Essays on Reinvestment

Abstract

When an organization has cash inflows and outflows of foreign nature, the cash forecast for every currency will help during the identification of the currency exposures. The format of the estimation should allow the users to determine the balance for every currency and whether there is a growing shortage or extra money over time based on reasonable cash flows. The increasing gaps between the cash inflows and outflows may need hedging, and the cash flows that offset over time represents the issue of timing effectively. The management of foreign exchange transaction can be achieved through the offsetting transactions to ...

Vodafone

Introduction This report seeks to assess the expected returns for Vodafone using the CAPM model. The CAPM model is based on three inputs: risk-free return, market return and company beta. Therefore, the report will estimate these three parameters and use them to find the expected return of Vodafone. Finally, it will provide a critique of the CAPM estimation technique.

The risk-free rate of return is often taken as the return of short term government securities. The 3-month treasury bill for UK is 0.48 . Therefore, we assume that the risk free rate.

Market Return

Expected market return are the average rate of ...

Introduction

In 2008, the entire world was rocked by the biggest financial crisis since the Great Depression. The crisis first affected the entire financial system of the United States before then quickly spread globally. The casualties of the crisis included the whole investment banking industry of the US. Other casualties were the US largest insurance company, largest mortgage lender, among other firms in the financial services sector. The US auto industry was severely hit leading to loss of jobs. The US unemployment rate increased by 4.9% points from the third quarter of 2007 to the third quarter of 2009. The ...

Net Present Value

The Net Present Value is used in estimating the potential value of every project by applying the discounted cash flow valuation that requires an estimation of the size and time of all cash flows that increases from the project (Ehrhardt & Brigham, 2016). However, NPV is affected greatly by the discounting rate. Therefore, making a selection on the proper rate that is sometimes known as the hurdle rate is essential during decision making. Moreover, this should make a reflection on the riskiness of the investment because it is typically measured by the unpredictability of cash flows. Therefore, it must take ...

Dividend reinvestment plans (DRIPs or DIPs) are schemes offered by companies that allow shareholders to reinvest their cash dividends by foregoing the cash dividends to purchase additional shares for the full amount of the dividends that was payable or a fraction of it. DIPs is an excellent way for investors to expand their net worth of their portfolio by gradually accumulating shares instead of cashing the dividends and using it to meet personal needs. That way, the investor adds additional shares anytime cash dividends are declared. DRIPs often have different terms and conditions depending on the company. Some terms ...