Week 6: Homework
1
Week 6: Homework
Gwendolyn Parks
Instructor: Prof. Matthew Howard
Park University
Feb. 22, 2014
Week 6: Homework
2
Chapter 11: Problems 11-1, 11-2
P11-1. West Coast Manufacturing Company (WCMC) is executing an initial public offering wi
Week 6 Homework Answers
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
offer price of $25 per share, the underwriter will charge a 7%
Answers to End-of-Chapter Questions
Q5-1. How is preferred stock different from common stock?
A5-1. Common stock usually grants the investor to vote on important corporate decisions. Preferred
stock does not. Preferred shareholders have a higher priority
Week One Discussion
Chapter 1
Q1-1. Why must a financial manager have an integrated understanding of the five basic finance
functions? Why has the risk-management function become more important in recent years? Why is
the corporate governance function con
Answers to End-of-Chapter Questions
Q4-1. What is the relationship between the price of a financial asset and the return that investors require
on that asset, holding other factors constant?
A4-1. Holding an assets cash flows constant, if investors pay a
Q9-1. In capital budgeting analysis, why do we focus on cash flow rather than accounting
profit?
A9-1. Accounting numbers may not accurately reflect when revenues are received or when
payments are made. Net present value focuses on when money is actually
Homework Unit 2 Chapter 3
Chapter 3
P3-1. You have $1,500 to invest today at 7 percent interest compounded annually.
a.
How much will you have accumulated in the account at the end of the following number of
years?
1. Three years
2. Six years
3. Nine year
Week 2: Homework
1
Week 2: Homework
Gwendolyn Parks
Instructor: Prof. Matthew Howard
Park University
Jan. 25, 2014
Week 2: Homework
2
Chapter 3: Problem 3-1, 3-2, 3-4, 3-5, 3-10
P3-1.
You have $1,500 to invest today at 7% interest compounded annually.
a.
Week Six Discussion
Chapter 11
Q11-1. How should a corporation estimate the amount of financing that must be raised externally
during a given year? Once that amount is known, what other decision must be made?
Q11-2. What is the dominant source of capital
Chapter 18 Financial Planning
Answers to Concept Review Questions
1. What is the financial planning process? What is a strategic plan? Describe the roles that financial
managers play with regard to strategic planning.
The financial planning process is the
Answers to End-of-Chapter Questions
Q8-1. Can you name some industries where the payback period is unavoidably long?
A8-1. Payback period is unavoidably long in industries with long-lasting projects, for example,
the oil exploration industry, where it mig
Answers to End-of-Chapter Questions
Q7-1. Based on the charts below, which stock has more systematic risk, and which stock has more
unsystematic risk?
Stock #1
30
20
Stock return
10
0
-10
-20
-30
-30
-20
-10
0
Market return
177
10
20
30
Chapter 7 Risk, Re
Q10-1.
Explain when firms should discount projects using the cost of equity. When should they use the
WACC instead? When should they use neither?
A10-1.
Only firms with no debt in their capital structure should use the cost of equity to discount
project c
The Time Value of Money
Money has a time value because a unit of money received today is worth more than a unit of money to be received
tomorrow.
2.
INTEREST RATES: INTERPRETATION
Interest rates can be interpreted in three ways.
1) Required rates of retu
Chapter 1
P1-1.
A - Calculate the tax disadvantage to organizing a U.S. business today as a
corporation, as compared to a partnership, under the following conditions. Assume
that all earnings will be paid out as cash dividends. Operating income (operating
Homework Unit 7 Chapters 13 and 14
Chapter 13
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 the bond
FI360 Week 7 Discussion
Q13-4. Define the following: term loan, balloon payment, collateral, and stock purchase warrants.
Term Loan- A loan made by an institution to a business, with an initial maturity of more than 1 year,
generally 5 to 12 years.
Balloo
Discounted Cash Flow Applications
2.
