12. To construct the cash flow identity, we will begin cash flow from assets. Cash flow from assets is:
Cash flow from assets = OCF Change in NWC Net capital spending
So, the operating cash flow is:
O
CONFIRMING PAGES
C HAPTER
2
Financial Statements
and Cash Flow
O PENING CASE
I
n November 2009, mortgage giant Fannie Mae announced that it was reviewing a potential writeoff of $5.2 billion in low-in
Score: 60
1.
out of 60 points (100%)
award:
10 out of
10.00
points
Use the following information for Taco Swell, Inc., (assume the tax rate is 30 percent):
Sales
Depreciation
Cost of goods sold
Other
Score: 60
1.
out of 60 points (100%)
award:
10 out of
10.00
points
What is the future value of $3,118 invested for 10 years at 6.4 percent compounded annually?
$4,272.41
$5,798.19
$4,251.91
$10,398.41
Score: 50
1.
out of 50 points (100%)
award:
10 out of
10.00
points
The JacksonTimberlake Wardrobe Co. just paid a dividend of $1.25 per share on its stock. The dividends
are expected to grow at a cons
Score: 60
1.
out of 60 points (100%)
award:
10 out of
10.00
points
Titan Mining Corporation has 14 million shares of common stock outstanding, 900,000 shares of 9 percent preferred
stock outstanding a
Score: 50
1.
out of 50 points (100%)
award:
10 out of
10.00
points
You are looking at an investment that has an effective annual rate of 13.8 percent.
What is the effective semiannual return? (Do not
Score: 50
1.
out of 50 points (100%)
award:
10 out of
10.00
points
Fill in the missing numbers for the following income statement. (Input all amounts as positive values.)
Sales
Costs
Depreciation
$
67
Score: 50
out of 50 points (100%)
1.
award:
10 out of
10.00
points
Even though most corporate bonds in the United States make coupon payments semiannually, bonds
issued elsewhere often have annual cou
Score: 50
1.
out of 50 points (100%)
award:
10 out of
10.00
points
Fill in the missing numbers for the following income statement. (Input all amounts as positive values.)
Sales
Costs
Depreciation
$
67
Score: 120
1.
out of 120 points (100%)
award:
10 out of
10.00
points
A large U.S. company has 500,000 in excess cash from its foreign operations. The company would like to
exchange these funds for U.S
Score: 60
1.
out of 60 points (100%)
award:
10 out of
10.00
points
A portfolio is invested 15 percent in Stock G, 60 percent in Stock J, and 25 percent in Stock K. The
expected returns on these stocks
Score: 40
1.
out of 42 points (95.24%)
award:
2 out of
2.00 points
A business owned by a solitary individual who has unlimited liability for its debt is called a:
rev: 09_05_2012
corporation.
sole pro
Derivatives Soluion: Application for
Financial Futures
Case Solution for 'Peoples Federal Savings Bank'
1. Should Peoples Federal Savings have hedged its September 1 savings
certificate rollover?
Yes.
Professor Vasudevan
Finance 485
SWAP QUESTIONS
1)DESIGNING INTEREST RATE SWAPS
Companies A and B have been offered the following rates per annum on a $20 million
five year loan:
Fixed Rate
12%
13.4%
C
Swaps
Chapter 7
Fundamentals of Futures and Options Markets, 5th Edition, Copyright John C. Hull 2004
7.1
Nature of Swaps
A swap is an agreement to
exchange cash flows at specified
future times accord
Mechanics of Futures
Markets
Chapter 2
Fundamentals of Futures and Options Markets, 5th Edition, Copyright John C. Hull 2004
2.1
Futures Contracts
Available
on a wide range of underlyings
Exchange t
Professor Vasudevan
Finance 485
Spring 2009
SWAP PROBLEM SET
1. Given the following interest-rate swap:
Fixed-rate payer pays half of the YTM on a T-note of 6.5%.
Floating-rate payer pays the LIBOR
Score: 50
out of 50 points (100%)
1.
award:
10 out of
10.00
points
The following facts apply to a convertible bond making semiannual payments:
Conversion price
Coupon rate
Par value
Yield on nonconver
UNIVERSITY OF MASSACHUSETTS DARTMOUTH
Charlton College of Business
Department of Accounting and Finance
Fall 2014
Instructor: Gopala Vasudevan
Email:[email protected]
Office:
317 Charlton Building
G.Vasudevan
CAPITAL BUDGETING QUESTIONS
1. The internal rate of return is that discount rate which equates the present value of the cash outflows (or costs)
with the present value of the cash inflows.
Keiper, Inc., is considering a new three-year expansion project that requires an initial
fixed asset investment of $2.55 million. The fixed asset will be depreciated straight-line
to zero over its thr
Professor Vasudevan
Finance 650
Capital Budgeting Problems
i
.
The Seattle Corporation has been presented with an investment
opportunity which will yield cash flows of $30,000 per year in
Years 1 thro
Professor Vasudevan
Fin 650
MAKING CAPITAL INVESTMENT DECISIONS.
i
.
MacDonald Publishing is considering entering a new line of
business.
In analyzing the potential business, their financial
staff has
SOLVING STOCK VALUATION PROBLEMS ON CONNECT
The JacksonTimberlake Wardrobe Co. just paid a dividend of $1.60 per share on its stock. The
dividends are expected to grow at a constant rate of 6 percent
New project NPV
i
.
Answer: b
MacDonald Publishing is considering entering a new line of business. In
analyzing the potential business, their financial staff has accumulated
the following information:
Professor Gopala Vasudevan
Finance 650
STOCK VALUATION
1)
a.
b.
c.
d.
e.
2)
a.
b.
c.
d.
e.
3)
a.
b.
c.
d.
e.
4).
Angelinas made two announcements concerning their common stock today. First, the
compan
Income statement
Other expenses
Net sales
Cost of goods sold
Depreciation
Total
Earnings before
interest and tax
Interest paid
Total
Taxable income
Taxes
0.30
NET INCOME
Dividends
Addition to retained
1) oSuppose a stock currently pays a dividend of $1.10, which is expected to grow at 40% per year for the next five y
oWhat will the dividend be in five years?
Here:
PV
N
I
FV
-1.1
5
0.4
$5.92
o2) How