FIN 515 Entire Course Managerial Finance

Published on March 2017 | Categories: Documents | Downloads: 75 | Comments: 0 | Views: 861
of 17
Download PDF   Embed   Report

Comments

Content

FIN 515 Entire Course Managerial Finance
https://hwguiders.com/downloads/fin-515-entire-course-managerial-finance

FIN 515 Entire Course Managerial Finance

FIN 515 Week 1 Problem Set
Answer the following questions and solve the following problems in the space provided.
When you are done, save the file in the format flastname_Week_1_Problem_Set.docx,
where flastname is your first initial and you last name, and submit it to the appropriate
dropbox.

Chapter 1 (page 19)

1. What is the most important difference between a corporation and all other organizational
forms?
2. What does the phrase limited liability mean in a corporate context?
3. Which organizational forms give their owners limited liability?
4. What are the main advantages and disadvantages of organizing a firm as a corporation?
5. Explain the difference between an S corporation and a C corporation.

Chapter 2

The following is provided for use in answering the next set of questions. You may also find table
2.5 on page 53 of your text and all questions on pages 56–57.

29. In fiscal year 2011, Starbucks Corporation (SBUX) had revenue of $11.70 billion, gross
profit of $6.75 billion, and net income of $1.25 billion. Peet’s Coffee and Tea (PEET) had
revenue of $372 million, gross profit of $72.7 million, and net income of $17.8 million.
a. Compare the gross margins for Starbucks and Peet’s.
b. Compare the net profit margins for Starbucks and Peet’s.
c. Which firm was more profitable in 2011?
31. See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.
a. How did Mydeco’s accounts receivable days change over this period?
b. How did Mydeco’s inventory days change over this period?
c. Based on your analysis, has Mydeco improved its management of its working capital during
this time period?
32. See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.
a. Compare Mydeco’s accounts payable days in 2009 and 2013.
b. Did this change in accounts payable days improve or worsen Mydeco’s cash position in 2013?
33. See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.
a. By how much did Mydeco increase its debt from 2009 to 2013?
b. What was Mydeco’s EBITDA/Interest coverage ratio in 2009 and 2013? Did its coverage ratio
ever fall below 2?
c. Overall, did Mydeco’s ability to meet its interest payments improve or decline over this
period?
42. For fiscal year 2011, Starbucks Corporation (SBUX) had total revenues of $11.70 billion, net
income of $1.25 billion, total assets of $7.36 billion, and total shareholder’s equity of $4.38
billion.
a. Calculate the Starbucks’ ROE directly, and using the DuPont Identity.

b. Comparing with the data for Peet’s in Problem 41, use the DuPont Identity to understand the
difference between the two firms’ ROEs.

FIN 515 Week 1 Quiz

Question 1
(TCO G) Which do you think provides a more valid measure of how a company is doing,
comparison of current results with historical results or comparison of current results with the
current results of another company?
Question 2
(TCO G) Barnes Corp’s total assets at the end of last year were $415,000,000 and its net income
after taxes was $17,750,000. What was its return on total assets?
Question 3
(TCO G) Between December 31, 2016 and December 31, 2017, ROE at Bobcat Industries
decreased even though sales increased. Using the DuPont Identity, explain what else could have
happened to cause this.

FIN 515 Week 2 Problem Set

Answer the following questions and solve the following problems in the space provided.
When you are done, save the file in the format flastname_Week_2_Problem_Set.docx,
where flastname is your first initial and you last name, and submit it to the appropriate
dropbox.

Chapter 4 (pages 132–136):

3. Calculate the future value of $2000 in
a. five years at an interest rate of 5% per year;
b. ten years at an interest rate of 5% per year; and
c. five years at an interest rate of 10% per year.
d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in
part (b)?
4. What is the present value of $10,000 received
a. twelve years from today when the interest rate is 4% per year;
b. twenty years from today when the interest rate is 8% per year; and
c. six years from today when the interest rate is 2% per year?
5. Your brother has offered to give you either $5,000 today or $10,000 in 10 years. If the interest
rate is 7% per year, which option is preferable?
6. Consider the following alternatives.
i. $100 received in 1 year
ii. $200 received in 5 years
iii. $300 received in 10 years
a. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year.
b. What is your ranking if the interest rate is only 5% per year?
c. What is your ranking if the interest rate is 20% per year?
8. Your daughter is currently 8 years old. You anticipate that she will be going to college in 10
years. You would like to have $100,000 in a savings account to fund her education at that time. If
the account promises to pay a fixed interest rate of 3% per year, how much money do you need
to put into the account today to ensure that you will have $100,000 in 10 years?

