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:
OCF = EBIT + Depreciation Taxes
OCF = $111,866 + 54,576
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 expenses
Interest
Cash
Accounts receivable
Short-term n
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-income housing tax credits. A so-called write-off occurs
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 round intermediate calculations and round your final
an
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
$10,782.23
FV = $3,118 1.06410 = $5,798.19
2.
award:
1
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
$
673,900
428,800
101,400
EBIT
Taxes (35%)
$ 143,700
50,295
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 constant rate of 5 percent per year indefinitely. Investors
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 coupon payments. Suppose a German company issues a bond wi
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 traded
Specifications need to be defined:
What can be d
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
Notional principal is $10M
Effective dates are 3/23 a
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 much would an investor have to set aside today in orde
Professor Vasudevan
Fin 650
i
.
Today, Bruce and Brenda each have $150,000 in an investment account. No other
contributions will be made to their investment accounts. Both have the same
goal: They each want their account to reach $1 million, at which time
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 proprietorship.
general partnership.
limited partnership.
Hedging Strategies Using
Futures
Chapter 3
Fundamentals of Futures and Options Markets, 5th Edition, Copyright John C. Hull 2004
3.1
Long & Short Hedges
A
long futures hedge is appropriate when
you know you will purchase an asset in
the future and want to
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 according to certain
specified rules
Fundamentals of Futures
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%
Company A
Company B
Floating Rate
Libor +0.1
Libor +0.6
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. The reasons are explained as below:
Peoples had accumu
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 are 10 percent, 19 percent, and 22 percent, respective
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. dollars. In which of the following markets can this e
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
$
673,900
428,800
101,400
EBIT
Taxes (35%)
$ 143,700
50,295
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 and 220,000 ten percent semiannual bonds outstanding, pa
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 nonconvertible debentures of same quality
Maturity
Market price
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
(508) 999-8426 (office)
Course: FIN 650 Financial Deci
UNIVERSITY OF MASSACHUSETTS DARTMOUTH
Charlton College of Business
Department of Accounting and Finance
Fall 2016
Instructor: Gopala Vasudevan
Email:[email protected]
Office:
317 Charlton Building
(508) 999-8426 (office)
Course: FIN 650 Financial Deci
MIDLAND ENERGY RESOURCES,
INC.: COST OF CAPITAL
SYED SAJJAD ALI SHAH
CHAUDHRY TAIMUR
HASNAIN NAWAZ
OVERVIEW
Global Energy
Operations (Oil and Gas exploration and production, Refining and Marketing and Petro Chemicals)
Operating revenue 248.5 billion, a
Chapter7
1. a. The payback period is the time that it takes for the cumulative undiscounted cash inflows to
equaltheinitialinvestment.
ProjectA:
CumulativecashflowsYear1=$6,000
=$6,000
CumulativecashflowsYear2=$6,000+5,000
=$11,000
So, the payback period
Chapter 5
2.
The price of any bond is the PV of the interest payment, plus the PV of the par value. Notice this
problem assumes a semiannual coupon. The price of the bond at each YTM will be:
a . P = $35(cfw_1 [1/(1 + .035)]60 / .035) + $1,000[1 / (1 + .
Chapter 6
1.
The constant dividend growth model is:
Pt = Dt (1 + g) / (R g)
So, the price of the stock today is:
P0 = D0 (1 + g) / (R g) = $2.15 (1.04) / (.12 .04) = $27.95
The dividend at year 4 is the dividend today times the FVIF for the growth rate in