A
1
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4
5
6
7
8
9
10
11
12
13
14
15
16
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18
19
20
21
B
Chapter:
Problem:
C
D
E
F
G
H
12/7/2012
7
22
Hamilton Landscaping's dividend growth rate is expected to be 30% in the next year, drop to 15% from Year 1
to Year 2, and drop to a constant 5% for Yea
A
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
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27
28
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31
32
33
34
Chapter:
Problem:
B
C
D
E
F
G
H
18
8
Schumann Shoe Manufacturer is considering whether or not to refund a $70 million, 10% coupon, 30-year bond issue that was s
Read the Chapter 14 Mini Case on page 586 in Financial Management: Theory and
Practice. Using complete sentences and academic vocabulary, please answer questions a
and b.
(1) What is meant by the term distribution policy? Distribution policy is described
Chapter 9: Cost of Capital
The cost of capital used in capital budgeting should reflect the average cost of the various sources of
long-term funds a firm uses to acquire assets. The component costs of capital are market-determined
variables in that they a
Ashley Langer
Module 2 Problems
Intro to Bus. Finance
A new bank has vault cash of $1 million and $5 million in deposits
held at its Federal Reserve District Bank.
a. If the required reserves ratio is 8 percent, what dollar amount
of deposits can the bank
CHAPTER 3 THE TIME VALUE OF MONEY
OVERVIEW
A dollar in the hand today is worth more than a dollar to be received in the future because, if you had it now, you could invest that dollar and earn interest. Of all the techniques used in finance, none is more
1. The form of organization for a business is not an important issue, as this decision has very little effect on the income and wealth of the firm's owners. B. False 2. The major advantage of a regular partnership or a corporation as a form of business or
A small countrys gross domestic product (GDP) is $12 million.
a. If government expenditures amount to $7.5 million and gross
private domestic investment is $5.5 million, what will be the
amount of net exports of goods and services?
7.5+5.5=13
12-13=-1
(-1
Broussard Skateboards sales are expected to increase by 15% from $8 million in 2012 to $9.2 million in 2013. Its assets totaled $5 million at
the end of 2012. Broussard is already at full capacity, so its assets must grow at the same rate as projected sal
Ashley Langer
Business Finance
Module 4
You are planning to invest $2,500 today for three years at a nominal
interest rate of 9 percent with annual compounding.
a. What would be the future value (FV) of your investment?
2500*(1+(0.09*3)=$3175.00
b. Now as
Module 7 DQ 2
Pick a company in the news (i.e., The Wall Street Journal, Bloomberg) and report on a working
capital issue the company faces. How do the principles in this module come into play with your
example company?
The company that I have chosen to r
Module 8 DQ 2
What is operating, financial, and total leverage? Explain the relationship between them.
Operating leverage is a measurement of the unit to which a firm acquires a mix of fixed costs
that are independent of the output and variable costs that
An investor recently purchased a corporate bond that yields 9%. The investor is in the 36% combined federal and state tax bracket.
What is the bond's after-tax yeield?
Fomula: After-Tax yield = Pre-Tax yield X (1- Marginal Rate)
5.76%
Corporate bonds issu
Ace Industries has current assets equal to $3 million. The ocmpany's current ratio is 1.5, and it's quick ratio is 1.0.
What is the firm's level of current liabilities? What is the firm's level of inventories?
Formula =
Current Liabilities =
Current Asset
12/7/2012
Chapter:
Problem:
10
23
Gardial Fisheries is considering two mutually exclusive investments. The projects' expected net cash flows
are as follows:
Expected Net Cash Flows
Project A Project B
($375)
($575)
($300)
$190
($200)
$190
($100)
$190
$600
Snider Industries sells on terms of 2/10, net 45. Total sales for the yeaer are $1,500,000. Thirty
percent of customers pay on the 10th day and take discounts; the other 70% pay on average, 50
days after their purchases.
a. What is the days sales outstand
FIN 650 Final Exam
Chapter 20:
Refunding NPV problem; calculate net present value of refunding (20.9)
Investment bankers compensation problem; calculate present value of underwriting compensation
(20.3)
Refunding breakeven interest rate problem; calculati
Module 8 DQ 1
Explain what capital structure is. Find two publicly traded companies and compare and contrast their
capital structures.
Capital structure is a mix of a companys long term debt and its specific short term debt, common equity
and preferred eq
12/8/2012
Chapter:
Problem:
15
12
Reacher Technology has consulted with investment bankers and determined the interest rate it
would pay for different capital structures, as shown below. Data for the risk-free rate, the market
risk premium, an estimate of
CH 14, Problem 1
Capital Expenditures
Debt
Equity
Net Income
Dividend Payout Ratio
$5,000,000
60%
40%
$3,000,000
$2,000,000
$1,000,000
33%
CH 14, Problem 2
Capital Budget
Debt
Equity
Net Income
Dividend Payout Ratio
$1,200,000
60%
40%
$600,000
$480,000
$1
Find the net present value (NPV) and profi tability index (PI) of a
project that costs $1,500 and returns $800 in year one and $850 in
year two. Assume the projects cost of capital is 8 percent.
Cost of Capital=
7.25%
Year
Cash Flow PV
0
-10,000 -10,000
1
Chapter 3 Review Problems
(SOURCE: Brigham, Eugene F. and Michael C. Ehrhardt, Study Guide: Financial Management Theory
and Practice, 12th edition, Thomson, 2008.)
Info Technics Inc. has an equity multiplier of 2.75. The companys assets are financed with
Chapter 2 Review Problems
(SOURCE: Brigham, Eugene F. and Michael C. Ehrhardt, Study Guide: Financial Management Theory
and Practice, 12th edition, Thomson, 2008.)
1. Ryngaert & Sons has operating income (EBIT) of $2,250,000. The companys depreciation
exp
Dividends are sometimes seen as a reward that companies will give their loyal stockholders. Just
like how some companies will give their loyal employees bonuses. Many investors will look at
the stock market this way they can make extra money either to spe
WACC also known as weighted average cost of capital. Is the weighted average of the after tax
component cost of capital, debit preferred stock and common equity. With WACC it is a factor
in which proportion of the type of capital in the optimal or target
A
1
2
3
4
5
6
7
8
9
10
11
12
B
Chapter:
Problem:
C
D
E
F
G
H
12/7/2012
7
22
Hamilton Landscaping's dividend growth rate is expected to be 30% in the next year, drop to 15% from Year 1
to Year 2, and drop to a constant 5% for Year 2 and all subsequent year
Broussard Skateboards sales are expected to increase by 15% from $8 million in
2013 to $9.2 million in 2014. Its assets totaled $5 million at the end of 2013.
Broussard is already at full capacity, so its assets must grow at the same rate as
projected sal