9. You are thinking of retiring. Your retirement plan will pay you either $250,000 immediately on
retirement or $350,000 5 years after the date of your retirement. Which alternative should you
choose if the interest rate is
a. 0% per year;
b. 8% per year; and
c. 20% per year?
14. You have been offered a unique investment opportunity. If you invest $10,000 today, you will
receive $500 1 year from now, $1,500 2 years from now, and $10,000 10 years from now. a.
What is the NPV of the opportunity if the interest rate is 6% per year? Should you take the
opportunity? b. What is the NPV of the opportunity if the interest rate is 2% per year? Should
you take it now?
36. You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash
that you can use as a down payment on the house, but you need to borrow the rest of the
purchase price. The bank is offering a 30-year mortgage that requires annual payments and has
an interest rate of 7% per year. What will your annual payment be if you sign up for this
mortgage?
37. You would like to buy the house and take the mortgage described in Problem 36. You can
afford to pay only $23,500 per year. The bank agrees to allow you to pay this amount each year,
yet still borrow $300,000. At the end of the mortgage (in 30 years), you must make a balloon
payment; that is, you must repay the remaining balance on the mortgage. How much will this
balloon payment be?
38. You have just made an offer on a new home and are seeking a mortgage. You need to borrow
$600,000. a. The bank offers a 30-year mortgage with fixed monthly payments and an interest
rate of 0.5% per month. What is the amount of your monthly payment if you take this loan? b.
Alternatively, you can get a 15-year mortgage with fixed monthly payments and an interest rate
of 0.4% per month. How much would your monthly payments be if you take this loan instead?
*A.1. This problem is from the Appendix to Chapter 4. Your grandmother bought an annuity
from Rock Solid Life Insurance Company for $200,000 when she retired. In exchange for the
$200,000, Rock Solid will pay her $25,000 per year until she dies. The interest rate is 5%. How
long must she live after the day she retired to come out ahead (that is, to get more in value than
what she paid in)?

FIN 515 Week 2 Quiz

Question 1
(TCO B) Your daughter has just given birth to your first grandchild. You decide to start a college
fund for the child. You want the fund to have $300,000 in it when the child turns 18. You think
you can get a return of 10% per year on your investment. How much should you deposit in the
fund? Ignore taxes. Show your work. If you use Excel, show the formula with the parameters,
and the answer. If you use a formula, provide the standard formula, the formula with terms
substituted, and the answer. If you use a calculator, show the inputs and the answer.
Question 2
(TCO B) You have a student loan of $75,000. The interest rate is 8.6% per year. You have been
out of school for 6 months and are ready to start making payments. You want to use the
maximum allowed of 10 years to pay off the loan by making equal monthly payments. How
much are the monthly payments? Ignore taxes. Show your work. If you use Excel, show the
formula with the parameters, and the answer. If you use a formula, provide the standard formula,
the formula with terms substituted, and the answer. If you use a calculator, show the inputs and
the answer.
Question 3
(TCO B) Your cousin wants to buy a car but he really can’t afford it. He needs a loan of $22,000.
The finance manager at the dealership offers him something like a loan in which your cousin will
get the $22,000 and will pay $413 per month for the next 60 months with an additional payment
of $3,000 (which the car will surely be worth!) in the 60th month. What interest rate is your
cousin really going to pay? Ignore taxes. Show your work. If you use Excel, show the formula
with the parameters, and the answer. If you use a formula, provide the standard formula, the
formula with terms substituted, and the answer. If you use a calculator, show the inputs and the
answer.

FIN 515 Week 3 Problem Set

Answer the following questions and solve the following problems in the space provided.
When you are done, save the file in the format flastname_Week_3_Problem_Set.docx,

where flastname is your first initial and you last name, and submit it to the appropriate
dropbox.

