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Angus Cartwright Capital Investment Analysis

Printed on recycled paper-actually better, not printed at all. DeRight's investment considerations. Goal of each of the cousins John and Judy DeRight minimum leveraged return on investment of 12% after tax Leveraged return on investment is investor's required rate of return when part of the investment is financedCost of financing is considered in the return calculation.

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Angus Cartwright Capital Investment Analysis

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    1. Angus Cartwright Capital Investment Analysis Professor Doug Cerf Donald Bren Graduate School of Environmental Science and Management Corporate Environmental Management (ESM 281) Spring 2009

    2. Printed on recycled paper-actually better, not printed at all DeRight’s investment considerations Goal of each of the cousins John and Judy DeRight minimum leveraged return on investment of 12% after tax Leveraged return on investment is investor’s required rate of return when part of the investment is financed Cost of financing is considered in the return calculation

    3. Printed on recycled paper-actually better, not printed at all Disclaimers This is an excellent case except the: Name, Angus I assume it has nothing to do with beef The chemical company owned by Judy

    4. Printed on recycled paper-actually better, not printed at all Analysis summary Understand transaction and related cash flows See the spreadsheet posted on the course site with basic NPV and IRR tools Financial Project Evaluation Basics Net Present Value of cash inflows and outflows Internal rate of return The rate at which the present value of the inflows equals the present value of the outflows Profitability index Net present value divided by original investment This method of analysis is main stream, however variants are acceptable

    5. Printed on recycled paper-actually better, not printed at all Applicability to Bren students Capital Budgeting (NPV and IRR) is THE MOST COMMON TOOL for financial analysis of projects The analysis in Cartwright is similar to decisions regarding environmental capital investments Acid Rain-should a company invest in pollution control equipment or purchase the necessary permits to pollute Burn and buy versus Scrub and Sell Assume that instead of real estate properties you were evaluating investments in a wind farm or a solar installation.

    6. Printed on recycled paper-actually better, not printed at all Recommendation Which potential investment, if any, would you suggest for each of the investors? Why? Next week

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