Cumulative return

Many early CVC programs were too short. Our findings show that the present value of the cumulative returns only turns positive, on average, in the seventh year. Provide a complementary role to venture capital firms, co-investing with them or investing in pooled/dedicated funds. 

The annualized cumulative return (CR) of the portfolio over a period of M months is thus computed ... 

The upper part (rows 3 to 11) of Exhibit 27.6 displays descriptive statistics of the cumulative return for the three horizons 3, 5, and 10 years. All values are annualized. They can be used to study the performance of a buy-and-hold strategy. 

The proflt-to-investmentratio (PIR) may be defined in many ways, and is most meaningful when deflated and discounted. On an undeflated and undiscounted basis, the PIR may be defined as the ratio of the cumulative cash surplus to the capital investment. This indicates the return on capital investment of the project, is simple to calculate, but does not reflect the timing of the income/investment in the project. 

AU processed material is screened to return the coarse fraction for a second pass through the system. Process feed rates are matched to operating variables such as rpm speed and internal clearances, thus minimizing the level of excess fines (—200 mesh (<0.075 mm mm)). At one installation (3) the foUowing product size gradation of total smaller than mesh size (cumulative minus) was obtained ... 

This gives two choices ia interpreting calculated NRR values, ie, a direct comparison of NRR values for different options or a comparison of the NRR value of each option with a previously defined NRR cutoff level for acceptabiUty. The NPV, DTC, and NRR can be iaterpreted as discounted measures of the return, iavestment, and return rate, analogous to the parameters of the earher example. These three parameters characterize a venture over its entire life. Additional parameters can be developed to characterize the cash flow pattern duting the early venture years. Eor example, the net payout time (NPT) is the number of operating years for the cumulative discounted cash flow to sum to zero. This characterizes the early cash flow pattern it can be viewed as a discounted measure of the expected operating time that the investment is at risk. 

Increasing use is being made of the capital-rate-of-return ratio (CRR), whiA is the net present value (NPV) divided by the maximum cumulative expenditure or maximum net outlay, -(S CF)max... 

The discounted-cash-flow rate of return (DCFRR) and net present value (NPV) are functions of the cumulative revenue from annual sales X AfE and the fixed-capital cost of the plant Cfc, among other factors. 

If the new catalyst requires drastically different conditions, e.g. fluid bed operation instead of fixed bed operation, or if it needs substantial additions to the purification train, it is again possible to calculate the benefit in terms of the return (in reduced operating cost) on the new capital, but it is probably more informative to draw up a cumulative cash flow diagram. This is illustrated in Fig. 3. 

D-E In this region the cumulative cash flow is positive. The project is earning a return on the investment. 

Discounted cash-flow analysis, used to calculate the present worth of future earnings (Section 6.10.3), is sensitive to the interest rate assumed. By calculating the NPW for various interest rates, it is possible to find an interest rate at which the cumulative net present worth at the end of the project is zero. This particular rate is called the discounted cash-flow rate of return (DCFRR) and is a measure of the maximum rate that the project could pay and still break even by the end of the project life. 

Calculate the cumulative net present worth of the project, at a discount rate of 8 per cent. Also, calculate the discounted cash flow rate of return. 

Economic analysis can determine the discounted profitability criteria in terms of payback period (PBP), net present value (NPV), and rate of return (ROR) from discounted cash flow diagram, in which each of the annual cash flow is discounted to time zero for the LHS system. PBP is the time required, after the construction, to recover the fixed capital investment. NPV shows the cumulative discounted cash value at the end of useful life. Positive values of NPV and shorter PBP are preferred. ROR is the interest rate at which all the cash flows must be discounted to obtain zero NPV. If ROR is greater than the internal discount rate, then the LHS system is considered feasible (Turton et al., 2003). 

