FI360 Week 6 Homework and Answers
Investment Banking and the Public Sale of Securities
P11-1. West Coast Manufacturing Company (WCMC) is executing an initial public offering with the following
characteristics. The company will sell 10 million shares at an
FI360 Week 4 Homework & Answers
Understanding Returns
P6-1. You purchase 1,000 shares of Spears Grinders Inc. stock for $45 per share. A year later, the stock
pays a dividend of $1.25 per share and it sells for $49.
a. Calculate your total dollar return.
RATIO ANALYSIS Data for Barry Computer Co. and its industry averages follow.
a. Calculate the indicated ratios for Barry.
b. Construct the DuPont equation for both Barry and the industry.
c. Outline Barry’s strengths and weaknesses as revealed by your ana
LOAN AMORTIZATION AND EAR You want to buy a car, and a local bank will lend you
$20,000. The loan will be fully amortized over 5 years (60 months), and the nominal inter—
est rate will be 12% with interest paid monthly. What will be the montth loan paymen
PORTFOLIO REQUIRED RETURN Suppose yOu are the money manager of a $4 million
investment fund. The fund consists of four stocks with the following investments and betas:
Stock Investment Beta
A S 400,000 1.50
B 600,000 (0.50)
C 1,000,000 1.25
D 2,000,000
CONSTANT GROWTH VALUATION Harrison Clothiers’ stock currently sells for $20.00
a share. It just paid a dividend of $1.00 a share (that is, DU 2 $1.00) The dividend is
expected to grow at a constant rate of 6% a year. What stock price is expected ‘1 year f
Q1. Suppose you are buying your first condo for $200,000,
and you will make a $40,000 down payment. You have
arranged to finance the remainder with a 30-year,
monthly payment, amortized mortgage at a 4.5%
nominal interest rate, with the first payment due
Annotated Bibliography (Continued)
Sports, Nancy. "Armour: Lies of Lance Armstrong Keep Coming." USA Today. Gannett,
9 Mar. 2015. Web. 12 Oct. 2015.
In this article it explains the lies Lance Armstrong told to try and protect his own
appearance and he tri
Unit 1 Quiz Review
Question 1
One of the tasks for financial managers when identifying projects that increase firm value is to
identify those projects where
a. benefits are at least equal to the project's costs.
b. taking the project will increase the boo
FI360 Week 5 Homework Problems and Answers
Payback Methods
P8-1. Suppose that a 30-year U.S. Treasury bond offers a 4% coupon rate, paid semiannually. The
market price of the bond is $1,000, equal to its par value.
a. What is the payback period for this b
FI360 Week 7 Home Problems and Answers
Corporate Bonds
P13-1. The initial proceeds per bond, the size of the issue, the initial maturity of the bond, and the years
remaining to maturity are shown in the following table for a number of bonds. In each case
Week 3 Homework Solutions
Valuation Basics
P4-1. A best-selling author decides to cash in on her latest novel by selling the rights to the books
royalties for the next six years to an investor. Royalty payments arrive once per year, starting one
year from