fundamentals of corporate finance sixth solution

... present value of the friend’s offer is $6,520 Yes; present value of the friend’s offer is $6,624 No; present value of the friend’s offer is $5,134 No; present value of the friend’s offer is $5,624 ... 2:30-5:30 pm), Professor Okonkwo’s Section B (Tuesdays, 7-10 pm), Professor Patterson’s Section D (Thursdays, 4-7 pm), and Professor Tahani’s Section C (Wednesdays, 7-10 pm) AP/ADMS 3530.03 Finance Midterm ... Name Section ID # Professor Alagurajah’s Section A (Fridays, 2.30-5.30 pm), Professor King’s Section G (Internet), Professor Kohen’s Section F (Tuesdays, 2:30-5:30 pm), Professor Li’s Section...

Ngày tải lên: 24/02/2018, 08:31

... of stock that offers a constant growth rate of 10 percent, requires a 16 percent rate of return, and is expected to sell for $50 one year from ... investments exceeds the firm's required rate of return 30 The purpose of a sinking fund is to: A) reduce the par value of stock over time B) take advantage of the tax break on preferred stock C) periodically ... C) higher rates of interest can be earned on the cash flows D) the cash flows have been discounted to a common date 27 Which of the following will increase the present value of an annuity, other...

Ngày tải lên: 24/02/2018, 08:32

... in B) What is the most likely value of the PVGO for a stock with a current price of $50, expected earnings of $6 per share, and a required rate of return of 20 percent? A) $10 B) $20 C) $25 D) ... is the expected constant growth rate of dividends for a stock currently priced at $50, that just paid a dividend of $4, and has a required rate of return of 18 percent? A) 3.41 percent B) 5.50 ... maturity date of the bond D) receives 97.16 percent of the stated coupon payments Answer A Bond prices are quoted as a percentage of their face value So the bond in question has a price of 97.16%...

Ngày tải lên: 24/02/2018, 08:32

... it at the end of year realizing an expected annual return of 0% annually What is your rate of return over the year period? A) Gain of 10% B) Loss of 10% C) Gain of 11.11% D) Loss of 11.11% E) ... the beginning of each year for years, IV Pay $500 at the end of year 1, $400 at the end of year 2, $300 at the end of year 3, and $1,500 at the end of year 4, V Pay $1,200 at the end of year and ... for a higher price The corporate bond will offer a lower coupon The corporate bond will offer a higher coupon The corporate bond has a higher credit spread Answer E 29 Which of the following statements...

Ngày tải lên: 24/02/2018, 08:32

... _ Section _ ID # (Prof Alagurajah’s sections F and G; Prof King’s section D; Prof Li’s section A; Prof Tahani’s sections C and E; Prof Tissenbaum’s sections B and H) AK/ADMS ... value of $1,922.51: $300 today, $400 at the end of year one, X at the end of year two, and $900 at the end of year three The annual interest rate is 6% What is X? A) B) C) D) $419 $450 $489 $550 Solution ... share) of JKL corp is $5; with a dividend payout ratio of 30%, a discount rate of 16%, and a return on equity (ROE) of 20% What is the current stock price? A) B) C) D) $60 $65 $70 $75 Solution...

Ngày tải lên: 24/02/2018, 08:32

... rate of return However, Division B, with a required rate of return of 14.3%, has an expected return of 13% Likewise, Division C has a required rate of return of 6.89% but its expected rate of return ... return of the portfolio is the weighted average of the returns on the TSX and T-bills Similarly, the beta of the portfolio is a weighted average of the beta of the TSX (which is 1.0) and the beta of ... the value of ChemCo is Value of ChemCo = = $91.837 million d Think of BigCo as a portfolio consisting of the original three divisions plus the new ChemCo division Thus, the new beta of BigCo will...

Ngày tải lên: 04/10/2018, 09:02

... a reasonable estimate of the discount rate since the risk of the proposed project is similar to the risk of the existing projects Use a discount rate of 10.47% e The WACC of optical projects should ... project as the cost of debt if the project is debt financed, and as the cost of equity if the project is equity financed In fact, if the project poses risk comparable to the risk of the firm’s other ... share, for total market value of $1.5 million The market value of million common shares selling at $20/share is $20 million The book value of the common shares is sum of the common stock plus retained...

