SMG FE 101 Lecture Notes - Lecture 3: Financial Accounting Standards Board, Retained Earnings, International Financial Reporting Standards

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6 Apr 2016

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Document Summary

Investors, financial analysts, managers, and other interested parties such as creditors rely on financial statements to obtain reliable information about a corporation. Public companies must file financial results with the securities and exchange. Commission (sec: on a quarterly basis (10-q, an annual basis (10-k) The annual report with financial statements must be sent to their shareholders every year. Preparation of financial statements: generally accepted accounting principles (gaap) Set by financial accounting standards board (fasb) to provide a common set of rules and a standard format for public companies" report. Corporations required to hire an auditor to . Ensure they are prepared according to gaap. Provide evidence: in europe, have international financial reporting standard (ifrs) Balance sheet: also called statement of financial position . Provides a snapshot of the firm"s financial position at give point in time: example: height and weight. Any dividends not returned to shareholders = retained earnings to grow company.

Related Questions

Compare Companies --- Netflix (NFLX) vs. GEO Holdings (TOK) Compute financial ratios, time value, variables, and returns using industry standard tools for optimizing financial success. Analyze corporate financial data in evaluating past and future financial performances.

Use formulas to calculate the following financial indicators for each year of data: Three fiscal years for Netflix and GEO Holdings for:

o Price to earnings ratio

o Debt to equity ratio

o Free cash flow

o Earnings per share

o Return on equity

o Net profit margin

V. Performance Over Time

A. Analyze the performance of the Netflix over time. What financial strengths and weaknesses does this company have? Consider addressing the free cash flows and ratios you calculated earlier.

B. Analyze the performance of your GEO Holdings over time. What financial strengths and weaknesses does this company have? Consider addressing the free cash flows and ratios you calculated earlier.

C. Analyze how the data differ between these two companies. Why do you think this is? Consider addressing the free cash flows and ratios you calculated earlier.

VI. Investment

A. Are the companies considered growth or value companies? Why?

B. Which companyâs stock is the better investment?

Netflix Inc. (NMS: NFLX)

Exchange rate used is that of the Year End reported date


As Reported Annual Balance Sheet
Report Date	12/31/2016	12/31/2015	12/31/2014
Currency	USD	USD	USD
Audit Status	Not Qualified	Not Qualified	Not Qualified
Consolidated	Yes	Yes	Yes
Scale	Thousands	Thousands	Thousands

Cash & cash equivalents	1467576	1809330	1113608
Short-term investments	266206	501385	494888
Current content library, net	-	-	2125702
Current content assets, net	3726307	2905998	-
Other current assets	260202	215127	206271
Total current assets	5720291	5431840	3940469
Non-current content library, net	-	-	2773326
Non-current content assets, net	7274501	4312817	-
Information technology assets	185345	194054	189274
Furniture & fixtures	32185	30914	25758
Building	40681	40681	40681
Leasehold improvements	107945	107793	57339
DVD operations equipment	70152	88471	89144
Capital work-in-progress	108296	8845	12495
Property & equipment, gross	544604	470758	414691
Less: accumulated depreciation	294209	297346	264816
Property & equipment, net	250395	173412	149875
Other non-current assets	341423	284802	192981
Total assets	13586610	10202871	7056651
Current content liabilities	3632711	2789023	2117241
Accounts payable	312842	253491	201581
Accrued expenses	197632	140389	69746
Deferred revenue	443472	346721	274586
Total current liabilities	4586657	3529624	2663154
Non-current content liabilities	2894654	2026360	1575832
Long-term debt	3364311	2371362	900000
Other non-current liabilities	61188	52099	59957
Total liabilities	10906810	7979445	5198943
Common stock	1599762	1324809	60
Additional paid-in capital	-	-	1042810
Foreign currency	-47966	-42502	-4615
Change in unrealized gains on available for sale securities	-599	-806	169
Accumulated other comprehensive income (loss)	-48565	-43308	-4446
Retained earnings (accumulated deficit)	1128603	941925	819284
Total stockholders' equity (deficiency)	2679800	2223426	1857708

Geo Holdings Corp (TOK: 2681)

Due to changes with International Financial Reporting Standards (IFRS), recent financials statement presentations have been adjusted to meet this standard. Please note the original historical presentations have remained in the original format

