1
Pace University
Lubin School of Business
Spring, 2015
Fin 320 Corporate Finance
Monday/Wednesday, 10:35AM 12:00
Instructor: Dr. Peter M. Sperling
E-mail: psperling@pace.edu
Office Hours: M/W, 10-10:30AM, Room W483, or by appointment
Course Description:
FORMULA SHEET for Chapter 2&3
Balance Sheet Identity
Total Assets = Total Liabilities + Stockholders Equity
Cash Flow Identity
The cash flow identity is similar to the balance sheet identity:
Cash Flow from Assets = Cash Flow to Creditors + Cash Flow to S
LECTURE 4- Review Problems
1. Consider an investment with an initial cost of $20,000 and is that expected to last for 5
years. The expected cash flows in years 1 and 2 are $5,000, in years 3 and 4 are $5,500
and in year 5 is $1,000. The total cash inflow
PACE UNIVERSITY
LUBIN SCHOOL OF BUSINESS
FIN 320 -40400 CORPORATE FINANCE INSTRUCTOR: Prof. Mahmoud Montasser
Course Syllabus: SUMMER I 2016
METHOD OF INSTRUCTION-Online/Remote
Instructor Information
Mahmoud Montasser
Office Location- Room 483 NY Pace Pla
Lecture 3
Discounted Cash Flow Valuation
4.1 The One-Period Case
If
you were to invest $10,000 at 5-percent
interest for one year, your investment would
grow to $10,500.
$500 would be interest ($10,000 .05)
$10,000 is the principal repayment ($10,000
1)
Lecture 4
Net Present Value and Other Investment Rules
6.1 Why Use Net Present
Value?
Accepting
positive NPV projects
benefits shareholders.
NPV uses cash flows
NPV uses all the cash flows of the
project
NPV discounts the cash flows
properly
Reinvestment
RATIO ANALYSIS PROBLEM
1) In 2008, how many days on average did it take Bayside to sell its inventory?
2) What is the debt-equity ratio for 2008?
3) What is the times interest earned ratio for 2008?
4) What is the equity multiplier for 2008?
5) What is th
LECTURE 4- Review Problems
1. Consider an investment with an initial cost of $20,000 and is that expected to last for 5
years. The expected cash flows in years 1 and 2 are $5,000, in years 3 and 4 are $5,500
and in year 5 is $1,000. The total cash inflow
FIN$320$
Corporate(Finance(
Spring 2016
Pace University
Lubin School of Business
Department of Finance & Economics
Instructor: Dr. Burcin Col
Office: W-493
E-mail: bcol@pace.edu
Time: Tuesday 6:10 pm9:00 pm
Office hours: Tuesday 3:30 pm6:00 pm & Thursday
FIN 320 Final Review Packet
Lecture 4
Accepting positive NPV projects benefits shareholders as NPV uses all cash flows of the
project and discounts the cash flows properly
Reinvestment Assumption: NPV rule assumes that all cash flows can be reinvested a
Lecture 6 Review Questions
1. The use of debt is called:
A. operating leverage.
B. production leverage.
C. financial leverage.
D. total asset turnover risk.
E. business risk.
2. Using the CAPM to calculate the cost of capital for a risky project assumes t
Review Problems for Stock Valuation
FIN320
Prof. Col
1.
Denver Shoppes will pay an annual dividend of $1.46 a share next
year with future dividends increasing by 4.2 percent annually.
What is the market rate of return if the stock is currently selling
for
Col, FIN320
1) What is the change in the net working capital from 2007 to 2008?
2) What is the amount of the non-cash expenses for 2008?
3) What is the amount of the net capital spending for 2008?
4) What is the operating cash flow for 2008?
1
Col, FIN320
Lecture 2
Financial Statements and Cash Flow
2.1 The Balance Sheet
An accountants snapshot of the firms
accounting value at a specific point in time
The Balance Sheet Identity is:
Assets Liabilities + Stockholders Equity
Balance Sheet Model of the
Firm
T
Lecture 1
Introduction to
Corporate Finance
What is corporate
finance?
Corporate finance is a specific area of
finance that analyzes the financial
decisions of corporations.
1.1 What is Corporate
Finance?
Corporate Finance addresses the
following three qu
Prof. Col
FIN 320
HOMEWORK I
1) Your company needs to borrow $5,600 to buy a car. The terms of the loan call for
monthly payments for four years at a 5.9% rate of interest. What is the amount of
each payment?
2) Winston Enterprises would like to buy some
Introduction to Corporate Finance
What is corporate finance?
Corporate finance is a specific area of finance that analyzes the financial decisions of
corporations.
Corporate Finance addresses the following three questions:
1. What long-term investments sh
Review Problems for Stock Valuation
1.
FIN320
Prof. Col
Denver Shoppes will pay an annual dividend of $1.46 a share next year
with future dividends increasing by 4.2 percent annually. What is the market
rate of return if the stock is currently selling for
How to Value Bonds and Stocks
5.1 Definition of a Bond
A bond is a legally binding agreement between a borrower and a lender that specifies the:
Coupon rate
Coupon payment
Par (face) value
Maturity Date
The yield to maturity is the required market interes
Discounted Cash Flow Valuation
The One-Period Case
If you were to invest $10,000 at 5-percent interest for one year, your investment would grow to
$10,500.
$500 would be interest ($10,000 .05)
$10,000 is the principal repayment ($10,000 1)
$10,500 is the
Financial Statements and Cash Flow
2.1 The Balance Sheet
A a ou ta ts s apshot of the fi
s a ou ti g alue at a spe ifi poi t i ti e
The Balance Sheet Identity is:
Assets Lia ilities + to kholde s E uit
The left-hand side of the balance sheet lists the a
Col, FIN320
1) What is the change in the net working capital from 2007 to 2008?
2) What is the amount of the non-cash expenses for 2008?
3) What is the amount of the net capital spending for 2008?
4) What is the operating cash flow for 2008?
1
Col, FIN320
BOND PROBLEM SOLUTIONS
1. Six years ago, The Corzine Company sold a 20-year bond issue with a 14 percent annual
coupon rate and a 9 percent call premium. Today, Corzine called the bonds. The bonds
originally were sold at their face value of $1,000. Comput
FIN320
AnnuityProblems
1.The McDonald Group purchased a piece of property for $1.2 million. It paid a down payment
of 20% in cash and financed the balance. The loan terms require monthly payments for 15 years
at an annual percentage rate of 7.75% compound
Prof. Col
FIN 320
Homework II
1. Wine and Roses, Inc. offers a 7% coupon bond with semiannual payments and a
yield to maturity of 7.73%. The bonds mature in 9 years. What is the market price of
a $1,000 face value bond?
2. The Extreme Reaches Corp. last p