1/15/2008
Build a Model
Gardial Fisheries is considering two mutually exclusive investments. The projects' expected net cash flows are as
follows:
Time
0
1
2
3
4
5
6
7
Expected net cash flows
Project A
Project B
($375)
($575)
($300)
$190
($200)
$190
($100
BUS 330a: CORPORATE FINANCE I
FALL 2012, AUBG
Quiz 5(a)
Solution Guide
Problem 1 (5 points)
Beckman Engineering and Associates (BEA). is considering a change in its capital
structure. The firm currently has $20 million debt carrying a rate of 8%, and its
PROBLEM 10-1
Given
Assets (Invested Capital)
Borrowing rate
Return on Invested Capital
Good state
Bad state
Solution Legend
$
1,500,000.00
9.00%
12.00% 15% on text
4.00%
Capital Structures
Alternative #1
Alternative #2
Debt/Assets
30.00%
50.00%
Solution
A
Chapter 6 - Stock Valuation
The price of any financial instrument is the present value of the future cash flows.
Preferred Stock
There is a 6 percent preferred share outstanding. If investors have a required return of 7 percent on this stock, what is the
PROBLEM 8-1
Given
Sale price
Square footage
Selling price/sq ft
Time on the market
$
$
Comp #1
240,000.00 $
2,240
107.14 $
61 days
Solution
a.
b.
c.
Average price per square foot
Estimated Value
Solution Legend
Comp #2
265,000.00
2,145
123.54
32 days
2121
CHAPTER 26
MERGERS AND ACQUISITIONS
Answers to Concepts Review and Critical Thinking Questions
1.
In the purchase method, assets are recorded at market value, and goodwill is created to account for
the excess of the purchase price over this recorded value
CHAPTER 19
CASH AND LIQUIDITY MANAGEMENT
Answers to Concepts Review and Critical Thinking Questions
1.
Yes. Once a firm has more cash than it needs for operations and planned expenditures, the excess
cash has an opportunity cost. It could be invested (by
CASE 7-1: Zorba Company
1.
December 1, Year 1
Inventory
Account Payable
50,000
To record the purchase of inventory and a foregin account payable at the spot rate of $1.00
50,000 50,000*1.00= 50,000
December 31, Year 1
Foreign Exchange Loss
Account Payable
Enron: What Caused the Ethical Collapse? Introduction
Kenneth Lay, former chairman and chief executive officer (CEO) of Enron Corp., is quoted in Michael Novak's book Business as a Calling: Work and the Examined Life as saying, "I was fully exposed to not
PROBLEM 4-1
Given
As a summer intern you are asked to prepare a spreadsheet
calculating the project free cash flow associated with a project
your employer is considering. Initially your boss assumes that
no debt would be used to fund the project. During y
PROBLEM 6-1
Cash provided by operations (CPBO) differs from free cash flow for the following reasons:
1.
Solution Legend
= Value given in problem
= Formula/Calculation/Analysis required
= Qualitative analysis or Short answer required
= Goal Seek or Solver
PROBLEM 5-1
Thought Question: Explain how a firm might use the divisional WACC approach to avoid
underinvesting in divisions with more risky projects and over-investing in divisions with less
risky projects.
Answer:
Solution Legend
= Value given in proble
PROBLEM 7-1
a.
b.
Solution Legend
= Value given in problem
= Formula/Calculation/Analysis required
= Qualitative analysis or Short answer required
= Goal Seek or Solver cell
= Crystal Ball Input
= Crystal Ball Output
PROBLEM 7-2
Given
Tax rate
Cost of Cap
Help Question 45
Ok, this one is pretty simple. Take the price ($45) times units sold (at this price level) for gross revenue
and then subtract the total variable costs and fixed costs (for this price and units sold) to get profit.
Help Question 56
Take e
Chapter 4
Problems 1-75 (odd problems)
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be installe
Multiple Choice, Question
78
Offshore Company makes 2 different types of boats sail and fishing boats. The company consists of two
different departments, design & engineering, and production. The company has decided to allocate overhead
costs in each of t
Managers Perceptions of
Information System Project Success
DIRK BASTEN
University of Cologne
50969 Cologne, Germany
DOMINIK JOOSTEN
University of Cologne
50969 Cologne, Germany
Abstract
The adequate measurement of information system project
s
Multiple Choice, Question
89
Ceradyne projects its factory rent to be $6,000 in August when 8,600 units are expected to be produced. If
rent is a fixed cost, and if production is expected to drop to 7,000 units in September, what is the expected
cost of r
Determinants of Information Systems and Information Technology Project
Team Success: A Literature Review and a Conceptual Model
Fanta Tesgera Jetu
Ethio Telecom, College of Telecommunications and Information Technology, Ethiopia
ftesgerajetu@yahoo.com
Ren
PROCUREMENT DEPARTMENT
ATTN: BID/PROPOSAL CUSTODIAN
2 MONTGOMERY STREET, 3RD FLOOR
JERSEY CITY, NJ 07302
REQUEST FOR PROPOSALS (RFP)
Issued: June 3, 2013
TITLE:
HOSTED MICROSOFT EXCHANGE E-MAIL AND
ADMINISTRATION SERVICES
NUMBER:
33627
SUBMIT PROPOSALS BE
CHAPTER 6: PROBLEM SOLVING
Problem 1 (15 points)
Suppose you have invested in three stocks: A, B and C. You expect that returns on the
stocks depend on the following two states of the economy, with the probabilities to
happen given below.
State of
Economy
Chapter 11
Problems 1-37 (odd problems)
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be install
Fin 3322 Time Value of Money Homework 1. Your local travel agent is advertising an extravagant global vacation. The package deal requires that you pay $5,000 today, $15,000 one year from today, and a final payment of $25,000 on the day you leave two years
Homework Questions
Lecture 1: Introduction to Corporate Finance
1.1
What are the three types of financial management decisions? For each type of decision,
give an example of a business transaction that would be relevant.
1.2
What goal should always motiva
Chapter 5
Problems 1-27 (odd problems)
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be installe
P
Given
Initial cost of equipment
Project and equipment life
Salvage value of equipment
Working capital requirement
Depreciation method
Depreciation expense
Discount rate
Tax rate
Base case
Enter the given va
book here
Unit sales
Price per unit
Variable c
Problem 9-4: Traditional WACC Valuation
Given
Solution Legend
Debt beta
Levered equity beta
Market Risk Premium
Risk free rate
Borrowing rate (before tax)
Number of common shares
Tax rate
0.20
1.60
5%
7%
8%
2,000
30%
= Value given in problem
= Formula/Cal
Assumptions
Sales growth for years 1-4
Gross profit margin
Operating expense (excluding depreciation) to sales ratio
Current assets to sales ratio
Accruals and Payables to sales ratio
Net working capital to sales ratio
Average depreciable life of PP&E in
Problem 10-28 Using Probability Distributions
Suppose the average return on Asset A is 6.2 percent and the standard deviation is 8.2 percent and the
average return and standard deviation on Asset B are 3.4 percent and 3.0 percent, respectively. Further
as
FIN 620
Long-Term Financial Management
Midterm Examination
6 Points
1. The cost of equity for UMUC Corporation is 10%. If the expected return on the
market is 10% and the risk-free rate is 5%, then the equity beta is _.
A. 0.48
B. 1.00
C. 1.25
D. 1.68
E.