Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Assignment 4
_
Part I: Problem Set
I.1. Bumbles Bees, Inc., has identified the following two mutually exclusive projects. (10
points)
Year

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Assignment 3
Due Tue, Mar 30, 2010
_
Please answer the following questions. Show your work! That is, you may use calculator,
Excel, etc, to compute you

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Assignment 3
_
Please answer the following questions. Show your work! That is, you may use calculator,
Excel, etc, to compute your results

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2006
Exam 3
Prof. Leonardo Madureira
INSTRUCTIONS
1. Do not turn this page until you are instructed.
2. You have 1 hour and 15 minutes to answer the followi

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2006
Exam 3
Prof. Leonardo Madureira
INSTRUCTIONS
1. Do not turn this page until you are instructed.
2. You have 1 hour and 15 minutes to answer the followi

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Assignment 1
_
1. The first comic book featuring Superman was sold in 1938. In 2003, the estimated
price for this comic book in good condi

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Assignment 1
Due Thu, January 28, 2010
_
Please answer the following questions. Show your work! That is, you may use calculator,
Excel, etc, to compute

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Assignment 2
_
Please answer the following questions. Show your work! That is, you may use calculator,
Excel, etc, to compute your results

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Assignment 2
Due Mon, March 02, 2010
_
Please answer the following questions. Show your work! That is, you may use calculator,
Excel, etc, to compute y

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Exam 4
Prof. Leonardo Madureira
INSTRUCTIONS
1. Do not turn this page until you are instructed.
2. You have 3 hours to answer the following questions.

Today
Today
Working with Financial Statements
(Chapter 3, items 3.2, 3.3 and 3.4)
BAFI 355 Spring 2010
7-1
Objective Today
Objective Today
Analyzing accounting data to get a picture of the firm
and to compare the firm with its peers
th fi
it
BAFI 355 Spr

Administrative Issues
Administrative Issues
Assignment 1 due Thursday
Assignment is in Blackboard
Groups of 1 to 3 persons. You can talk among groups but the final
write-up must be each groups own work
Return one write-up per group
The best investment tow

BAFI 355 Spring 2010
Solutions to Problems 01/14/10
Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Exercises Suggested During Class, Jan 14, 2010
_
RWJ, Problem 5.1
The simple interest

Today
Today
Interest Rates and Bond Valuation
(Chapter 7)
BAFI 355 Spring 2010
9-1
Objective Today
Objective Today
All about bonds (in the next two lectures):
Know the important bond features and bond types
Understand bond values and why they fluctuate
Un

Today
Today
Interest Rates and Bond Valuation
(Chapter 7)
Continued from last lecture
BAFI 355 Spring 2010
10-1
The Risks of Holding Bond
The Risks of Holding a Bond
Interest rate risk
Changes in interest rate affect the value of a bond
Reinvestment rate

Administrative Issues
Administrative Issues
Assignment 2 due next Tuesday
With todays lecture, you can finish the assignment
today lecture you can finish the assignment
Old exams now available on Blackboard
The new help sheet is also available on Blackboa

Administrative Issues
Administrative Issues
Assignment 1 due Tuesday
Groups of 1 to 3 persons. You can talk among groups but
the final write-up must be each groups own work
Return one write-up per group
Tuesday is review session
Tuesday is a review sessio

Recent Results
Recent Results
All results are available on Blackboard. Make sure your
numbers are correct
numbers are correct
Assignment 1: Results
Mean: 73
Standard deviation: 15
Exam 1: Results
Exam 1: Results
Mean: 86
Standard deviation: 17
BAFI 355 Sp

Today
Today
Time Value of Money (Continued)
BAFI 355 Spring 2010
4-1
From Last Lecture
From Last Lecture
Using the time line:
the time line:
1
0
2
n
PMT
PMT
PMT
FV
r
PV
you can find one variable if you have 4 others in the
fi
if
th
group (PV,r,n,PMT,FV)
B

Today
Today
Time Value of Money (Continued)
BAFI 355 Spring 2010
3-1
Suggested Exercises
(From Last Lecture)
Last Lecture)
Solutions will be posted in the Courses Website
(Bl
(Blackboard)
BAFI 355 Spring 2010
3-2
From Last Lecture
From Last Lecture
Using

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Exercises Suggested During Class, Feb 23, 2010
_
RWJ, Problem 8.1
The constant dividend growth model is:
Pt = Dt (1 + g) / (R g)
So the pr

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Exercises Suggested During Class, Feb 18, 2010
_
RWJ, Problem 7.12
The Fisher equation, which shows the exact relationship between nominal

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Exercises Suggested During Class, Feb 16, 2010
_
RWJ, Problem 7.1
The yield to maturity is the required rate of return on a bond expressed

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Exercises Suggested During Class, Feb 11, 2010
_
RWJ, Problem 4.1
It is important to remember that equity will not increase by the same pe

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Exercises Suggested During Class, Feb 09, 2010
_
RWJ, Problem 3.1
Using the formula for NWC, we get:
NWC = CA CL
CA = CL + NWC = $3,720 +

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Exercises Suggested During Class, Feb 04, 2010
_
Compute CF(A), CF(B) and CF(C) for DLeon Inc. in 2002. The balance sheets and income stat

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Exercises Suggested During Class, Jan 21, 2010
_
RWJ, Problem 6.18
For this problem, we simply need to find the PV of a lump sum using the

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Exercises Suggested During Class, Jan 19, 2010
_
RWJ, Problem 6.6
The time line of the problem is:
0
1
2
8
r=8.5%
PV=?
PMT=73K PMT=73K
PMT

Case Western Reserve University
Weatherhead School of Management
BAFI 355 Corporate Finance
Spring 2010
Solutions to Exercises Suggested During Class, Mar 16, 2010
_
RWJ, Problem 12.1
The return of any asset is the increase in price, plus any dividends or

BAFI 355: Corporate Finance
Time Value of Money
Professor Greg Harmon
Fall 2016
BAFI 355
6-1
Learning Objectives
BAFI 355
Understand future value of investment
made today (compounding)
How to determine the value today of
cash received in the future (prese

Allied Clothiers
(in millions)
Income Statements
Net sales
Cost of goods sold
Selling, general and administrative expense
Depreciation expense
Earnings before interest and tax (EBIT)
Net interest expenses
Earnings before tax (EBT)
Income tax expense
Earni

Taco Swell, Inc.
Financial Statements
Income Statements
Sales
Cost of goods sold
Depreciation
Other expenses
Operating income
Interest expense
Pre-tax income
Taxes (34%)
Net income
$
Dividends
Additions to
retained earnings
Div. payout ratio
Balance Sheet

BAFI 355: Corporate Finance
Financial Ratio Analysis
Professor Greg Harmon
Fall 2016
BAFI 355
4-1
Financial Ratio Analysis
Financial ratio analysis, which will help us
analyze financial results in a more
comprehensive manner
Many types of financial ratios

BAFI 355: Corporate Finance
Long-term Financial Planning
and Growth
Professor Greg Harmon
Fall 2016
BAFI 355
5-1
Goal of Financial Planning
BAFI 355
Anticipate possible future outcomes
Within the firms control
Outside the firms control
Assess the impact