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Finance Bootcamp Day 4&5
Finance Bootcamp Day 4&5
Finance Bootcamp Day 4&5
Bootcamp
Day 4 & 5
Valuation
WACC is the average rate that a company expects to pay to finance its assets.
Cash Flow Calculate the Net Present Value (NPV)
Year Cash Flow NPV is how much an investment is worth throughout its
0 -$11 million lifetime, discounted to today's value.
1 $1 million
2 $1 million
3 $4 million
4 $4 million
5 $6 million
Internal Rate of Return (IRR)
The internal rate of return (IRR) is the annual rate of growth that an
investment is expected to generate.
IRR is a discount rate that makes the net present value (NPV) of all cash flows
equal to zero in a discounted cash flow analysis.
Ramazotti SA has $1 million allocated for capital expenditures. Which of the following
projects should the company accept to stay within the $1 million budget? How much does
the budget limit cost the company in terms of forgone NPV? The opportunity cost of capital
for each project is 11 %.
Earnings before interest and taxes (EBIT)
Straight Line
Declining Balance
Sum-of-the-Years-Digits
Units of Production
EBITDA
Apple Huawei
Bank of America Norinchukin
McDonalds 7/11
Benchmarking
The Apple Example