poorer tropical countries with higher morbidity rates, such as Nigeria and Gran Chaco, in order to bridge this gap? In my opinion, Allergan as a multibillion-dollar company, should have the most elementary moral obligation to sacrifice a slim of our profit and push towards higher levels of accessibility

Q3 - OE_Strengths What do you see as Delta’s particular strengths? "Their focus on returns on invested capital. Their management team. The variable expense structure that they 've created over the last seven years. Its relatively smaller penetration of unionized labor. Its leading presence at some of the strongest airport hubs in the country, namely Atlanta, JFK and LaGuardia. Its partnerships with international carriers as a way to decrease the capital intensity of running international, directly

noteworthy to comment that while the capital spending of this project is under the capital spending limits of the company, it also brings diversity in the core business and is promissory in terms of market expansion. With the IRR of 28.7% and projected return of $134 million, accepting this project will provide substantial gain to the revenue figures and confidence of the shareholders. Therefore, on the basis of Equivalent Annuity, the projects will be ranked as follows: 1. Strategic Acquisition 2. Eastward

efficiently to produce profits. These ratios provide users of financial information with useful data such as how much net income is generated from each dollar of revenue and how much net income is generated per share of stock. Return on Sales

Program Bachelor of Arts (Honors) in Accounting and Finance N401 Module Financial Strategy 6AG522 Student Name Khaled Sweelat Student ID 058002581 Ford Motor Company Income Statement For the year ended 31st December 2000 (All values are in Million $) Total revenue 170,064 Less: Cost of revenue (126,120) Gross profit 43,944 Selling, general and administrative expenses 14,855 Other operating expenses 11,371

have, rRF = risk-free rate RPM = market risk premium b = beta coefficient rs = rRF + (RPM)bi e. (1) Estimated cost of equity using discounted cash flow (DCF) approach: We have, = = = = 13.8%. e. (2) Another method for estimating growth rate: Another method for estimating the growth rate is to use the retention growth model: g = (1 - Payout Ratio) ROE In This is consistent with the 5% rate given earlier. e. (3) DCF method

lagging indicators, which measure the achievements against the goal. Formally the output of business activity is measured for a strategy is designed to achieve. For example, if the organization strategy calls for a 12 percent return rate, the outcome metric might be "return rate per month". They measure past activity that has already happened and cannot be changed. 2. Driver Metrics. Known as leading indicators and they are tactical metric. They measure business activity that influences the results

deal from a lender’s viewpoint. Interest must be paid before dividend. In case of liquidation, the debt finance is paid early before equity and this helps in making debt a safer investment than equity. Therefore, debt investors demand a lower rate of return than equity investors.  If external debt or equity is to be used, where should it be raised from and in which form? When it comes to equity finance, for some companies, the new shares must be offered to the existing shareholders in proportion

appropriate laws or regulations accordingly. 2. How Hedge Funds Seek Profits The following table proposes the annual returns and risks by hedge funds from 1996 to 2000. Most of the annual returns mark positive percentage, meaning that hedge funds had created huge amount of profits. The amount of returns depends on what kind of fund style hedge funds pursued. Table 1: Risks and Returns by Hedge Fund Category

When the RJR Nabisco buyout happened many factors were in play from the two competitors in play to buy the company first was Ross Johnson’s management, a group who had originally come to the table with a 75 dollars a share offer. Then when the news came out about the LBO Kohlberg, Kravis and Roberts or KKR were bidding 90 dollars a share for RJR Nabisco. Now with two competitors in play it was now a game of who may put together the highest bid or the best bid possible to buy the company. What we

For example, The Cornyn-Kyl bill (S. 1438) prohibited migrants who cause damage or harm to US such as pollution and crime from return for 10 years (Kane & Johnson, 2006). Australia needs to apply those kinds of regulations to ensure that migrants will have good behavior in their countries and limit harm and offences in order to raise Australia’s economy and create a safe environment

Relational the record between financial reporting quality and investment efficiency has an impact between macroeconomic and corporate levels (given that investment is a major determinant of the return on capital obtained by investors). Our results by considering a comprehensive measure of investment elongate and generalize the results of before (and its sub-components), in order to financial reporting quality using multiple agents，and by specifically

Andrew Carnegie: A Titan of Industry Andrew Carnegie was a Scottish immigrant, who became one of the greatest business men in American history. He was born in Dunfermline, Scotland to a poor household. His family immigrated to the United States when he was a young boy. Once Carnegie arrived in the US one of his first jobs was working in a cotton mill for one-dollar and twenty cents a week. It wasn’t until 1853 when Carnegie’s career took off. In 1853 Andrew Carnegie was hired by Thomas Scott,

the age of the insured. Tyler’s YPT = ($1,104 + $7,850) (1 + 0.055) – ($8,750 + $250) ($100,000 - $8,750) (0.001) Tyler’s YPT = $4.89 Tyler’s benchmark for his age group is $4. Although his policy is greater than the $4 rate, it is less than two times the rate and he should keep his policy in force. Mia’s YPT = ($960 + $7,500) (1 + 0.055) – ($8,350 + $250) ($100,000 - $8,350) (0.001) Mia’s YPT = $3.55 Since Mia’s policy is below the $4 benchmark she should keep her life insurance

Additionally, trading volume should increase when the price of an IPO with a negative initial return exceeds the offer price for the first time. Kaustia (2004) finds support for the aggregate impact from the disposition effect on the subsample of negative initial return IPOs. Kaustia (2004) states that trading volume is clearly suppressed below the offer price for negative initial return IPOs, and turnover increases significantly at the time the stock price exceeds the offer price for the