1.
Arredondo, Inc., has current assets of $2,320, net fixed assets of $10,800, current liabilities of $1,425, and longterm debt of $4,130. Requirement 1: What is the value of the shareholders equity account for this firm? (Do not include the dollar sign (
1.
award:
1 out of 1 point
Assume the total cost of a college education will be $385,000 when your child enters college in 15 years. You presently have $63,000 to invest.
Required: What annual rate of interest must you earn on your investment to cover the
.
award:
1 out of 1 point
Crabtree, Inc., had additions to retained earnings for the year just ended of $626,000. The firm paid out $125,000 in cash dividends, and it has ending total equity of $7.21 million.
Requirement 1: If the company currently has 58
1.
The Timberlake-Jackson Wardrobe Co. has 10.2 percent coupon bonds on the market with eleven years left to maturity. The bonds make annual payments.
Required: If the bond currently sells for $1,165.00, what is its YTM? (Do not include the percent sign (
1.
Patience, Inc., just paid a dividend of $2.90 per share on its stock. The dividends are expected to grow at a constant rate of 4.75 percent per year, indefinitely. Assume investors require an 9 percent return on this stock.
Requirement 1: What is the c
1.
Kings of Leon, Inc., has a book value of equity of $64,500. Long-term debt is $57,500. Net working capital, other than cash, is $22,300. Fixed assets are $92,100 and current liabilities are $7,300.
Requirement 1: How much cash does the company have? (D
1.
You have $36,300 on deposit with no outstanding checks or uncleared deposits. One day you write a check for $3,800 and then deposit a check for $7,200.
Required: What are your disbursement, collection, and net floats? (Do not include the dollar signs (
1.
Requirement 1: Fill in the missing numbers in the following income statement (Do not include the dollar signs ($):
Sales Costs Depreciation EBIT Taxes (35%) Net income
$
644,100 345,600 96,300
$ $
Requirement 2: Calculate the OCF. (Do not include the d
1.
Find the EAR in each of the following cases (Do not include the percent signs (%). Use 365 days in a year. Round your answers to 2 decimal places (e.g., 32.16):
Stated Rate (APR) 11.7 % 5 14.2 5 17.7 5 13.7 5
Number of Times Compounded Quarterly Monthl
1.
Offshore Drilling Products, Inc., imposes a payback cutoff of three years for its international investment projects. Assume the company has the following two projects available. Year 0 1 2 3 4 Cash Flow A $ 64,000 26,500 34,400 28,500 14,500 Cash Flow
1.
Suppose a stock had an initial price of $95 per share, paid a dividend of $2.00 per share during the year, and had an ending share price of $114.
Requirement 1: Compute the percentage total return. (Do not include the percent sign (%). Round your answe
1.
You own a portfolio that has $2,700 invested in Stock A and $3,800 invested in Stock B. Assume the expected returns on these stocks are 12 percent and 18 percent, respectively.
Required: What is the expected return on the portfolio? (Do not include the
FBE 529: Financial
Analysis & Valuation
Lecture 8 Enterprise Valuation in the
Context of Leveraged Buyouts (LBOs)
LBOs Overview
In a leveraged buyout, a company is acquired by a specialized
investment firm using a relatively small portion of equity and a
FBE 529: Financial
Analysis & Valuation
Lecture 4
Free Cash Flows
Introduction
We have seen that we will focus on valuing the operations of
companies
Once we have valued their operations, we can estimate the value of
their equity
Moreover, valuing the
FBE 529: Financial
Analysis & Valuation
Lecture 6
Estimating a Firms Cost of Capital Continuation
Cost of Equity (re)
The cost of equity is the rate of return investors expect from
investing in the firms stock.
Recall that equity holders are the residua
FBE 529: Financial
Analysis & Valuation
Lecture 10 - Continuation
Relative Valuation Using Market
Comparables
Motivation
The right comparable companies need to have a similar
business risk (risk of the assets) as the company being valued
One important f
FBE 529: Financial
Analysis & Valuation
Lecture 9 - APV Approaches
APV Approaches
We have seen so far that in many examples we cannot
use the WACC
We have seen how to estimate enterprise value using an
APV approach that breaks down this value in tow par
FBE 529: Financial
Analysis & Valuation
Lecture 10
Relative Valuation Using Market
Comparables
Introduction
Relative valuation using market comparables: technique
used to value businesses and business units.
Assumes similar assets should sell at similar
FBE 529: Financial
Analysis & Valuation
Lecture 11
Relative Valuation in the Context of
IPOs
Relative Valuation for Initial
Public Offerings
The market comparables approach plays an important
role in the pricing of IPOs.
Most firms conducting initial pu
1.
Use the information below to answer the following questions. U.S. $ EQUIVALENT 0.3053 1.3166 0.0761 0.8847 0.001738 0.6619 0.5752 CURRENCY PER U.S. $ 3.3707 0.7595 13.1406 1.1326 575.37 1.5108 1.7385
Poland Zloty Euro Mexican Peso Switzerland Franc Chi
FBE 529: Financial
Analysis & Valuation
Lecture 6
Estimating a Firms Cost of Capital
Firms Cost of Capital
We have seen how to measure and forecast firms free cash
flows.
The discounted value of these cash flows is the enterprise
value i.e., the value o
FBE 529: Financial
Analysis & Valuation
Lecture 3
Value Drivers - Continuation
Value Drivers
We have seen that the key to value creation is having high ROIC and being
able to grow, without compromising too much the ROIC
So being able to predict and unders
FBE 529: Financial
Analysis & Valuation
Lecture 5 Forecasting Financial
Performance
Forecasting Firms Cash Flows
Three key steps:
(1) Using historical financial statements, figure out how to compute firms
free cash flows from information on income stateme
FBE 529: Financial
Analysis & Valuation
Lecture 2
Fundamental Analysis Intrinsic Value
Fundamental (Intrinsic)
Value
What is the fundamental value of a company ?
CF1
CF2
DCF CF0
.
2
1 r1 (1 r2 )
where the CF terms represent expected future cash flows
an
FBE 529: Financial
Analysis & Valuation
Lecture 5 Forecasting Financial
Performance - Continuation
Forecasting Financial Performance
As we have seen last time, there are two key components to this analysis:
(a) Analyzing the big picture of companies opera
FBE 529: Financial
Analysis & Valuation
Lecture 3
Value Drivers
Value Creation
We have seen that the intrinsic value of a company is given by the
discounted cash flows
This tells us how to compute the value of a company, but does not gives us
a good econo
FBE 529: Financial
Analysis & Valuation
Lecture 4 - Continuation
Project Cash Flows & Statement of Cash
Flows
Lecture Agenda
Last time, we learned about firm free cash flow, and discussed
how to compute it by adjusting information from income
statements
FBE 529: Financial
Analysis & Valuation
Prof. Daniel Carvalho
Spring 2014
Agenda
Why Study Valuation?
Reviewing the syllabus, course expectations, and course goals.
Why learning about the tools of Financial Analysis is
important.
Why Study Valuation?
M
2. McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $820 per set and hav
$155,000 for a marketing study that determined the company will sell 21,000 sets per year for seven ye
lose sales of 4,000 sets of its high-priced c