Tutor profile: Usna U.
Subject: Corporate Finance
To discuss: On a project that does not have a positive Net present value (NPV).
Introduction: Net present value (NPV) refers to the discounted value of the future cash flows at present. The company should accept the project, if the net present value is positive or greater than zero and vice-versa. If there are two mutually exclusive projects, then the company has to select the project that has a higher net present value. Solution: The potential of believing that a particular project indicates a positive NPV when the project does not indicate a positive NPV is referred to as Negative NPV. Explanation: The NPV of the project is the present value of all cash flows of a company’s project. In this form of cash flows, the cash inflows indicate positive cash flows whereas cash outflows imply negative cash flows. This means that the NPV is positive when the value of revenue is more than the cash outflows. On the other hand, the NPV is negative when the value revenue is less than the cash outflows made by the project. Conclusion: A particular project is accepted at the time when the project specifies a positive NPV. In case, a particular project does not points out a positive NPV that project has to be rejected by the company.
Whether the residual theory of dividends can lead to stable dividend and whether the approach consistent with dividend relevance.
Introduction: A dividend is a sum of money paid to the shareholders of the company. It is distributed among the investors from the portion of the company’s earnings. It is paid by the company to the shareholders either in the form of cash or stock. Explanation: Residual theory of dividends will not lead to stable dividends. It is because every company uses the residual theory of dividends to finance or undertake a new project. As a result, the dividends are a leftover portion of equity after considering the entire capital requirements of the firm. Therefore, the residual theory of dividends can lead to volatility in dividends as earnings and investment opportunities vary from period to period. This theory is based on earnings less funds company retains to finance the equity portion of its capital budget. As a result, this approach will not be consistent with dividend relevance theory. It is because there must be an optimum payout ratio as per dividend relevance.
What are the advantages and disadvantages of training and development in an organization?
Answer In this modern evolutionary era, the training and development offers an opportunity to magnify the knowledge of the whole employees in an organization. It is considered as an essential role in the fast-paced corporate world. On the other hand, several employers consider development opportunities as expensive in nature due to some reasons as such as: • The employees attending the training program would miss out productive hours, which lead to a delay in the completion of the projects. • Training and development platforms are often more costly. It is considered as expensive because of the additional cost incurred such as hotel accommodation, travel expenses, and such many more. Despite these probable disadvantages, it offers both employees and organizations as a whole with numerous benefits, which make the cost and time a worthy investment. The vital aims of this program in an organization are as follows: • It offers a wide job-associated knowledge to employees. • It would provide to maintain standards and policies. • This type of program will motivate and develops the employees • Offers knowledge and skill in a methodical manner. • Enhance equipment management practices to the employees. • Develops employees for the growth of the organization. • Minimize absenteeism and turnover. • Boosts organizational stability. From the vital aims of this program, it is clear that training and development is a part of the performance management system. This program mainly takes place when there is a change in technology or to adopt new strategies in an organization. Every organization has challenges and obstacles in its life as no one is free of them, but the real question to ask is-Are the organization ready to accepts these challenges and look for solutions to create and achieve the organizational goals. If the answer to this query is “Yes” then every organization must be ready to offer the best training and coaching for their employees in the organization.
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