Exchange rate used is that of the Year End reported date


As Reported Annual Balance Sheet
Report Date	03/31/2016	03/31/2015	03/31/2014
Currency	JPY	JPY	JPY
Audit Status	Not Qualified	Not Qualified	Not Qualified
Consolidated	Yes	Yes	Yes
Scale	Millions	Millions	Thousands
Cash & deposits	37683	32052	19869000
Trade notes & accounts receivables	4100	4077	3992000
Merchandise	24894	23834	23495000
Deferred tax assets	2156	1806	1773000
Other current assets	5462	7181	5942000
Allowance for doubtful accounts	-281	-292	343000
Total current assets	74015	68659	54729000
Asset for rent, gross	100974	104514	104647000
Accumulated depreciation - asset for rent	-95154	-97475	96055000
Asset for rent, net	5820	7038	8591000
Buildings & structures, gross	40872	39984	39478000
Accumulated depreciation - buildings & structures	-27470	-26362	25976000
Buildings & structures, net	13402	13622	13501000
Land, net	5844	6356	6651000
Leased assets, gross	2176	3519	4576000
Accumulated depreciation - leased assets	-681	-1764	2588000
Leased assets, net	1495	1754	1988000
Other property, plant & equipment, gross	24838	20562	17708000
Accumulated depreciation - other property, plant & equipment	-18391	-15292	13236000
Other property, plant & equipment, net	6447	5270	4471000
Total property, plant & equipment	33010	34043	35205000
Total intangible assets	1865	1277	2028000
Investment securities	926	1002	1266000
Long-term loans receivable	2250	6682	6628000
Lease & guarantee deposits	14905	14735	15034000
Deferred tax assets	3342	3774	2845000
Other investments & other assets	1222	1188	1760000
Allowance for doubtful accounts	-1332	-3751	3917000
Total investments & other assets	21315	23632	23617000
Total non-current assets	56192	58952	60851000
Total assets	130207	127612	115581000
Trade accounts payable	12631	13540	13124000
Current portion of long-term borrowings	8333	7097	8754000
Current portion of bonds	149	149	249000
Income taxes payable	4815	265	1170000
Reserve for bonuses	1665	1420	1135000
Other current liabilities	10135	12595	10279000
Total current liabilities	37731	35068	34713000
Bonds	105	254	403000
Long-term borrowings	19509	21843	13910000
Lease liabilities	1612	1660	1590000
Deferred tax liabilities	23	22	26000
Asset retirement obligations	4406	3994	3898000
Other non-current liabilities	1857	1554	1839000
Total non-current liabilities	27514	29329	21668000
Total liabilities	65246	64398	56381000
Capital stock	8871	8615	8603000
Capital surplus	3283	6090	6078000
Retained earnings	52542	49998	44381000
Treasury shares	-	-1979	334000
Total shareholders' equity	64697	62724	58729000
Valuation difference on available-for-sale securities	166	282	297000
Loss (gain) on deferred hedge	-15	-	297000
Total accumulated other comprehensive income	150	282	172000
Stock acquisition rights	113	206	59199000
Net assets	64961	63214	115581000
Total liabilities & net assets	130207	127612

Netflix Inc. (NMS: NFLX)

Exchange rate used is that of the Year End reported date


As Reported Annual Income Statement
Report Date	12/31/2016	12/31/2015	12/31/2014
Currency	USD	USD	USD
Audit Status	Not Qualified	Not Qualified	Not Qualified
Consolidated	Yes	Yes	Yes
Scale	Thousands	Thousands	Thousands

Revenues	8830669	6779511	5504656
Cost of revenues	6029901	4591476	3752760
Marketing expenses	991078	824092	607186
Technology & development expenses	852098	650788	472321
General & administrative expenses	577799	407329	269741
Operating income (loss)	379793	305826	402648
Interest expense	150114	132716	50219
Interest & other income (expense)	30828	-31225	-3060
Income before income taxes - United States	188078	95644	325081
Income (loss) before income taxes - foreign	72429	46241	24288
Income (loss) before income taxes	260507	141885	349369
Current tax provision (benefit) - federal	54315	52557	86623
Current tax provision (benefit) - state	5790	-1576	9866
Current tax provision (benefit) - foreign	60571	26918	16144
Total current tax provision (benefit)	120676	77899	112633
Deferred tax provision (benefit) - federal	-24383	-37669	-10994
Deferred tax provision (benefit) - state	-14080	-17635	-17794
Deferred tax provision (benefit) - foreign	-8384	-3351	-1275
Total deferred tax provision (benefit)	-46847	-58655	-30063
Provision for (benefit from) income taxes	73829	19244	82570
Net income (loss)	186678	122641	266799
Weighted average shares outstanding - basic	428822	425889	420546
Weighted average shares outstanding - diluted	438652	436456	431893
Year end shares outstanding	430054.212	427940.44	422910.887
Net income (loss) per share - basic	0.44	0.29	0.634
Net income (loss) per share - diluted	0.43	0.28	0.617
Number of full time employees	4500	3500	2189
Number of part time & temporary employees	200	400	261
Total number of employees	4700	3700	2450
Number of common stockholders	290	237	203
Foreign currency translation adjustments	-5464	-37887	-