Ngày tải lên: 04/10/2018, 09:03

... comprised of the book value of long-term debt) 16 INCO LTD - For year ending December 31, 2004 USES OF FUNDS • Capital Expenditure • Preferred dividends • Reduction of long term debt SOURCES OF FUNDS ... difference between the present value of the net savings and the present value of the net investment cost PV of net savings over years PV of net investment cost NPV of bond refunding $28,648,119 - ... difference between the present value of the net savings and the present value of the net investment cost PV of net savings over years PV of net investment cost NPV of bond refunding $28,648,119 -...

Ngày tải lên: 04/10/2018, 09:03

... initial price of = $99.38 to a new price of = $75.37 This is a price decline of 24.16%, far greater than that of the coupon bond 5-11 Copyright © 2006 McGraw-Hill Ryerson Limited The price of the coupon ... at a price of 980 and maturity of 10 years, the bond’s yield to maturity is 8.3% (n = 10, PV = (-) 980, PMT = 80, FV = 1000) In one year, at a price of 1050 and remaining maturity of years, the ... credit rating is updated) 34 Internet: Canadian corporate bond yields Tips: The Monday issue of the Globe and Mail has the most complete list of corporate bond prices and yields Warn students...

Ngày tải lên: 04/10/2018, 09:03

... the required rate of return, 11%, minus the sustainable growth rate of 5%: Value2013 = = = $233.3 million The value of the firm as of today, the end of 2009, is the present value of this amount ... a profit opportunity that would be a contradiction of the efficient market hypothesis The text points out that the slope of the yield curve might be a reflection of investors’ expectations of ... 3.3190 Present value of Year 15 and on dividends at the end of Year 14 = = = 47.41 Present value of Year 15 and on dividends today = = × 47.41 = 9.70 Price today = present value of all dividends...

Ngày tải lên: 04/10/2018, 09:03

... value of the portfolio for the equal weighted index is the simple average of the prices of the stocks in the index For any week, the value of the index is the current simple average price of the ... correlation of only 2, the portfolio standard deviation is less than the standard deviation of return of either of the two stocks in the portfolio However, with the higher correlation of 7, the ... average of the individual stocks’ standard deviation, is 0818 or 8.18% The standard deviation of the equal-weighted portfolio, shown in the table is 3.81% This is striking evidence of the benefits of...

Ngày tải lên: 04/10/2018, 09:03

... bottom-line profit per dollar of sales h Return on assets is a measure of bottom-line profit per dollar of total assets i Return on equity is a measure of bottom-line profit per dollar of equity ... the corporate form of ownership, the shareholders are the owners of the firm The shareholders elect the directors of the corporation, who in turn appoint the firm’s management This separation of ... measure of the short-term liquidity of the firm, after removing the effects of inventory, generally the least liquid of the firm’s current assets b Cash ratio represents the ability of the firm...

Ngày tải lên: 01/07/2014, 14:22

... material from FUNDAMENTALS OF CORPORATE FINANCE, Third Edition with additional material from FUNDAMENTALS OF CORPORATE FINANCE, Alternate Fifth Edition ESSENTIALS OF CORPORATE FINANCE, Second ... Wallace E Carroll School of Management Boston College with additional material from Fundamentals of Corporate Finance, Alternate Fifth Edition Essentials of Corporate Finance, Second Edition Stephen ... material from Fundamentals of Corporate Finance Third Edition Richard A Brealey Bank of England and London Business School Stewart C Myers Sloan School of Management Massachusetts Institute of Technology...

Ngày tải lên: 22/02/2014, 06:20

... material from FUNDAMENTALS OF CORPORATE FINANCE, Third Edition with additional material from FUNDAMENTALS OF CORPORATE FINANCE, Alternate Fifth Edition ESSENTIALS OF CORPORATE FINANCE, Second ... Wallace E Carroll School of Management Boston College with additional material from Fundamentals of Corporate Finance, Alternate Fifth Edition Essentials of Corporate Finance, Second Edition Stephen ... material from Fundamentals of Corporate Finance Third Edition Richard A Brealey Bank of England and London Business School Stewart C Myers Sloan School of Management Massachusetts Institute of Technology...