Chapter 7 (pages 225–228):

1. Your brother wants to borrow $10,000 from you. He has offered to pay you back $12,000 in a
year. If the cost of capital of this investment opportunity is 10%, what is its NPV? Should you
undertake the investment opportunity? Calculate the IRR and use it to determine the maximum
deviation allowable in the cost of capital estimate to leave the decision unchanged.
8. You are considering an investment in a clothes distributor. The company needs $100,000 today
and expects to repay you $120,000 in a year from now. What is the IRR of this investment
opportunity? Given the riskiness of the investment opportunity, your cost of capital is 20%. What
does the IRR rule say about whether you should invest?
19. You are a real estate agent thinking of placing a sign advertising your services at a local bus
stop. The sign will cost $5,000 and will be posted for one year. You expect that it will generate
additional revenue of $500 per month. What is the payback period?
21. You are deciding between two mutually exclusive investment opportunities. Both require the
same initial investment of $10 million. Investment A will generate $2 million per year (starting at
the end of the first year) in perpetuity. Investment B will generate $1.5 million at the end of the
first year and its revenues will grow at 2% per year for every year after that.


a. Which investment has the higher IRR?



b. Which investment has the higher NPV when the cost of capital is 7%?



c. In this case, for what values of the cost of capital does picking the higher
IRR give the correct answer as to which investment is the best opportunity?



Chapter 8 (260–262)

1. Pisa Pizza, a seller of frozen pizza, is considering introducing a healthier version of its pizza
that will be low in cholesterol and contain no trans fats. The firm expects that sales of the new

pizza will be $20 million per year. While many of these sales will be to new customers, Pisa
Pizza estimates that 40% will come from customers who switch to the new, healthier pizza
instead of buying the original version.
a. Assume customers will spend the same amount on either version. What level of incremental
sales is associated with introducing the new pizza?
b. Suppose that 50% of the customers who will switch from Pisa Pizza’s original pizza to its
healthier pizza will switch to another brand if Pisa Pizza does not introduce a healthier pizza.
What level of incremental sales is associated with introducing the new pizza in this case?
6. Cellular Access, Inc. is a cellular telephone service provider that reported net income of $250
million for the most recent fiscal year. The firm had depreciation expenses of $100 million,
capital expenditures of $200 million, and no interest expenses. Working capital increased by $10
million. Calculate the free cash flow for Cellular Access for the most recent fiscal year.
12. A bicycle manufacturer currently produces 300,000 units a year and expects output levels to
remain steady in the future. It buys chains from an outside supplier at a price of $2 a chain. The
plant manager believes that it would be cheaper to make these chains rather than buy them.
Direct in-house production costs are estimated to be only $1.50 per chain. The necessary
machinery would cost $250,000 and would be obsolete after 10 years. This investment could be
depreciated to zero for tax purposes using a 10-year straight-line depreciation schedule. The
plant manager estimates that the operation would require $50,000 of inventory and other working
capital upfront (year 0), but argues that this sum can be ignored because it is recoverable at the
end of the 10 years. Expected proceeds from scrapping the machinery after 10 years are $20,000.
If the company pays tax at a rate of 35% and the opportunity cost of capital is 15%, what is the
net present value of the decision to produce the chains in-house instead of purchasing them from
the supplier?

Week 4 Problem Set

Bonds-1. Interest on a certain issue of bonds is paid annually with a coupon rate of 8%. The
bonds have a par value of $1,000. The yield to maturity is 9%. What is the current market piece
of these bonds? The bonds will mature in 5 years.
Bonds-2. A certain bond has 12 years left to maturity. Interest is paid annually at a coupon rate of
10%. The bonds are currently selling for $850. What is their YTM?

Bonds-3. A certain bond pays a semiannual coupon rate at a 10% annual rate. The bond has a
par value of $1,000. There are eight years to maturity. The yield to maturity is 9%. What is the
current price of the bond?
Bonds-4. A particular corporate bond has a par value of $1,000. Coupon payments are $40 and
are paid twice a year. Seven years are left on the life of the bond.The YTM is 9%. What is the
price of the bond?
Bond-5. A given bond has 5 years to maturity. It has a face value of $1,000. It has a YTM of 5%
and the coupons are paid semiannually at a 10% annual rate. What does the bond currently sell
for?
Bond-6. A given bond has five years left to maturity. Interest is paid annually and the annual
coupon rate is 9%. The par value of the bond is $1,000. The bond currently sells for $1,000.
What is the yield to maturity?
9-1.Assume Evco, Inc., has a current price of $50 and will pay a $2 dividend in 1 year, and its
equity cost of capital is 15%. What price must you expect it to sell for right after paying the
dividend in 1 year in order to justify its current price?
9-5.NoGrowth Corporation currently pays a dividend of $2 per year, and it will continue to pay
this dividend forever. What is the price per share if its equity cost of capital is 15% per year?
9-6.Summit Systems will pay a dividend of $1.50 this year. If you expect Summit’s dividend to
grow by 6% per year, what is its price per share if its equity cost of capital is 11%?
9-7. Dorpac Corporation has a dividend yield of 1.5%. Dorpac’s equity cost of capital is 8%, and
its dividends are expected to grow at a constant rate. a. What is the expected growth rate of
Dorpac’s dividends? b. What is the expected growth rate of Dorpac’s share price?
9-12.Procter & Gamble will pay an annual dividend of $0.65 1 year from now. Analysts expect
this dividend to grow at 12% per year thereafter until the fifth year. After then, growth will level
off at 2% per year. According to the dividend-discount model, what is the value of a share of
Procter & Gamble stock if the firm’s equity cost of capital is 8%?