Geo Holdings Corp (TOK: 2681)

Exchange rate used is that of the Year End reported date


As Reported Annual Income Statement
Report Date	03/31/2016	03/31/2015	03/31/2014
Currency	JPY	JPY	JPY
Audit Status	Not Qualified	Not Qualified	Not Qualified
Consolidated	Yes	Yes	Yes
Scale	Millions	Millions	Thousands
Total revenue	267910	270308	262324000
Cost of sales	-151798	-157825	152301000
Gross profit	116112	112483	110022000
Selling, general & administrative expenses	-99559	-102925	100823000
Operating income	16552	9558	9198000
Interest & dividend income	49	114	111000
Rental income	1268	1167	1193000
Other non-operating income	1043	1062	453000
Total non-operating income	2361	2343	1758000
Interest expense	-230	-231	332000
Rental expenses	-759	-609	595000
Transfer to reserve for doubtful account	-	-227	-
Other non-operating expenses	-100	-803	-
Total non-operating expenses	-1089	-1871	684000
Ordinary income	17824	10030	1612000
Imapirment loss	-1319	-1543	9344000
Other extraordinary losses	-13	-	203000
Total extraordinary losses	-1333	-1543	203000
Income before income taxes	16491	8486	1218000
Income taxes - current	-5779	-2074	514000
Income taxes - deferred	-147	925	87000
Total income taxes	-5927	-1149	1821000
Profit	10563	7337	7726000
Profit attributable to owners of parent	10563	7337	4027000
Average number of shares outstanding - basic	51.331	53.169	-39000
Average number of shares outstanding - diluted	51.623	53.29	3987000
Year end shares outstanding	48.244	52.295	3738000
Earnings per share - basic	205.78	137.99	-70000
Earnings per share - diluted	204.62	137.68	3808000
Number of full time employees	3825	3579	53996.5
Number of part time employees	10421	10114	54066.499
Number of common stockholders	57105	65030	53996.5

rubyalpaca295

1.The concept that an item is not large enough to influence the users of a financial statement is

A, cost effectiveness

b. Materiality

c. reliability

d. relvance

e. none

2. The quality that allows quantitative assessment of the similarities and differences among enterprises is known as

a.comparability

b. consistency

c. reliability

d. relevance

e. none

3. Profit margin and asset turnover can be combined to create

a. return on assets

b return on equity

c. earnings per share

d. price earnings ratio

e. none

4.which of the following increases cash

a. issuance to long term debt

b. acquisition of property plant and equipment

c. payment of divdends

d decrease in short term debt

e. none

5. if a company pays out more than the income tax incurred as shown in the income tax liability decrease, the effect on cash is a

a. decrease

b. increase

c.no effect

d. none of the above

6. which of the following increases cash

a. increase in inventory

b. increase in accounts receivable

c. increase in the accounts payable

d. none

7.Grayson is saving for a used car. He needs $14,000. How much he invest at 3% annual interest rate to have $ 14,000 in two years? Round to the nearest dollar.

a. 12,983

b.12,417

c. 13,720

d. 13.196*

e, none

8.ellen fetter invested $5,000 in a savings account that paid 5% interest compounded annually. She kept the account for three years. At the end of the three years, ellen will have approimentely

a. $6,103

b. $5,444

c.5,414

d.5,788*

e. none

9. Which of the following is a snapshot of the financial position of a company

a. Balance sheet

B.income statement

C. statement of retained earnings

D. cash flow statement

e. none

10.which of the following rations is not useful for comparison purposes?