Ngày tải lên: 31/03/2014, 22:21

... material from FUNDAMENTALS OF CORPORATE FINANCE, Third Edition with additional material from FUNDAMENTALS OF CORPORATE FINANCE, Alternate Fifth Edition ESSENTIALS OF CORPORATE FINANCE, Second ... Wallace E Carroll School of Management Boston College with additional material from Fundamentals of Corporate Finance, Alternate Fifth Edition Essentials of Corporate Finance, Second Edition Stephen ... material from Fundamentals of Corporate Finance Third Edition Richard A Brealey Bank of England and London Business School Stewart C Myers Sloan School of Management Massachusetts Institute of Technology...

Ngày tải lên: 28/06/2014, 10:20

... material from FUNDAMENTALS OF CORPORATE FINANCE, Third Edition with additional material from FUNDAMENTALS OF CORPORATE FINANCE, Alternate Fifth Edition ESSENTIALS OF CORPORATE FINANCE, Second ... Wallace E Carroll School of Management Boston College with additional material from Fundamentals of Corporate Finance, Alternate Fifth Edition Essentials of Corporate Finance, Second Edition Stephen ... material from Fundamentals of Corporate Finance Third Edition Richard A Brealey Bank of England and London Business School Stewart C Myers Sloan School of Management Massachusetts Institute of Technology...

Ngày tải lên: 28/06/2014, 23:20

... material from FUNDAMENTALS OF CORPORATE FINANCE, Third Edition with additional material from FUNDAMENTALS OF CORPORATE FINANCE, Alternate Fifth Edition ESSENTIALS OF CORPORATE FINANCE, Second ... Wallace E Carroll School of Management Boston College with additional material from Fundamentals of Corporate Finance, Alternate Fifth Edition Essentials of Corporate Finance, Second Edition Stephen ... material from Fundamentals of Corporate Finance Third Edition Richard A Brealey Bank of England and London Business School Stewart C Myers Sloan School of Management Massachusetts Institute of Technology...

Ngày tải lên: 05/08/2014, 13:20

... formula for the future value of a stream of cash flows of $1 a year for each of t years is therefore Future value of annuity of $1 a year = present value of annuity of $1 a year ؋ (1 + r)t 1 = ... limited number of years is called an annuity The present value of a stream of cash flows is simply the sum of the present value of each individual cash flow Similarly, the future value of an annuity ... detail gets in the way of the intended use of corporate planning models, which is to project the financial consequences of a variety of strategies and assumptions The fascination of detail, if you...

Ngày tải lên: 05/08/2014, 13:20

... 143 PROFITABILITY RATIOS Profitability ratios focus on the firm’s earnings Net Profit Margin If you want to know the proportion of revenue that finds its way into profits, you look at the profit ... Buffett is especially critical of another way of dampening current profits to the benefit of future ones: restructuring charges (the cost, taken in one go, of a corporate reorganization) Firms ... Microsoft’s total capital in 1997 was $7.2 billion With a return of 53 percent, it earned profits on this figure of 53 × 7.2 = $3.8 billion The total cost of the capital employed by Microsoft was...

Ngày tải lên: 05/08/2014, 13:20

... www.businessfinancemag.com/ Business Finance Magazine has resources and software reviews for financial planning www.toolkit.cch.com/ Financial planning resources of all kinds http://edge.lowe.org/quick /finance/ ... Balances Suppose that Dynamic Sofa (a subsidiary of Dynamic Mattress) has a line of credit with a stated interest rate of 10 percent and a compensating balance of 25 percent The compensating ... quoted annual rate of percent a What is the effective rate of interest if the loan is for year and is paid off in one payment at the end of the year? b What is the effective rate of interest if the...

Ngày tải lên: 05/08/2014, 13:20