FIN 515 Week 4 Midterm

1. (TCO G) The firm’s asset turnover measures

2. (TCO G) Suppose Novak Company experienced a reduction in its ROE over the last year. This
fall could be attributed to
3. (TCO B) You plan on retiring in 20 years. You currently have $275,000 and think you will
need $1,000,000 to retire. Assuming you don’t deposit any additional money into the account,
what annual return will you need to earn to meet this goal?
4. (TCO B) You take out a 4 year car loan for $18,000. The loan has a 4% annual interest rate.
The payments are made monthly. What are the monthly payments? Show your work
5. (TCO B) You currently have $10,000 in your retirement account. If you deposit $500 per
month and the account pays 5% interest, how much will be in the account in 10 years? Show
your work.
6. (TCO B) You have a two children, A and B. Child A is not going to college but is working in a
business to learn the ropes. Child A plans on opening a business someday. Child B is attending
college. You put a certain amount of money into an account. From this account, Child B will
receive $2,000 per month for the next four years. Whatever is left at that time will go to Child A
to help start the business. You want Child A to receive $96,000 at that time. The account pays 7%
annually, compounded monthly. How much money do you need to start the account? Show your
work.
7. (TCO F) A project requires an initial cash outlay of $95,000 and has expected cash inflows of
$20,000 annually for 9 years. The cost of capital is 10%. What is the project’s NPV? Show your
work.
8. (TCO F) A project requires an initial cash outlay of $60,000 and has expected cash inflows of
$15,000 annually for 8 years. The cost of capital is 10%. What is the project’s payback period?
Show your work.
9. (TCO F) A project requires an initial cash outlay of $95,000 and has expected cash inflows of
$20,000 annually for 9 years. The cost of capital is 10%. What is the project’s IRR? Show your
work.
10. (TCO F) A project requires an initial cash outlay of $40,000 and has expected cash inflows of
$12,000 annually for 7 years. The cost of capital is 10%. What is the project’s discounted
payback period? Show your work.
11. (TCO F) Company A has the opportunity to do any, none, or all of the projects for which the
net cash flows per year are shown below. The projects are not mutually exclusive. The company
has a cost of capital of 15%. Which should the company do and why? You must use at least two
capital budgeting methods. Show your work. Explain your answer thoroughly.

FIN 515 Week 5 Problem Set

Answer the following questions and solve the following problems in the space provided.
When you are done, save the file in the format flastname_Week_5_Problem_Set.docx,
where flastname is your first initial and you last name, and submit it to the appropriate
dropbox.

Chapter 10 (pages 345–348)

4. You bought a stock one year ago for $50 per share and sold it today for $55 per share. It paid a
$1 per share dividend today.
a. What was your realized return?
b. How much of the return came from dividend yield and how much came from capital gain?
20. Consider two local banks. Bank A has 100 loans outstanding, each for $1 million, that it
expects will be repaid today. Each loan has a 5% probability of default, in which case the bank is
not repaid anything. The chance of default is independent across all the loans. Bank B has only
one loan of $100 million outstanding, which it also expects will be repaid today. It also has a 5%
probability of not being repaid. Explain the difference between the type of risk each bank faces.
Which bank faces less risk? Why?
22. Consider the following two, completely separate, economies. The expected return and
volatility of all stocks in both economies is the same. In the first economy, all stocks move
together—in good times all prices rise together and in bad times they all fall together. In the
second economy, stock returns are independent—one stock increasing in price has no effect on
the prices of other stocks. Assuming you are risk-averse and you could choose one of the two
economies in which to invest, which one would you choose? Explain.
30. What does the beta of a stock measure?
35. Suppose the market risk premium is 5% and the risk-free interest rate is 4%. Using the data
in Table 10.6 (also shown above), calculate the expected return of investing in

a. Starbucks’ stock.
b. Hershey’s stock.
c. Autodesk’s stock.

