Financial Term Paper Example | Topics and Well Written Essays - 2500 words

Financial - Term Paper Example 900,000 ?1,600,000 ?1,850,000 ?1,100,000 ?2,225,000 Discount Factor @ 12% Cost of Capital 1.00 0.893 0.797 0.712 0.636 0.567 Present Value (?5,150,000) ?803,700 ?1,275,200 ?1,317,200 ?699,600 ?1,261,575 NPV ?207,275 NPV:-?5,150,000 + ?803,700 + ?1,275,200 + ?1,317,200 + ?699,600 + ?1,261,575 = ?207,275 The Net Present Value of a company is the value of a future number in terms of today. It basically helps in finding out a project’s is profitability. It requires finding out the present value of each future cash flow discounted at a specific value, which is the cost of capital of the project given in the form of a percentage. It uses the concept of discounted cash flows. Time Cash Flow (?5,150,000) ?900,000 ?1,600,000 ?1,850,000 ?1,100,000 ?2,225,000 Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Cash Flow (?5,150,000) ?900,000 ?1,600,000 ?1,850,000 ?1,100,000 ?2,225,000 Discount Factor @ 14% Cost of Capital 1.00 0.877 0.769 0.675 0.592 0.519 Present Value (?5,150,000) ?789,300 ?1,230,400 ?1,248 ,750 ?651,200 ?1,154,775 NPV (?75,575) NPV = -?5,150,000 + ?789,300 + ?1,230,400 + ?1,248,750 + ?651,200 + ?1,154,775 NPV = (?75,575) Payback Payback = 4,250,000 – 900,000 (Yr 1) – 1,600,000 (Yr 2) = 1750000 ? 1,850,000 (Yr 3) * 12 Payback = 2 Years and 11 months This is a technique used to measure the feasibility of projects in terms of the number of years that it takes to pay back an initial investment. It is measured in number of years till full recovery and the following formula can be used to measure it. Payback = No. of years prior to full recovery + Unrecovered cost at beginning of year/Cash flow during full recovery year. Payback basically represents the period of time during which the initial investment gets recovered. IRR: To calculate IRR, a negative NPV would be calculated. Hence a discount factor of 14% is selected. IRR = LDR + [PV1/PV1-PV2]* (HDR-LDR) LDR = Lower Discount Rate HDR = Higher Discount Rate Pv1 = Present Value at Lower Rate of Return Pv2= Pre sent Value at Higher Rate of Return IRR = 12% + [207,275/ 207,275 – (-75,575) * (14% - 12%)] IRR = 13.46% IRR is the value where the NPV is equal to zero. It is the optimal value where a project is most beneficial. IRR can gauge the profitability of a proposed investment by taking into consideration the concept of discounted cash flows. IRR is not very easy to be calculated as any other accounting measure such as NPV and if done then it does not give accurate answers. It is done on a trial and error. b) Provide a rationale for your treatment of initial research, depreciation and working capital, supporting your answer with links to theory briefly indicate other considerations which might also affect the decision Initial research would not be included within the Net Present Value (NPV) calculation. This is because the initial research cost had already been incurred before starting the project hence the cost was deemed to be a sunk cost. Sunk costs are not to be included within the NPV calculation because these costs have already been incurred and that do not affect the decision of either commencing or aborting any business plan. Depreciation costs do not get included within the calculation of NPV. This is because depreciation is a non-cash item and the NPV purely constitutes cash related items with respect to the time value of money. Although depreciation expense is only included within the NPV calculation in order to ascertain the Tax savings. The tax savings on allowances allowed by the tax authorities are only included

The Truman Show Essay Example | Topics and Well Written Essays - 1250 words

The Truman Show - Essay Example The unsuspecting protagonist, who has no idea that everything around him and everyone around him are just behaving the way they are supposed or told to, gives the story a fresh appeal. As the story progresses, each stage if it makes the audience think what would they do if they were in Truman’s place. It makes people wonder what his reaction would be in the end when he finds out about the truth. Even his mother, wife and best friend are part of it so that makes his situation really pathetic. The people whom a person trusts most in the world are all in the plot of filming his life. The world he thinks is real is only make-believe. But then soon he starts picking up clues. He starts discovering the repetitive events have more than habitual meaning to them. Bit by bit he starts to think that he is being set up and he tests things one by one to try and unravel the truth. Although Truman trusts his logic to escape from a scripted world, Can Truman force reality since he was living in Seahaven Island for his entire life? Truman has been living twenty nine years of his life in Seahaven and has not yet come across anything that would force him to think out of the ordinary. He works as an insurance salesman, has a lovely wife who is happy always and has a best friend who was with him since he was seven years old. The town is also a dream come true, very neat with everyone smiling at each other and greeting them with sheer respect. The only incident that is seen to be haunting Truman is the death of his father, which took place when they went for sailing when he was a kid. He feels guilty for this incident as it was his curiosity and stubbornness that took him on the trip during the storm. This incident still lingers in him and he has developed hydrophobia. Even though his whole life is â€Å"broadcast 24 hours a day† he has no idea about it. (Weschler 1) That is until one day, a light projector falls from the supposed beautiful, normal sky. Soon more event s start adding up to it, like the time when he drives and he can hear on the radio every turn that he takes, when he goes to his office he finds that inside the lift there is a TV set etc. He even starts to understand that there is more to the things that happen around him than just everyday routine. When he sits in the car and watches from the mirror the order in which the man with the cycle, the man with the flowers etc keep passing here and there and when he takes his wife on a spontaneous ride the traffic just magically appears. The most surprising fact is that everyone knows Truman’s name, are very courteous and ready to help him with anything. He starts to figure out gradually that his life has been set up. He resolves to get away from Seahaven but everything comes in his way. It is like he has no way to escape from that place. He tries talking to his wife and friend but they too behave as though nothing his wrong. But Truman feels it in his guts that everyone is hiding something from him. Chritsof is the creator of this TV show. The man who has invested and spent millions to make a show like this, with the so-called intention of creating a safe world for his corporation adopted son Truman. He can be perceived as God as he is the one who controls everyone and everything in Truman’s life. He is the one who decides and chooses for Truman. All that Truman has to do is get up everyday and go to sleep every night, the rest is controlled by â€Å"the creator.† On one hand, Christof can be seen as a devil who controls