a. return on assets

b. price earnings ratio

c. return on equity

d. earnings per share

e. none*

11.elsie Jackson is saving for a down payment on a condo. She needs 20,000. How much must she invest in a savings account that pays 5% annually to have the 20,000 in 8years? Round to the nearest dollar.

a. 13,206

b $12,983

c. 13,616

d. 13,537

e. none

12.which of the following is added to net income to calculate cash flow?

a. depreciation

b. increase in accounts receivable

c. increase in inventory

D. decrease in accounts payable

e. none

13. which of the following increase cash?

a.issuance of long term debt

b. acquisition of property plant and equipment

c. payment of divdends

d. decrease in short term debt

e. none

14. profit margin and asset turnover can be combined to create

a. return on assets

b. return on equity

c. earnings per share

d. price earnings ratio

e. none

15.Bart is saving for college. He needs 20,000 for the first year. How much must he invest at a 5% annual interest rate to have 20,000 in five years? Round to the nearest dollar?

a. 14.982

b.15,016

c.15,023

d 15,671

e none

16.which of the following are added to net income to determine cash flow from operating activities?

a. depreciation

b. amortization

c. both a and b*

d. gain on asset sale

e. none

17. which of the following ratios is coverage ratio

a. return on assets

b. return on equity

c. earnings per share

d. times interest earned

e. none

18. ellis industries is a large, multinational company located in the us. Ellisâs financial statements are in us dollars. This GAAP is known as

a. monetary concept

b. economic entity

c.conservatism

d. matching

e. none

19.ginger Ellison invested $10,000 in a bank account at offshore bank. The account pays 3% interest compounded annually. How much will Ginger have in five years? Round to the nearest dollar?

a. 11,593

b. 11,108

c. 10,213

d. 12,619

e. none

20.which ratio is wall streetâs favorite

Inventory turnover

B. receivables turnover

Current

D. price- earnings*

E. none

21. ginger Ellison invested $10,000 in a bank account at offshore bank. The account pays 3% interest compounded annually. How much will Ginger have in five years? Round to the nearest dollar?

a. 11,593

b. 11,108

c. 10,213

d. 12,619

e. none

22.information that can make a difference to the decision at hand is considered to be

a. a reliable

b. a comparable

c. relevant

d. understandable

c. none

23. Blackson incorporated signed a 3 year lease for the building that blackson occupies and paid the first 6 months in advance. The account that should be debited is

a. prepaid expenses

b. cash

c. building

d. accounts payable

e. none

24.right-hand entries increase

a. asset accounts

b owners equity accounts

c. liabilities

d. both b and c

e. none

25.The quality that ensures that information is reasonably free from error is

a. reliability

b. relevant

c. understandability

d. consistent

e. none

26. a customer pays on an account receivable. The account that should be credited is

a. inventory

b. cash

c. accounts payable

d. accounts receivable

e. none

27. which of the following ratios measures liquidity?

a. current

b. payout

c. gross margin

d. asset turnover

e. none

28. Jesse Ellis invested $4,000 in a savings account that paid 6% interest compounded annually for 6 years. At the end of 6 years, Jesse will have approximately.

A. 5,103

b. $5,674

c. 5,506

d.4,903

e.none

29. which of the following is not a functional area of accounting?

a. Managerial accounting

b. tax accounting

c.economic accounting*

d. financial accounting

e. none

30.John Vincent invested $10,000 in a savings account. The account pays 4,5% annual interest. John will have much in the account at the end of 10 years? Round to the nearest dollar.

a. 15,530

b. 14,984

c. 16,010

d. 16,311

e none

31.capital stock is a part of which of the following accounts?

a. ownersâ equity

b. liabilities

c. current assets

d. long term assets

e. none

32.The stock market values a company based on which of the following accounts?

a. assets

b. liabilities

c. capital stock

d. retained earnings*

e none

33. The following accounts are listed in order of liquidity

a. current assets

b. current liabilities

c. both a and b

d. long term assets

e. none

34. When shares are sold from one shareholder to another in the open market: the following accounts is impacted

a. capital stock

b. retained earnings

c. long term liabilities

d. current assets

e. none*

35. The accounts that reflects the amount the owners have invested in the business is

a. capital stock

b. retained earnings

c. long term liablilties

d. long term assets

d. none

36. Karen Quigley is saving for new car. The car cost $22,000. How much must Karen invest in a savings account that pays 4% annually to have the $22,000 in three years? Round to the nearest dollar.

