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Chapter:
Problem:
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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
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
A
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Chapter:
Problem:
B
C
D
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H
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8
Schumann Shoe Manufacturer is considering whether or not to refund a $70 million, 10% coupon, 30-year bond issue that was s
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
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
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
Ch. 14: Distributions to Shareholders: Dividends and Repurchases
* See tabs at bottom for additiona
(SOURCE: Brigham, Eugene F. and
Amalgamated Shippers has a current and target capital structure of 30 percent debt and 70 percent equity. This past year,
A
Chapter 15: Capital Structure Decisions
* See tabs at bottom fo
(SOURCE: Brigham, Eug
The Fisher Company will produce 50,000 10-gallon aquariums next year. Variable costs will equal
40 percent of dollar sales, while fixed costs total $100,000. At what pri
Chapter 16: Working Capital Management
* See tabs
(SOURCE:
Simmons Brick Company sells on terms of 3/10, net 30. Gross sales for the year are $1,216,667 and the collections department
estimates that 30 percent of the customers pay on the tenth day and tak
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
Vandells free cash flow (FCF0) is $2 million per year and is expected to grow at a constant
rate of 5% a year; its beta is 1.4. What is the value of Vandells operations? If Vandell has
$10.82 million in debt, what is the current value of Vandells stock? (
The acquisition, if made, would occur on January 4, 2012. All cash flows above are assumed to occur at the end of the year. CHC currently has a marke
The cash flows above detail the free cash flows and the interest on all of the debt associated with the a
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
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
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
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
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
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
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
LL Incorporateds currently outstanding 11% coupon bonds have a yield to maturity of
8%. LL believes it could issue new bonds at par that would provide a similar yield to
maturity. If its marginal tax rate is 35%, what is LLs after-tax cost of debt?
coupoi
CAPITAL BUDGETING
William Inc. is considering two investment projects. It will be your responsibility to
analyze each of the projects based on NPV, IRR, MIRR, PI, payback, and discounted payback assuming
that the two projects are mutually exclusive.
Evalu
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
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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
Elizabeth Tortoso
Chapter:
Problem:
24
5
Duchon Industries had the following balance sheet at the time it defaulted on its interest payments and filed for liquidation
under Chapter 7. Sale of the fixed assets, which were pledged as collateral to the mortg