Figure 2.2 shows the cash flow pattern for a typical project. The cash flow is a cumulative cash flow. Consider Curve 1 in Figure 2.2. From the start of the project at Point A, cash is spent without any immediate return. The early stages of the project consist of development, design and other preliminary work, which causes the cumulative curve to dip to Point B. This is followed by the main phase of capital investment in buildings, plant and equipment, and the curve drops more steeply to Point C. Working capital is spent to commission the plant between Points C and D. Production starts at D, where revenue from sales begins. Initially, the rate of production is likely to be below design conditions until full production is achieved at E. At F, the cumulative cash flow is again zero. This is the project breakeven point. Toward the end of the projects life at G, the net rate of cash flow may decrease owing to, for example, increasing maintenance costs, a fall in the market price for the product, and so on.

In general, one or more of three methods are used to justify major expenditures. The first, payback, is a measure of the time it will take for cumulative benefits to equal cumulative costs (time to break even). This, by itself, may not be sufficient to compare alternative investments and projects competing for the same limited resources so one of two other methods may be used. These methods, Net Present Value and Internal Rate of Return, consider the earning power of money in making comparisons. Because investments earn compound interest, a dollar to be gained in the future has less present value than one gained today. The NPV is computed by estimating the yearly... 

At this point, the student reviewed the check clearing process in detail. Checks are issued to a supplier and an encumbrance is placed on an internal account in the chemical company the supplier cashes the check at the supplier s bank the check proceeds through a series of intermediate banks until it arrives at the chemical company s bank the issued amount is removed from the chemical company s bank account (cleared) and the check is then returned to the chemical company where the encumbrance on the internal account is removed. The system must achieve an overall mass balance such that the total or cumulative amount of money issued must eventually equal the total or cumulative amount of money cleared. 

The effects of ozone appear to be cumulative for initial exposures followed by adaptation. Five of six subjects exposed to 0.5 ppm ozone 2 hours/day for 4 days showed cumulative effects of symptoms and lung function tests for the first 3 days, followed by a return to near control values on day 4." In animals exposure to 0.3-3 ppm for up to 1 hour permits the animals to withstand multilethal doses for months afterwards. However, repeated exposures impart protection from all forms of lung injury (e.g., susceptibility to infectious agents, enzyme activities, inflammation). Initial ozone exposure may act to reduce cell sensitivity and/or increase mucus thickness, factors which may modify the accessibility and action of the gas. It is not known how variations in the length, frequency, or magnitude of exposure modify the time course for tolerance. 

Land for the project is available at 300,000. The fixed capital investment was estimated to be 12,000,000. A working capital of 1,800,000 is needed initially for the venture. Start-up expenses based upon past experience are estimated to be 750,000. The project qualifies under IRS guidelines as a 5-year class life investment. The company uses MACRS depreciation with the half-year convention. At the conclusion of the prmect, the land and working capital are returned to management. Develop a cash flow analysis for this project, using a cumulative cash position table (Table 9-25). 

Cumulative volume curves generated by intruding mercury into porous samples are not followed as the pressure is lowered and mercury extrudes out of the pores. In all cases the depressurization curve lies above the pressurization curve and the hysteresis loop does not close even when the pressure is returned to zero, indicating that some mercury is entrapped in the pores. Usually after the sample has been subjected to a first pressurization-depressurization cycle, no additional entrapment occurs during subsequent cycles. In some cases, however, a third or even fourth cycle is required before entrapment ceases. 

The smaller the value of n, the quicker will the pressure return to equilibrium, that is, a low value of n will allow the design of light-weight rocket motors. Constant is a measure of the dependence of r on Pc. A value of n of 0.80 indicates a strong dependence of r on Pc, while that of 0.20 indicates relatively low dependence. This is very important because if for some reason Pc increases and n is large, the r increases and Pc rises still further. The cumulative effect of such variations easily lead to rocket motor burst or failure. 

Period of 4 trading days before announcement and 3 trading days after announcement T Period of 4 trading days before announcement and 40 trading days alter announcement Cumulative excess return of specific company over FTSE Chemical Europe performance "" (Reported annual EPS-consensus forecast EP )/(absoiute value of consensus forecast EPS) Source McKinsey... 

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