a. 20,147

b. 19,107

c. 19,558

d.19,328

e. none

37. Agr corporation signed a two-yr lease for the building that the company occupies. The account that should be debited is

a. prepaid expense

b.cash

c. accounts payable

d. building

e. none

38. left-hand entries DECREASE

a. asset accounts

b. liability accounts

c. ownerâs equity accounts

d. both b and c*

e.none

39. which of the following is a source of cash? (question 42 different choices)

a. issuance of long-term debt

b. increase in inventories

c. decrease in accounts payable

d. increase in accounts receivable

e. none

REPEAT Different choice 40. which of the following increases cash?

Issuance of long-term debt

Acquition of property plant and equipment

Cpaymentof divdends

D. decrease in short term debt

none

41.The ratio that shows how much in excess of current earnings investors are willing to pay for company stock is.

A payout

b.current

c, price-earnings*

d.return on equity

e none

42. which of the following is a source of cash?

A increase in accounts recievable

b. increase in inventories

c. increase in accounts payable

d. none*

43. A gain on the sale of an asset is subtracted from net income to determine cash flow from operating activities because of

a. double counting

b. asset sales require a basis

c. losses are cash flow neutral *

d. none

44. which of the following is an expense allocation scheme?

a. cost of goods sold

b. amortization

c. Depreciation

D. Band C*

e. none

45.The account that reflects the amount the owners have invested in the business is

a. capital stock

b. retained earnings

c. long term liabilies

d. long term asset

e. none

46. which of the following statements represents a flow concept?

a. balance sheet

b. income statement*

c. statement of retained earnings

d. inventory statement

e. none

47. left- hand entries INCREASE

a. asset accounts

b. liability accounts

c. ownersâ equity accounts

D. both B and C

e. none

48.which of the following ratios measures operating performance?

a. price-earnings

b. current

c. receivable turnover*

d. operating cycle

e. none

49. credit sales increase

a. cash

b. land

c. ownersâ equity

d. accounts payable

e. none*

50.Projecting inventory levels for next year would be an example of

a. financial accounting

b managerial accounting*

c. tax accounting

d. none

51. investments representing long term holdings of securities would appear on the balance sheet as

a. long term liabilities

b long-term asset

c. capital stock

d. retained earnings

e. none*

52. which organization is recognized today as the authoritative voice of accounting rules and principles?

a. sec

b. aICPA

c.FASB *

d.AAA

e. none

53. which account below would be credited to record this transaction: purchase merchandise for resale on credit

a. inventory

b. cash

c. accounts payable *

d.accounts receivable

e. none

54. Formis, Inc. estimates the useful life of each asset purchased and depreciates the asset over the useful life. This GAAP is known as

a. Monetary concept

b. economic entity

c. going concern

d. matching*

e. none

55. which of the following is one gauge of the companyâs ability to meet its short-term obilgations?

a. gross margin

b. asset turnover

c. profit margin

d. working capital*

e. none

A CAPITAL BUDGETING CASE

The E-Check Company, a manufacturer of pollution detection systems, has enjoyed considerable success. In 2015, the company completed its 25^th year in business and generated a return on common equity of 20%. Rusty Rivet, Company C.E.O., is certain the Company can continue this performance. One thing that contributes towards his confidence is that almost all of the Companyâs sales are to governmental programs that, in order to help control pollution, force residents in communities located next to interstate highways to pay a fee to have their vehicle emissions systems tested. Given the high test pass-rates, the pollution in these areas obviously comes largely from traffic passing through the communities rather than from the localâs vehicles, but governments have come to rely on the income emission testing generates and are reluctant to cut the testing requirements. Another reason for his confidence is the fact that most of the Companyâs top managers hold an advanced engineering degree awarded by a variety of prestigious universities. Rusty also believes that stockholders like the fact that the Company pays out all earnings not needed to pay preferred dividends as common dividends (and because he is the majority stockholder in the Company it is unlikely this policy will change). It is estimated that the common dividend will continue to grow annually at an 8% rate.