Chapter 11 (pages 390–396):

2. You own three stocks: 600 shares of Apple Computer, 10,000 shares of Cisco Systems, and
5,000 shares of Colgate-Palmolive. The current share prices and expected returns of Apple,
Cisco, and Colgate-Palmolive are, respectively, $500, $20, $100 and 12%, 10%, 8%.
a. What are the portfolio weights of the three stocks in your portfolio?
b. What is the expected return of your portfolio?
c. Suppose the price of Apple stock goes up by $25, Cisco rises by $5, and Colgate-Palmolive
falls by $13. What are the new portfolio weights?
d. Assuming the stocks’ expected returns remain the same, what is the expected return of the
portfolio at the new prices?
50. Suppose Autodesk stock has a beta of 2.16, whereas Costco stock has a beta of 0.69. If the
risk-free interest rate is 4% and the expected return of the market portfolio is 10%, what is the
expected return of a portfolio that consists of 60% Autodesk stock and 40% Costco stock,
according to the CAPM?

Chapter 12 (page 431):

26. Unida Systems has 40 million shares outstanding trading for $10 per share. In addition,
Unida has $100 million in outstanding debt. Suppose Unida’s equity cost of capital is 15%, its
debt cost of capital is 8%, and the corporate tax rate is 40%.


a. What is Unida’s unlevered cost of capital?



b. What is Unida’s after-tax debt cost of capital?



c. What is Unida’s weighted average cost of capital?

27. You would like to estimate the weighted average cost of capital for a new airline business.
Based on its industry asset beta, you have already estimated an unlevered cost of capital for the
firm of 9%. However, the new business will be 25% debt financed, and you anticipate its debt
cost of capital will be 6%. If its corporate tax rate is 40%, what is your estimate of its WACC?

FIN 515 Week 6 Problem Set
Answer the following questions and solve the following problems in the space provided.
When you are done, save the file in the format flastname_Week_6_Problem_Set.docx
(where flastname is your first initial and your last name), and submit it to the appropriate
Dropbox.
Chapter 29 (pages 983-984):
1. What inherent characteristic of corporations creates the need for a system of checks on
manager behavior?
2. What are some examples of agency problems?
3. What are the advantages and disadvantages of the corporate organizational structure?
4. What is the role of the board of directors in corporate governance?
Second Project
The purpose of this project is for you to have some practice working with financial concepts in
the real world. This will involve integrating some material from throughout the course. The
project will also involve the development of your own approach to doing the work. The project
does not provide a step-by-step procedure for you to follow.
Your task is to determine the WACC for a given firm using what you know about WACC as well
as data you can find through research. Your deliverable is to be a brief report in which you state
your determination of WACC, describe and justify how you determined the number, and provide
relevant information as to the sources of your data.

With the help of your professor, you have selected a company for which to research and find the
WACC. Your research is to be independent from any information you may find at thatswacc.com
or similar sites although you might want to use such sites to provide a reasonableness check on
the WACC you calculate.
Assumptions
As you recall, the formula for WACC is
rWACC = (E/E+D) rE + D/(E+D) rD (1-TC)
The formula for the required return on a given equity investment is
ri= rf + βi * (RMkt-rf)
RMkt-rf is the Market Risk Premium. For this project, you may assume the Market Risk Premium
is 4% unless you can develop a better number.
rf is the risk free rate. The YTM on 10 year US Treasury securities is a good approximation.
You may assume a corporate tax rate of 40%.
One good source for financial data for companies as well as data about their equity is
http://finance.yahoo.com. By looking around this site, you should be able to find the market
capitalization (E) as well as the β for any publicly traded company.
There are not many places left where data about corporate bonds is still available. One of them is
http://finra-markets.morningstar.com/BondCenter. To find data for a particular company’s
bonds, find the Quick Search feature, then be sure to specify corporate bonds and type in the
name of the issuing company. This should give you a list of all of the company’s outstanding
bond issues. Clicking on the symbol for a given bond issue will lead you to the current amount
outstanding and the yield to maturity. You are interested in both. The total of all bonds
outstanding is D in the above formula.
If you like, you can use the YTM on a bond issue that is not callable as the pre-tax cost of debt
for the company.
Deliverable
Write a two or three page report that contains the following elements:
1. 1.

