1. Uneven dividend growth model problem
You want to value Maxima Machinery stock. You expect the firm to have a
growth rate of 12% for the next two years, 9% for the succeeding two years, after
which the firms growth will be a constant 4.5% per year. Maxi
Time Value of Money Problems
1. If a father wants to have $100,000 to send a child to college, how much must he
invest annually for 18 years if he earns 9% on his funds?
N: 18
PV: 0
FV: 100,000
I: 9%
Solve for PMT = $2,421.22
2. Year Return
1998
$50
1999
Name:
Section:
Professor:
Ratio and Industry Analysis Report: SBUX
Industry Analysis
Starbucks Corporation (SBUX) operates primarily in the Specialty Eateries industry (SIC
code 58120000) while also competing in the Nonalcoholic Beverage Manufacturing and
This guide will show you how to use the regression tool in Excel for part 3 of the BMGT340
finance project.
Step 1
Go to the sheet that contains the data you want to perform a regression analysis on (in the
screenshot below: Regression Data).
Then, go to
0
-100
cf
1
10
2
60
3
80
WACC
10.00%
$118.78 =PV of cash inflow
$18.78 to get NPV, must subtract cash outflow at time 0
0
-100
cf
1
70
2
50
3
20
WACC
10.00%
$119.98 =PV of cash inflow
$19.98 to get NPV, must subtract cash outflow at time 0
18.13% IRR for
Homework Problems and Suggested Practice Problems
Problems and Questions at the end of each chapter
Spring 2013
BMGT 340
Each homework assignment is worth 12 points
Chapter
Homework
2
3
5
6
7
8
12
13
9
10
14
16
5,6,8,9,14,21 (HW1)
2,5,8,10,12,29 (HW2)
3,6
Extra Ch. 12 slides
Return on Countrywide stock
If you bought Countrywide stock at
$13.64 in 2003 and sold when in
peaked in January 2007 at $45, what
was your annualized return?
If you held till July (4.5 years) and sold
at $28.17 what was your return.
I
Using Excel to solve Time Value of Money Problems
Uneven Cash Flow
0
0
PV =
NPV =
1
100
2
300
3
300
4
-50
1
100
2
300
3
300
4
-50
$530.09
$530.09
Internal Rate of Return
0
-450
IRR =
NPV =
18.87%
$80.09
You are investing $100/year for 3 years at 10%. What
Addendum to CHAPTER 7
BONDS AND THEIR
VALUATION
- a bearer bond illustration
Key Features of Bonds - LT contract borrower agrees to make payments of
interest & principal on specific dates to
holders of bonds
Bearer bond illustration & valuation
1
What is
Efficient Frontier and Portfolio
Construction
Professor Susan White
Two Asset PORTFOLIO
Companies:
Probability
0.1
0.2
0.4
0.2
0.1
Expected return
Hi Tech and Collections
r
Hi Tech
-0.22
-0.02
0.2
0.35
0.5
0.174
0.2
Collections
0.28
0.147
0
-0.1
-0.2
0.01
DuPont Analysis
Professor Susan White
Return on Equity
ROE=
NetProfitability
ROE=
ROE
AssetEfficiency
x
Leverage
NetIncome
ShareholdersEquity
Netincome
NetIncome
= NetProfitMargin
/Sales
Equity
x
x
Sales/
TotalAssetTurnover
Assets
x
Assets/
EquityMultipli
Financial Statement and Ratio Analysis
25 points
Go to the income statement and balance sheet for the company that you are doing
the for the individual project. Calculate the DuPont ratio for the most recent year long
form, in other words, calculate profi
Ch. 12 Risk and Return Video Problems
Countrywides stock price in January 2003 was $13.64. It peaked at $45 in February
2007 and in July 2007, its price was $28.17. The holding period returns annualized, if
held for years from 2003 to 2007:
PV = -13.64
FV
Consider the cash flows presented in the table below. What is the value of
the cash flows in year 5?
Rate
15% (Same as .15)
Year
NPER
1
2
3
4
5
Cash Flow
Future Value
4
1000
$1,749.01
3
3000
$4,562.63
2
5000
$6,612.50
1
7000
$8,050.00
0
9000
$9,000.00
For
You are going to borrow $250,000 to buy a house. What will your
monthly payment be if the interest rate is .58% per month and you
borrow the money for 30 years?
PV =
NPER =
RATE =
250,000
360 (30 years * 12 months per year)
0.58% (Same as .0058)
Monthly P
What is the present value of $50,000 per year for 15 years if the interest rate
is 7%?
PMT =
RATE =
NPER =
50,000
7% (Same as .07)
15
Present Value =
$455,395.70
Formula:
=-PV(B4,B5,B3)
Note: The negative sign in the formula makes the result positive. You
Chapter 6
Non-annual Compounding
Plaza Gold
Customers have 4 months to pay. The firm
borrows at 18%, compounded monthly.
What nominal rate is equivalent to a 4
month (3 times a year) compounding
period?
Plaza Gold Solution
18% compounded monthly:
Eff(18,1
You have $10,000 to invest. You will need the money in 5 years and
you expect to earn 8% per year. How much will you have in 5
years.
What are you looking for?
PV =
NPER =
RATE =
Use the FV formula:
FV(rate,nper,pmt,pv)
Compute
FV =
10,000
5
8% (Same as .
Chapter 2 Thoughts
What you need to know from your
accounting classes
When I say inventory, you say.
When I say cost of goods sold, you say
When I say depreciation, you say
Income Statement
Balance Sheet
Cash Flow Statement
Basic Income Statement
Re
Chapter #9
Controlling Information
Systems:
Business Process and
Application Controls
Business Process and
Application Controls
Can be applied across many types of business
processes
To ensure that an information system captures only:
Legitimate (i.e., va
#8
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Ch. 13 Risk and Return Video Problems
Countrywides stock price in January 2003 was $13.64. It peaked at $45 in February
2007 and in July 2007, its price was $28.17. The holding period returns annualized, if
held for years from 2003 to 2007:
PV = -13.64
FV
You have just bought a security that pays $500 every six months. The security lasts for 10 years.
Another security of equal risk also has a maturity of 10 years, and pays 10 percent compounded
monthly (that is, the nominal rate is 10 percent). What should