Remember me Forgot password? FGA case study — suggested answers. If you have questions for the author of this case study, please contact him via his mailbox at the following site: Financial analysis of Steria. Case Study Case Study. FGA case study — suggested answers – Vernimmen.
From a financial point of view, an investment is only worthwhile if it generates a set of positive flows, the present value of which is higher than the amount invested. In other words, if the net present value NPV is positive, or, and this amounts to the same thing, if the internal rate of return IRR is higher than the weighted average cost of capital WACC , or, and this also amounts to the same thing, if the market value added MVA is positive. In other words, this bears no relation to whether the investment acquisition of FGA was worthwhile or not. Would your answer change depending on whether the transaction was financed entirely by debt or entirely by equity? See – Vernimmen Answers.
Case Study Case Study Dubai. The return on an asset does not only depend on its performances as such, but on the way in which the acquisition is financed.
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The market for foreign exchange can be viewed as a two-tier market. The NPV should thus be calculated at 7. Medica – Vernimmen Please send any questions on this case study to the author via the mail box on the web site www. AXA Financial – Vernimmen Suggested instructions for study participants ” As a 2. This case study involves the acquisition of a group, which, from a financial point of view, has to be treated like any other investment.
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Answers An unusual case of renal failure: The central element of this case study is the criteria on which investment decisions are based.
Divorce is not allowed in the Risk-Return pair www. Financial analysis of Steria. Alpha considered its current capital structure optimal. AK Microeconomics — Chapter 7.
An unusual case of renal failure: Accordingly, the last column of the table in appendix 2 is wrong, since WACC was calculated with the assumption that the cost of equity and the cost of borrowing are the same, whatever the financial structure. Return on equity is an accounting measure of profitability.
If you have questions for the author of this case study, please contact him via his mailbox at the following site: FGA case study — suggested answers.
This criterion is irrelevant! Increasing the caae of an inexpensive resource debt at the expense of a more costly resource equity does not, contrary to appearances, change the weighted average cost of capital, since doing so results in both equity and debt becoming more risky, which means that shareholders and creditors are going to increase their required rate of return, which will counterbalance the first effect.
Remember me Forgot password? The difference between these rates is only justified by a risk perception that is higher in the UK than in France inflation in the UK is higher than in France, GDP growth rates are more volatile in the UK than in France, for examplewhich is why the British government borrows at a higher interest rate 4. If JV invests in the insurance sector in France, it will require the required rate on investments in the insurance sector in France, which is 7.
The performance of banks during the financial crisis. But there is no creation of value as such and this criterion cannot be relied on for judging whether the acquisition of Sstudy was a good thing. Contrary to what JV’s finance director says in the file for teaching purposes! What they can then try and do is to work out whether the acquisition creates value or not by relying on other criteria that are easier to calculate but a lot less efficient, since they were not designed to measure the tga or destruction of value.
HEC Majeure Finance Good financing never cancels out a bad investment!
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