NET PRESENT VALUE AND INTERNAL RATE OF RETURN
Capital Budgeting refers to an investment decisionmaking process used by an organization to evaluate
and select long-term investment projects.
Capital Structure is the mix
Pleaseworkandpostinthesubmissionlink/dropboxthefollowingproblems:
Chapter4:Problems41,412
Chapter5:Problems51,54,and59
P 4-1
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 t
2.1
Statistical Concepts and Market Returns
The Nature of Statistics
Statistics refer to the methods used to collect and
analyze data. Statistical methods include descriptive
statistics and statistical inference (inferential statistics).
Descriptive stat
Hypothesis Testing
1.
INTRODUCTION
Statistical inference refers to a process of making
judgments regarding a population on the basis of
information obtained from a sample. Two branches of
Statistical inference include:
1) Hypothesis testing: It involves m
Chapter 1
Q1-8. What are the key provisions of the Sarbanes-Oxley Act of 2002? How has this act
changed the way corporate America conducts business?
Key provision number one for the Sarbanes-Oxley act is that CFOs (chief financial officers)
must vouch for
Sampling and Estimation
2.
Sampling is the process of obtaining a sample from a
population.
Benefits of Sampling:
Sampling saves time and energy because it is
difficult to examine every member of the population.
Sampling saves money; thus, it is more ec
Common Probability Distributions
1.
INTRODUCTION TO COMMON PROBABILITY DISTRIBUTIONS
Probability distribution: A probability distribution
describes the values of a random variable and the
probability associated with these values.
2.
Types of distribution:
Probability Concepts
2.
PROBABILITY, EXPECTED VALUE, AND VARIANCE
Random variable: A variable that has uncertain
outcomes is referred to as random variable e.g. the
return on a risky asset.
Empirical (or statistical) probability: It is a probability
based
FI360 Week 6 Discussion
Q11-1. How should a corporation estimate the amount of financing that must be raised externally during
a given year? Once that amount is known, what other decision must be made?
The company needs to raise enough capital to fund all
FI360 Week 3 Discussion
4-10 (and 11) Under the expectations theory, what does the slope of the yield curve reveal about the
future path of interest rates?
When looking through the chapter on page 141 the book is very clear about this topic. The expectati
Good Afternoon class,
Sorry my posting is so late but I am still adjusting to being a dad now and time management is quite a
bit harder. Anyway here is my posting.
Q3-3. You are considering two investment plans. Plan A requires you to save $100 per month
Week Seven Discussion
Chapter 13
Q13-1. Comment on the following proposition: The use of floating-rate debt eliminates interest rate
risk (the risk that interest payment amounts will change in the future) for both the borrower and the
lender.
Q13-2. What
Aaron Wilson
Homework
336897
Unit 7
Chapter 13
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 the bond
Aaron Wilson
336897
Unit 6 Homework
Chapter 11
P11 1
a. Calculate the initial return earned by investors who are allocated shares in the IPO.
$ 32 - $ 25 = $ 7 (25% return at first day closing)
b. How much will WCMC receive from this offering?
IPO = $ 25
Aaron Wilson
FI360DLC
Week 2 Homework
Chapter 3: Problem 3-1
You have $1,500 to invest today at 7% interest compounded annually.
a. How much will you have accumulated in the account at the end of the following number
of years?
3 years
FV3 = PV * (1.07)3
F
Aaron L Wilson
336897
Unit 4 Homework
Problem 6-1
a. Calculate your total dollar returns
1,000 shares
$1.25 dividends
$4 increase per share
1,000 x (1.25 + 4) = $5,250
b. Calculate your total percentage return
$49 current price
$1.25 dividend
$45 purchase
Aaron Wilson
FI360DLC
Week 1 Homework
Chapter 1: Problem 1-1
A firm organized as a corporation, would be taxed at the corporate level, only being taxed once
on the operating income.
$500,000 x (1 0.35)
$500,00 x 0.65= $325,000 available amount for distrib