Chapter 1
An Overview of Financial Management and
The Financial Environment
1-3
A firms fundamental, or intrinsic, value is the present value of its free cash flows when
discounted at the weighted ave
1 of 2
IRR and Delayed Investments
2 of 2
IRR and Delayed Investments
Assume you have just retired as the CEO of a successful
company. A major publisher has offered you a book deal. The
publisher will
Coupon rate
Number of payments per year
NPER
20
RATE
PV
PMT
4.01% -1067.21
9%
2
FV
45
1000
Remember to multiply your answer by # payments per year
Annual yield
8.01%
Annual yield
10.00%
Coupon rate
Nu
Discount rate
Investment old
Depreciation life old
Years after acquisition old is sold
Accumulated depreciation old
Book value old as of year 0
Selling price old
Taxable Profit from sale old
Net selli
4. You have a loan outstanding making 5 annual payments at the end of next 5 years of $3000 each. You can skip the next 4
payments in exchange of making one large payment at loan maturity. If the inte
Part a
Discount rate
CFs
NPV
0
10.00
(9.895)
Part b
Discount rate
CF in year 4
g rate in perpetuity
CFs
Terminal value
CFs +TV
NPV
0
10.00
10.00
(0.503)
10%
1
(8.00)
2
(8.00)
3
(8.00)
10%
5.00
-30%
1
LT growth rate
cost of capital
FCF
Continuation value
Sum of FCF & Cont. value
Value today
3%
16%
Year 1
-173,000
Year 2
13,000
Year 3
90,000
-173,000
$657,402.77
13,000
90,000
Year 4
150,000
1,188,46
NPER
1-year bond
5-year bond today
5-year bond in 1 year
Current Yield 5 year bond in 1 year
1
5
4
6.00%
RATE
PV
3.00% ($970.87)
6.00% ($747.26)
6.00% ($792.09)
Use Goal seek. Set B12 equal to your 1-
cost of capital
CFs
CFs
NPV
6.10%
1
0
(97.50)
(97.50) 509.8361
$383.02
2
31.1
3
31.1
4 5-Forever
31.1
31.1
IRR Calculation - Use Goal seek since the discount rate for the perpetuity should be equal to
Chapter 2
Financial Statements, Cash Flow, and Taxes
2-6
NOPAT is the amount of net income a company would generate if it had no debt and held
no financial assets. NOPAT is a better measure of the per
Chapter 3
Analysis of Financial Statements
3-2
The emphasis of the various types of analysts is by no means uniform nor should it be.
Management is interested in all types of ratios for two reasons. F
Chapter 4
MINI CASE
Assume that you are nearing graduation and have applied for a job with a local bank. As
part of the bank's evaluation process, you have been asked to take an examination that
cover
TENFOUR TRUCKING COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED JANUARY 31, 2014
Retained earning, January 1, 2014
Add Net Income
40,470
21,553
62,023
-20,000
42,023
Less dividends
Retained
WEEK 2 PRACTICE TEST QUESTIONS
Name
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Use the following timeline to answer the question(s) below.
0
Notes for Nextel Peru: Emerging Market Cost of Capital
1
Your Assignment
Your assignment is conduct the necessary analysis and write a report addressing the issues raised in the last
two paragraphs of
Instructions
Given
Solve For FV
Date
PV
PMT
FV
Cash Flow
Enter 4 of the items N, I/Y, PV, PMT, or FV in the shaded area below, and the annuity calculator will
solve for the fifth item. The solution wi