FINANCE 301
REVIEW SHEET FOR EXAM II
Exam II will cover all of Chapters 7 and 8. Study the class notes, chapter material, assigned
problems and homework. The following concepts are intended to highlight the major concepts
we covered.
CHAPTER 7: Interest R
CHAPTER 8
STOCK VALUATION
Answers to Concepts Review and Critical Thinking Questions
1.
The value of any investment depends on the present value of its cash flows; i.e., what investors will
actually receive. The cash flows from a share of stock are the di
CHAPTER 7
INTEREST RATES AND BOND
VALUATION
Solutions to Questions and Problems
NOTE: All end of chapter problems were solved using a spreadsheet. Many problems require
multiple steps. Due to space and readability constraints, when these intermediate step
HOMEWORK 1 SOLUTIONS
MC Kaylor Equipment Rental paid $75 in dividend.
Kaylor Equipment Rental paid $75 in dividends and $511 in interest expense. The addition to retained earnings is $418
and net new equity is $500. The tax rate is 35 percent. Sales are $
FINANCE 301
REVIEW SHEET FOR EXAM I
Exam I will cover all of Chapters 1, 2, 5 and 6. Study the class notes, chapter material and
homework. The following concepts are intended to highlight the major concepts we covered.
CHAPTER 1: Introduction to Corporate
4/13/12
Assignment Print View
Score: 9
1.
out of 10 points (90%)
aw ar d:
0 out of
1 poi nt
The Square Box is cons idering two projects , both of which have an initial cos t of $35,000 and total cas h inflows
of $50,000. The cas h inflows of project A are
Problem #4 Tax % a. Sales Costs Depreciation EBIT Taxes Net Income 35% $ 602,184 $ 391,776 $ 89,100 $ 121,308 $ 42,458 $ 78,850
b. OFC c. Depreciation tax shield
$ 167,950 $ 31,185
EBIT+Depreciation-Taxes Depreciation times the tax rate
Problem #
Chapter 15 Problem #7 Year Coupon Rate Coupons per year Years Ago Selling for Tax Rate Settlement Maturity Face Value Pretax Cost of Debt Aftertax Cost of Debt 30 11% 2 Semi-Annual 7 $ 114 33% 1/1/2000 Subtract your "years ago" from the year above so
Problem #3 in textbook
Price per unit
Variable Cost
Fixed cost
Quanitity
Accuracy ±
$1,750
$190
$7,000,000
90,000
16%
Scenario
Base case
Best case
Worst case
Unit Sales
$90,000
$104,400
$75,600
Unit Price
$1,750
$2,030
$1,470
Unit Variable
Cost
$190
$160
Expected net cash flows Time Project A Project B 0 ($10,000) ($10,000) 1 $5,400 $4,500 2 $3,400 $3,600 3 $4,500 $5,400
Project A
0% Annual discount rate.this Net present value of $3,300.00 investment 5% Annual discount rate.this Net present value of