1) Honda is considering offering a $1800 rebate on its minivan, lowering the vehicle's price from $29000 to $27200
Suppose Honda's profit margin with the rebate is $6390 per veihule. If the change in sales os the only consequence
Cost of rebate= Loss per
Samenvatting finance
Chapter 1:The corporation
4 types of firms:
Sole proprietorship
o Owned and run by one person
o No separation between firm and owner
o Owner has unlimited personal liability for any of the firms debts
o Life of sole proprietorship is
Chapter 7 Financne Homework
1) Anle Corp has a current stock price of $23.31 and is expected to pay a dividend of $1.00 i
a) What is Anle's dequity cost of capital?
Re=(Div1+P1)/P0)-1
Current Stock Price
Dividend in 1 year
After paying dividend
$0.12
$12.
CARLOS RODRIGUEZ
Revenue in 2013
Revenue in 2014
Revenue Growth (1st 3 years)
Revenue Growth (next 2 years)
FCF Perpetuity Growth from year 5
Depreciation
COGS as % of Revenue
Other Expenses as % of Revenue
Current Assets as % of Revenue
Current Liabiliti
Chapter 8 HW
1) You Run a construction firm. You have just won a contract to build a government office complex. Building will req
in one year upon the building completio. Suppose the interest rate is 10.1%
a) What is the NPV of this opportunity?
PV(Benefi
CHAPTER 12 HOMEWORK
1) You buy
100 shares for
45 AND
The weight of mad fish
8395
46.40%
2)
Freemonth Enterprises expected return
Laurelhurst News expected return
If you put
19%
22%
46% of your portfolio in laurehurst and
Expected return on your portfolio
Class notes for 4/7/2015 and exam review
Practice problems for Exam #3
1) HPR example
1-Jan
*New
1-Jul
20.3
31.25
`
54% HPR
Annualized Return
2) Standard Deviation Example
know how to calculate portolio standard deviation
MSTF
look at the current capital
CHAPTER 9 HOMEWORK
1)
Incremental Sales Forecast
Sales of Mini Mochi Munch
Other Sales
COGS
Gross Profit
SG&A
Depreciaton
EBIT
Income Tax 35%
Unlevered Income
Year 1
Year 2
3)
Depreciation(new)
Depreciation old
Market Value old
EBITDA new
EBITDA old
Tax
C
Chapter 18 Homework
Growth rate
1)
Income Statement
Net Sales
Costs Except Depreciation
EBITDA
Depreciation and Amortization
EBIT
Interest Income (expense)
Pretax Income
Taxes (26%)
Net Income
185.8
-174.4
11.4
-1.1
10.3
-7.7
2.6
-0.7
1.9
Costs except dep
How to Think About Time Value of Money
Problems
One of the biggest obstacles to correctly solving time value of money problems is identifying
the cash flows and their timing. On this page I will offer some tips that I hope will be helpful.
There are Alway
CHAPTER 11 HOMEWORK
1)
Bought stock a year ago
Sold it today for
Paid today for dividend
51.65 per share
58.84
1.85
What was your reallized return?
0.18
17.50
2)
You bought stock a year ago
Sold it today for
Paid today for dividend
50.99 per dshare
57.12
CHAPTER 13 HW
1) MV Corporation has a debt with market value of
$99,000,000
5,700,000 shares outstanding. What weights should MV Corp use in its WACC?
Market value of common equity= Price of Common StockxNumber of common shares outstanding
Market value of
Chapter 4 question 5 :
10%
1
5500
A)
B)
C)
D)
*E)
2
3
4
5
10
-$600,499.71
$50,385.20
$78,949.96
23%
2/5/2014
Chapter 5 question
Suppose a banks is offering a 30-year mortgage with an EAR of 6.125%. If you plan to borrow $
EAR
APR
PV
220000
FV
0
PMT
Nper
3
FROM EXAM 2!
4/2/15 Finance Notes
EXAMPLE:
Ken.
Equity
Debt
total
30000000
9500000
39500000
WACC
75.95%
24.05%
Sample X-Credit
Amazon, Inc.
MKT value of Debt
MKT value of Equity
Total Cap Structure:
Cost of Debt
Effective cost of debt
Cost of EQUITY
Risk
Holding Period Return/Yield:
The total return received from holding an asset or portfolio over a period of time,
expressed as a %
Calculated on the basis of total returns from assets or portfolio
Useful for comparing returns between investments
Standar
Exam 2 - Problem 1
1)
Revenue in 2013
Revenue Growth (1st 3 years)
Revenue Growth (next 2 years)
EBIT as % of Revenue
Depreciation
Current Assets as % of Revenue
Current Liabilities as % of Revenue
Total Cash
Total Debt
FCF Perpetuity Growth from year 5
S
TODAY: Fundamentals of Capital Budgeting
Mon, Wed, Thurs: 2:00-3:00
and by appointment: [email protected]
(including taxes)
(including taxes)
Net Working Capital = Current Assets Current Liabilities
= Cash + Inventory + Receivables Payables
Net Working Capit
Chapter 6
6.1 Bond Terminology
Bonds pay both coupon and principal or face value payments to investors. By
convention, the coupon rate of a bond is expressed as an APR, so the amount of
each coupon payment, CPN, is:
6.2 Zero-Coupon Bonds
Zero-coupon bon
PART 1
1. According to your instructor, what is the firms job?
TO MAKE THE OWNERS AS RICH AS POSSIBLE
2. How was money defined in class?
MONEY IS A GENERALLY ACCEPTED MEDIUM OF EXCHANGE
3. To whom do banks pay interest and to whom do they charge interest?
Chapter 10
10.1 The Discounted Free Cash Flow Model
When a firm has leverage, it is more reliable to use the discounted free
cash flow model. In this model, the enterprise value of the firm equals the
present value of the firm equals the present value of
WRT 307: Professional Writing
spring 2017 online
Emily Dressing
Senior Lecturer
[email protected]
When you write at work, you act. You exert your power to achieve a specific result, to
change things from the way are they are now to the way you want them to
Ch 15: Venture capital and issuing new securities: Venture Capital Funding: Prepare business plan, receive first
stage financing, subsequent staged financing. Sources: VC funds, angel investors(finance in earliest growth stage),
Private equity (not on pub
Black-Scholes Model
S0
$189.03
Black-Scholes Model
S0
$189.03
r
$190.00
0.42
31.08%
0.13%
K
T
c
r
$190.00
0.42
$14.00
0.13%
q
0.00%
q
0.00%
K
T
s
Premiums
Black-Scholes Premium
c
$14.7097
c
$14.00
p
$15.5742
Difference
$0.00
Implied Volatility
s
29.62%
In
Binomial Tree Builder for European Call Options
INPUTS
Stock price (S)
Strike price (K)
Annual risk-free interest rate (r)
Annual stock volatility (s)
Option maturity (days) (T)
Number of time steps used (n)
Dt = T / n
OUTPUT
Call premium (c)
BINOMIAL TRE
- The free cash flow to the equity is the part
of the cash flow generated by the operating
assets of the firm that is available for
distribution to all EQUITY investors in the
firm, after the firm has met its reinvestment
needs
- Expected future dividends