Your calculated WACC.

2. 2.
How data was used to calculate WACC. This would be the formula and
the formula with your values substituted.
3. 3.

Sources for your data.

4. 4.
A discussion of how much confidence you have in your answer. What
were the limiting assumptions that you made, if any.

FIN 515 Week 7 Problem Set

Answer the following questions and solve the following problems in the space provided.
When you are done, save the file in the format flastname_Week_7_Problem_Set.docx
(where flastname is your first initial and your last name), and submit it to the appropriate
Dropbox.
Chapter 26 (page 903):
1. Answer the following questions:
a. What is the difference between a firm’s cash cycle and its operating cycle?
b. How will a firm’s cash cycle be affected if a firm increases its inventory, all else being equal?
c. How will a firm’s cash cycle be affected if a firm begins to take the discounts offered by its
suppliers, all else being equal?
4. The Greek Connection had sales of $32 million in 2012, and a cost of goods sold of $20
million. A simplified balance sheet for the firm appears below:
a. Calculate The Greek Connection’s net working capital in 2012.
b. Calculate the cash conversion cycle of The Greek Connection in 2012.
c. The industry average accounts receivable days is 30 days. What would the cash conversion
cycle for The Greek Connection have been in 2012 if it had matched the industry average for
accounts receivable days?
5. Assume the credit terms offered to your firm by your suppliers are 3/5, Net 30. Calculate the
cost of the trade credit if your firm does not take the discount and pays on day 30.

Chapter 27 (page 925):
1. Which of the following companies are likely to have high short-term financing needs? Why?
a. A clothing retailer
b. A professional sports team
c. An electric utility
d. A company that operates toll roads
e. A restaurant chain
2. Sailboats Etc. is a retail company specializing in sailboats and other sailing-related equipment.
The following table contains financial forecasts as well as current (month 0) working capital
levels. During which months are the firm’s seasonal working capital needs the greatest? When
does it have surplus cash?

FIN 515 Final Exam
1. (TCO A) In the United States, the most common type of business by number
of businesses is the _____. (Points : 5)
2. (TCO A) Sole proprietorships have all of the following advantages except
(Points : 5)
3. (TCO B) Which of the following would cause the future value of an annuity to
decrease? (Points : 5)
4. (TCO B) Which of the following is an annuity due? (Points : 5)
5. (TCO G) What are the names of the four components of the DuPont Identity
and how are they calculated? What does each measure? (Points : 20)
6. (TCO D) A stock pays an annual dividend of $2.50 and that dividend is not
expected to change. Similar stocks pay a return of 10%. What is P0? (Points :
20)
7. (TCO D) A stock has just declared an annual dividend of $2.25 to be paid one
year from today. The dividend is expected to grow at a 7% annual rate. The
return on equity for similar stocks is 12%. What is P0? (Points : 20)

8. (TCO D) A particular bond has 8 years to maturity. It has a face value of
$1,000. It has a YTM of 7% and the coupons are paid semiannually at a 10%
annual rate. What does the bond currently sell for? (Points : 10)
9. (TCO D) A bond currently sells for $1,000 and has a par of $1,000. It was
issued two years ago and had a maturity of 10 years. The coupon rate is 7%
and the interest payments are made semiannually. What is its YTM? (Points :
10)
10.(TCO D) Using examples, explain the difference between systematic risk and
nonsystematic risk. Explain why the distinction is important for both investors
and issuers of stock.(Points : 30)
11.(TCO E) A company has 10 million shares outstanding trading for $7 per
share. It also has $300 million in outstanding debt. If its equity cost of capital
is 15%, and its debt cost of capital is 9%, and its effective corporate tax rate
is 40%, what is its weighted average cost of capital? (Points : 30)
12.(TCO A) Relate how the job of the financial manager can be explained using
the balance sheet. (Points : 25)
13.(TCO H) Other things being equal, would a firm prefer a longer or shorter
Cash Conversion Cycle? What are some examples of ways a firm could attain
this? (Points : 30)
14.(TCO F) A company has the opportunity to do any of the projects for which
the net cash flows per year are shown below. The company has a cost of
capital of 12%. Which should the company do and why? You must use at least
two capital budgeting methods. Show your work

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close