In January 2016, managers of the Company have expansion plans; they have just completed an evaluation of six capital budgeting projects. The net cash flows (in millions of dollars) and risk assessment of each project are shown below. Company policy requires that average risk projects have an IRR at least equal to the Companyâs weighted average cost of capital (WACC). Policy also requires that the hurdle rate be increased (decreased) by 250 basis points when evaluating projects that are above (below) average risk. Management has determined that the Companyâs WACC is 9.63% and, therefore, management is making plans raise $52 million to implement all of the projects except Project E. As a part of your management training, you have been asked to review the analysis. In particular, management wants you to verify both the WACC calculation and project selection.

Project A B C D E F

0 (10) (12) (15) (5) (11) (10)

1 3.15 4.3 7 2 0 1

2 3.15 4.3 6.4 2 0 3

3 3.15 4.3 5.5 1 0 5

4 3.15 4.3 .5 0 3

5 3.15 .5 0 .55

6 .5 0

7 0

8 22

Risk High Ave. Ave. Low Ave. Low

The Company has one outstanding bond issue. It has an annual stated rate of 8% with annual interest payments. $50,000,000 of the bond issue, with an original term to maturity of 15 years was publicly placed 7 years ago at face value. The most recent price at which a bond traded on the secondary market was $900 (a $100 discount from face value). Any new long-term debt would be raised in the form of a new bond issue. Matilda Angle, E-Checkâs treasurer, has pointed out that the company would like any new bond issue to have an initial maturity of 15 years to lock in the interest rate for a long time, and she also points out that the good news is that the yield curve at this time is essentially flat. In addition, any new bond issues will be privately placed so there will be no flotation costs.

The company has 10 million shares of $1 par common stock outstanding. These shares are currently trading for $10.00 per share on the Cincinnati Stock Exchange. The company paid total dividends of $1,700,000 on these shares during 2015. The companyâs underwriter will charge flotation costs equal to 10% of the value of any new shares sold.

The company also has 100,000 shares of $200 par preferred stock outstanding. These shares are currently trading at $175 per share. The preferred share annual dividend (paid quarterly) is 9.5%. The underwriter will charge flotation costs of 5% of the value of new shares sold.

Managementâs WACC Calculation

Shown below are E-Checkâs simplified financial statements for 2015. Managers used information from the balance sheet to come up with the weights for their WACC calculation.

E-Check

Balance Sheet

December 31, 2015

Current assets 30,000,000 Current liabilities 30,000,000

Long-term assets 88,000,000 Long-term liabilities 50,000,000

Total assets 118,000,000 Total liabilities 80,000,000

Common shares 10,000,000

Preferred shares 20,000,000

Retained earnings 8,000,000

Total equity 38,000,000

Total liabilities & equity 118,000,000

E-Check

Income Statement

2015

Revenues 200,000,000

Cost of goods sold 110,000,000

Gross profit margin 90,000,000

Operating expenses 80,000,000

Operating income 10,000,000

Interest expense 4,000,000

Taxable income 6,000,000

Income tax 2,400,000

Net income 3,600,000

Specifically, the WACC was calculated as follows:

WACC = (K_d * wt_d) + (K_p * wt_p) + (K_e * wt_e)

= (8 * (80/118)) + (9.5 * (20/118)) + (17 * (18/118))

= 5.423 + 1.61 + 2.593

= 9.63%

Maria Sliderule, Company controller, has explained to you that 8% was used as the cost of debt because this is the stated rate of interest on the firmâs existing bond issue; 9.5% was used as the cost of preferred shares because this is the dividend rate on the Companyâs preferred stock, 17% was used as the cost of equity because dividends of $1.7 million were paid on the common shares with a book value of $10 million; and that the weights in the WACC calculation were derived directly from the balance sheet.

Internal announcement of the expansion possibilities has fostered some debate. One manager, Mel Lever, asserts that the Company should raise all the money needed in the form of debt, and since the cost of debt is only 8%, all projects should be accepted. Olm Meter, a Norwegian engineer who just joined the E-Check management team, argues that it makes no sense to invest in a project with an IRR less than the WACC. The input of all these individuals cannot be ignored because each is a valuable member of the management team and highly respected in the area of pollution detection technology. This is why you have been asked to review the analysis.

1. Please address the comments of Mr. Lever and Mr. Meter.

2. In which of the proposed capital budgeting projects should the Company invest?

3. What do you think is the Companyâs WACC?

4. List any errors in the 9.63% calculation?

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SMG FE 101 Lecture Notes - Lecture 3: Financial Accounting Standards Board, Retained Earnings, International Financial Reporting Standards

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