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Essay / Research Paper Abstract
This 26 page paper answers questions set by the student regarding different calculations for investment assessment. This includes calculating interest amounts that are payable, the rate of return on investments when the present and future values are given, the impact of compounding and discounting. The paper then looks at how to calculate earnings per share, price earnings ratio, the book value and the book to price ratio as well as the inventory turnover. Next, capital structure is considered with different equity and debt structures examined to see if there is a way of maximising company value, and finally, the use of different assessment tools such as net present value (NPV), internal rate of return (IRR) and profitability index are explained and demonstrated. In all parts of the paper the calculations are shown so the student can follow and replicate them.
Page Count:
26 pages (~225 words per page)
File: TS14_TEinvque.rtf
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Unformatted sample text from the term paper:
excel the calculation would look like this. Year Loan outstanding (a) Interest payable (b) (a/100 x 11) 1 40,000 4,400 2 (principle amount less 13,333) 26,667 2,933 3 (Year
2 less 13,333) 13,334 1,467 Total Interest paid 8,800 By calculating the interest each year and adding it together the total amount of interest can be calculated. 2. In
this question we have the present value and the future value and need to calculate the interest rate. There is a simple equation for this; r = (FV/PV)1/t -
1 Using this calculation we can see the results as follows for different given present and future values Future value (a) Present value (b) Time (c) Rate of
return(a/b)1/(c) - 1 307 250 3 7.09 761 425 9 6.69 136,771 25,000 15 12 255,810 40,200 30 6.21 3. When looking at the way money increases, if we want to
se how long it will take to double an investment at a rate of 10% we can look at a compound calculation. For illustration purposes only we will use a
figure of 100. Assuming there is a compound interest rate, each year we take the figure from the year before and multiple it by 10% and add it to the
previous years amount. This is shown below. Investment amount at beginning of year (a) Interest (b) (a/100 x 10) End of year balance (a + b) Year 1
100.00 10.00 110.00 Year 2 110.00 11.00 121.00 Year 3 121.00 12.10 133.10 Year 4 133.10 13.31 146.41 Year 5 146.41 14.64 161.05 Year 6 161.05 16.11 177.16 Year 7
177.16 17.72 194.87 Year 8 194.87 19.49 214.36 From this we can see that the money will double in year 8. The same will be true of any figure chosen.
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