Principles of Corporate Finance

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Category: Business and Industry

Date Submitted: 11/21/2012 01:31 AM

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Executive Summary

The report brings forward two cases (1) the case of Waldo County Real Estate, and (2) Thorndike Oils. For the former case, the owner of Waldo County Real Estate, Mr. County has decided to take on a new development project on a hunch of good location. A calculation of Net Present Value was conducted by George – A company financial employee- to verify the successfulness of the project, he also conducts a sensitivity analysis to ensure that some variables will not affect the project. George was able to conclude that the project would have a positive NPV of $38.36 million. And from the sensitivity analysis, he advises Mr. County that a reduction of 20% in sales will hinder the project’s success significantly, making this component of the analysis very critical.

In the latter case, Mr, Thorndike, the owner of Thorndike Oils, had been made an offer by Mr. T Spoone to buy company shares. Mr. Thorndike declined the offer, however, the investors in the company who were related to him did not entirely agree with Mr. Thorndike’s decision. Mr. Thorndike was found dead the following day, i.e. the day after the offer was made by Mr. T Spoone. Mr. Morse, an investigator needed to find out which of the investors had invested the most and would have the most in return had the shares been sold, and they would be the prime suspect for the investigation. After performing a comparison of the investments between the share holders before Mr. Thorndike’s death and after his death, it was found that Doris had invested the most making her the prime suspect of the murder, for which Mr. Morse was advised.

Part One | Waldo County

Company predicament

Waldo Country is a real estate company owned by Mr. Waldo County whom worked long hours. Despite his lack of experience in finance, he was well known for his outstanding judge of location through which he acquainted his reputation, also leading to company to its success.

Prior to leaving the office for a long summer’s...