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Net Present Value Method
Sophisticated capital budgeting techniques include Net present value method (NPV), internal rate of return (IRR), Profitability index (PI) and Equivalent annual annuity (EAA). NPV and IRR are discussed...
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Using a financial calculator
Using a financial calculator is a skill, similar to typing. You just need to know which steps to take and then you need to practice to the point when you feel comfortable with using a calculator. In...
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Annualized Net Present Value (ANPV)
The annualized Net Present Value (ANPV) technique is the best method to use when comparing mutually exclusive projects which have unequal duration. ANPV is the most efficient technique to convert Net...
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Overview of the balance sheet – financial position statement
A balance sheet – financial position statement is one of the most important financial statements. Other important financial statements include the income statement, cash flow statement and statement of...
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Importance of dividends and dividend policy
Dividends are payments made by an organization to its shareholders from earnings generated in current or previous periods. Shareholders earn income from two sources, the capital gain due to...
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Establishing a dividend policy
Dividend policy refers to the policy which is used as a guide when a firm makes dividend decisions. It assists the board of directors in establishing how much should be paid to shareholders in...
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Dividend policies
An important concept to know when it comes to the distribution of dividends is the dividend payout ratio. The Dividend payout ratio indicates which percentage of each dollar earned is distributed in...
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Financial (Capital) Lease
Finance or financial (capital) lease refers to the lease of the asset where the useful life is closely aligned to the term of the lease. The lease term is longer than operating lease. Finance leases...
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Establishing a value for the target company
An acquiring company may be interested in acquiring entire businesses or just acquiring individual assets and selling off the rest of the assets. When considering a merger, companies can use capital...
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Financing transactions with stock swaps
Stock swap transactions are one of the popular ways in which mergers can be financed. It refers to the situation when an acquiring company exchanges its common stock shares for common stock shares of...
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