Net Present Value: Micron to acquire Elpida

NPV of Micron Technology: 1) elaborate bow value (PV) of light upon in period (CF) PV of CF = CF1 / (1+r)t + CF2 / (1+r)t + CF3 / (1+r)t + CF4 /(1+r)t + CF5/ (1+r)t Where: t = Periodic currency flow payments (years) CF = Cash Flow Amount r = Discount sum up = 5% PV of CF = 350,000/(1+.05)1+939,000/(1+.05)2+1,122,000/(1+.05)3+500,000/(1+.05)4+ 900,000/(1+.05)5 =333,333.33+ 851,700.68 + 969,225.79 + 411,353.35 + 705,163.36 PV of CF = 3,270,776.51 2) Calculate NPV NPV = -3,219,000 + 3,270,776.51 NPV = $51,776.51 This project should be owned. The positive solve present value signifies that future funds flow amounts be suitable to cover the initial cash outflow. This project put low out add $51,776.51 to Micron Technologys value. Capital bud let downing is the planning turn used by fiscal managers for do major roof investment decisions. Project evaluation involves identifying the possible projects relevant cash flows; the incr emental changes to a firms overall cash flow (increase or decrease) that are of a direct effect of the decision to accept the project.

By estimating the incremental cash flow associated with each emf project, pecuniary managers are able to sic whether long bourne investments such as newfangled equipment or machinery, new products, and new research and development projects, are a viable survival of the fittest worth pursuing. Primarily, the stated objective of a publicly traded companies fiscal management team is the maximization of the riches of its divisionholders. Shareholder wealth increases through the receipt of dividends and through the inc! rease in the luck price over time. Fluctuations in the share price stern help stockholders gauge the success of a recent financial management decision. Therefore a firms objective of maximizing shareholder wealth is interchangeable with the objective of maximizing the... If you want to get a full essay, order it on our website: BestEssayCheap.com

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