The Board of Directors of ABC Co Ltd has assigned you the task of analysing the...

The Board of Directors of ABC Co Ltd has assigned you the task of analysing the Discounted Cash
Flow (DCF) technique for appraising large investment decisions.
Write a report to them giving your observations.

Solutions

Expert Solution

Discounting cash flow technique will be used in order to discount the cash flows associated with any project and provide them with the decision making criteria of accepting or rejecting the project be as discounting cash flows can be netted out in order to make a decision

I will be reporting them about present value of their cash flows in respect to that particular project and I will be also trying to ascertain the rate of growth in the cash flows and the risk factor which are associated with the Cash flows, so I will be trying to provide them with risk adjusted cash flows in order to have a better idea of overall cash flows which are associated with this project, so it can be helpful for the organisation in order to make a decision regarding acceptability or rejection of the project.

Discounted cash flow is completely based upon the present value concept of time value of money and it will be trying to to associate the depreciation in the value of money with the time and it will trying to discount the cash flows at present value in order to make a decision so it will help the organisation in decision making in respect to the particular project.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

. The board of directors of a medium-sized corporation, ABC Inc, has appointed you as the...

. The board of directors of a medium-sized corporation, ABC Inc, has appointed you as the Interim Chief Executive Officer. The company has had a stellar year reporting record high revenues and earnings per share that exceeded Wall Street analysts' expectation. However, the share price of your company has fallen. As Interim CEO, discuss some of the factors that may be contributing to this effect and what are some of the things you will do as CEO to rejuvenate the...

The board of directors of KLM Pte Ltd (“KLM”) has decided on 18 December 20X1 to...

The board of directors of KLM Pte Ltd (“KLM”) has decided on 18 December 20X1 to close its factory in Malaysia and move it to Vietnam. The decision was based on a detailed formal plan of re-structuring as required by FRS 37 “Provisions, Contingent Liabilities and Contingent Assets”. The decision was conveyed to the management personnel at the headquarters in Germany. The cost of restructuring the operation in Malaysia as per the plan was $700,000. Illustrate and explain how KLM...

george green was apppointed by the board of directors of nature pty ltd to be the...

george green was apppointed by the board of directors of nature pty ltd to be the company's managing director. nature now arranges camping holiday. green arranged a $15000 supply contract on the company's behalf, with canvas tenis ltd. however nature now's constitution contains the following provision: clause 1 the managing diretor may take contracts upto $10000 but above that amount the board approval is required. greeen had not obtained the boards approval for this contract, later the board refused to...

Morten Co. is experiencing a slowdown in their operations. The Board of Directors believe it is...

Morten Co. is experiencing a slowdown in their operations. The Board of Directors believe it is reasonably possibly that they will have to terminate the current Chief Executive Officer (CEO) as a result. If that comes to pass, the company will be required to pay a severance package per the CEO’s employment contract including: $60,000 cash upon termination; Another $30,000 to be paid one year following termination; Cash payments of $18,000 to be paid each year for 5 years. Required:...

The Board of Dental Assist Pty. Ltd. has five directors: three are executive and two non-...

The Board of Dental Assist Pty. Ltd. has five directors: three are executive and two non- executive. Dental Assist provides an employment agency for dental nurses. The Board recently approved the purchase of a complex computer system from Singsong Computers Pty. Ltd., on the recommendation of Sharif Omar, one of the non-executive directors. A minority shareholder of Dental Assist, Pam Yates, is aware that Sharif and the other non-executive director, Jing Jao, are the shareholders and directors of Singsong Computers....

Suppose you were the financial Accountant for Max Company Pty. Ltd. The board of directors promoted...

Suppose you were the financial Accountant for Max Company Pty. Ltd. The board of directors promoted you to position of Finance manager considering the satisfactory services that you rendered to the company. The CEO has asked you to analyze two proposed capital investments, Projects Naru and Oheema. The cost of capital for each project is 12%. The projects’ initial cost and expected net cash flows are as follows. The two projects are mutually exclusive projects. Year Cash Flow Naru ($)...

The Board of Directors has ask you to advise them as to whether it would be...

The Board of Directors has ask you to advise them as to whether it would be better to compensate employees with an additional bonus or restricted stock units (RSUs). They have noted that the Corporate tax rate is expected to decline from 35% to 15% and the Individual tax rates is expected to decline from 40% TO 20%. next year. Advice the Board as to the different tax treatment from both an employer and employee perspective of Bonuses vs RSU’s....

The Board of Dental Assist Pty. Ltd. has five directors: three are executive and two non-executive....

The Board of Dental Assist Pty. Ltd. has five directors: three are executive and two non-executive. Dental Assist provides an employment agency for dental nurses. The Board recently approved the purchase of a complex computer system from Singsong Computers Pty. Ltd., on the recommendation of Sharif Omar, one of the non-executive directors. A minority shareholder of Dental Assist, Pam Yates, is aware that Sharif and the other non-executive director, Jing Jao, are the shareholders and directors of Singsong Computers. Pam...

You are the chairman of the board of directors at Epson Information Systems, Corporation. The board...

You are the chairman of the board of directors at Epson Information Systems, Corporation. The board has decided to encourage employees to take college courses by reimbursing each eligible employee a maximum of $3,500 in tuition during any one calendar year. Anyone who wants to participate in the program must apply before the first class meeting and the application must be signed by the employee’s immediate supervisor. The only courses employees may choose are those either related to the employee’s...

Question: imagine that you are a business manager. Your board of directors has requested that you...

Question: imagine that you are a business manager. Your board of directors has requested that you report on the significance and impact of utilizing activity-based costing (ABC) over a single plant-wide predetermined overhead rate (POHR). Using your required readings this week, you will create a brief presentation for your investors analyzing the pros and cons of using ABC, including a comparison of at least two of the activity rates versus the single plant-wide POHR with calculations. Here is the relevant...

Subjects