Chapter 8 Problems
1. The Yurdone Corporation wants to set up a private cemetery business. According
to the CFO, Barry M. Deep, business is looking up. As a result, the cemetery
project will provide a net cash inflow of $97,000 for the firm during the fir

Chapter 9 Problems
1.
An asset used in a four-year project falls in the five-year MACRS class for tax
purposes. The asset has an acquisition cost of $7,900,000 and will be sold for $1,400,000
at the end of the project. If the tax rate is 35%, what is the

Chapter 8 Problems
1. The Yurdone Corporation wants to set up a private cemetery business. According
to the CFO, Barry M. Deep, business is looking up. As a result, the cemetery
project will provide a net cash inflow of $97,000 for the firm during the fir

Chapter 7 problems
1. Suppose a company will pay a $3.20 annual dividend on its common stock over the
coming year, and management plans on raising this dividend by 6 percent per year
indefinitely. If the required return on this stock is 12%, what is the c

Chapter 7 problems
1. Suppose a company will pay a $3.20 annual dividend on its common stock over the
coming year, and management plans on raising this dividend by 6 percent per year
indefinitely. If the required return on this stock is 12%, what is the c

Practice Exam 3
Weinstock and Wellman
1.
Profitable Ventures, Inc. has the following capital structure. The common
stock is valued at $40,300,000. The market return is 13%, beta for the stock is
1.09, and short term treasury bonds are paying interest of 3

Practice Final Solutions
1 Common Stock Market Value:
Preferred Stock Market Value:
Debt Market Value:
Total Firm Value
40300000 -Given in problem
20000000 =$20 per share * 1 million shares
30960000 =1032/1000*30 million face value
91260000
Common Stock P

After - tax Salvage Value SalePrice - (SalePrice - BookValue) * T Sale Price - (Capital Gain * T)
Capital Gain Sale Price - Book Value
Book Value Purchase Price - Accumulated Depreciation
Div n Div 0 * (1 g ) n
P0
FCFn FCF0 * (1 g FCF ) n
FCFn * (1 g FCF

Chapter 9 Problems
1.
An asset used in a four-year project falls in the five-year MACRS class for tax purposes.
The asset has an acquisition cost of $7,900,000 and will be sold for $1,400,000 at the end of the
project. If the tax rate is 35%, what is the

Chapter 11 problems
1. The Scarlet Knight Armor Company, which caters to organizations that do reenactments
of Middle Age battles, currently sells for $35.00 per share. It will give a quarterly
dividend of $.70 per share at the end of every quarter for on

Ch. 12 problems
1. Suppose you observe the following situations:
Security
ABC
Corp.
DEF Inc.
Beta Expected Return
1.35
13.2%
0.80
10.1%
Assume these securities are correctly priced. Based on the CAPM, what is the expected
return on the market? What is the

Chapter 6 problems
1. One More Time Software has 9.2% coupon bonds on the market with 9 years to
maturity. The bonds make semiannual payments and currently sell for 106.8% of
par. What is the current yield on the bonds? The YTM?
2. Seether Co. wants to is

Case Solutions
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
9th edition
CHAPTER 1
THE McGEE CAKE COMPANY
1.
The advantages to a LLC are: 1) Reduction of personal liability. A sole proprietor has unlimited
liability, which can include th

FV PV (1 r )
ln FV PV
t
ln(1 R)
t
PV(perpetuity)
C
r
FV
r
PV
PV(growing perpetuity)
1
n
1
C
r-g
1 r n 1
FV ( Annuity ) C *
r
1
1 g n
1
1
n
1 r
1 r
PV ( Annuity ) C *
PV (Growing Annuity ) C *
r
rg
(1 r) N (1 g ) N
FV(Growing Annu

Ch. 13 problems
1. Given the following information, calculate the WACC for Wharton Electronics. The
tax rate is 35%.
Debt: 240,000 7.5% coupon bonds outstanding, 20 years to maturity, selling for 94% of
par; the bonds have a $1,000 par value each and make

Chapter 11 problems
1. The Scarlet Knight Armor Company, which caters to organizations that do reenactments
of Middle Age battles, currently sells for $35.00 per share. It will give a quarterly
dividend of $.70 per share at the end of every quarter for on

Ch. 10 Problems
1. In the year just ended, the Madison Badger Memorabilia Company, Inc., had sales of
$465,000. It expects sales to grow by 10% in the coming year, by 8% the next year, and
by 6% per year perpetually after that. The company has neither cap

1
ANS: C from Chapters 1-2
2
ANS: A from Chapters 1-2
(A) is not a true statement because commercial paper is traded in the money
market. The other three statements are all correct.
3
ANS: A from Chapters 1-2
Unless the company is a party to the transacti

BUSFIN620
Spring 2012
Course Syllabus
M or W 11:30a-1:18p 105 Schoenbaum
Professor: Jay Wellman ([email protected])
Office: 850 Fisher Hall Phone: 292-4586
Office hours: M, W 4-5p or by appointment
Teaching Assistant: Adam Gale ([email protected]