INTERMEDIATE FINANCIAL MGMT.
FIN 36054
Kent State University
Summer, 2015
* PLUS-MINUS GRADING IN EFFECT *
Dr. David A. Dumpe
Email: [email protected]
Office: BSA 408
Phone: 330-672-1203
Office Hours: Monday through Thursday 9:30-10:00. My office phone has
Basic Definitions
Present Value
(PV)
The current value of future cash flows
discounted at the appropriate discount rate
Value at t=0 on a time line
Time Value of Money
Future Value
Introductory Lecture
and Review
(FV)
The amount an investment is wort
CHAPTER 2
Introduction Lecture
Risk and Return: Part I
1
Introduction Lecture Points
You are responsible for the following concepts
introduced in the video lecture:
Measuring dollar and percentage returns:
historical returns and expected returns
Measur
Chapter 6
Accounting for
Financial Management
6.7 6.8
1
Topics in Chapter
We will only cover pages 222 234 from this
chapter in class.
The material at the beginning of the chapter on the
balance sheet, income statement, and statement of cash
flows shoul
CHAPTER 9
Financial Planning and Forecasting
Pro Forma Financial Statements
1
Strategic Planning
Corporations define their mission (normally to
create value for shareholders), scope (lines of
business and geographic areas), and
objectives (specific goals
Computational Accuracy
Introductory Lecture
Why is accuracy important?
In finance, rounding of intermediate
calculations can sometimes have a large
impactwhen millions of dollars are
multiplied by small percent returns.
At points in this course, your ab
AFN:
$15,785.86
Key Input Data:
Used in the
forecast
40% New notes payable
6% New long-term debt
9% New common stock
11% Sell marketable securities
5% TOTAL PERCENT
Tax rate
Dividend growth rate
S-T rd
L-T rd
Sales growth rate
December 31 Income Statement
Name
Raytheon 6.75%
Raytheon 6.4%
Raytheon 4.4%
Raytheon 3.125%
Raytheon 2.5%
Raytheon 3.15%
Raytheon 7.2%
Raytheon 7%
Raytheon 4.875%
Raytheon 4.7%
Raytheon 4.2%
Book Value of Bonds
Market Value of Bonds
Average YTM
Cost of Debt
Maturity Day
3/15/2018
12
Cap. 12 Mercado de bonos
El Mercado de bonos o conocido como el Mercado de deudas, trata delos mercados financieros
en donde los participantes emiten deudas conocido como el Mercado primario; en el Mercado
secundario es donde se vende y compra debt securi
Chapter 12 Review
1.
Why is NPV the single best criterion in deciding whether to accept or reject a project?
It measures how much wealth the project contributes to shareholders because it tells you the
dollar amount of value created, include all the CF, t
Part 1. Input Data (in thousands of dollars)
Project Life
10
Depreciation Class
10
Equipment cost
$25,000
Net Operating WC/sales
100000%
First year sales (in units)
24
Sales price per unit
$17.50
Variable cost per unit
$18.00
Fixed costs
$1,500
Time 0 Opp
CHAPTERS 2 & 3
Risk and Return: Part I
2.1 2.7 and 2.9 only
Risk and Return: Part II
3.3 3.6
1
Introduction Lecture Points
You are responsible for the following concepts
introduced in the video lecture:
Measuring dollar and percentage returns:
historica
Chapter 16 Problems
Choosing the optimal capital structure (recapitalizing from 20% debt)
Firm is currently 20% debt financed and has an expected EBIT of $50,000. The firm expects no growth (therefore, the
FCF = NOPAT and the value of operations = FCF/WAC
What are the three types of financial management decisions, and what questions are
they designed to answer?
Capital budgeting
What long-term investments or projects should the business take on?
Capital structure
How should we pay for our assets?
Shou
HPR:
The total holding period return of a share of stock depends on the increase or
decrease in the price of the share over that investment. As well as on I need dividend
income that share has provided.
1.
2.
3.
Scenario analysis:
Possible economic scenar
FIN 36054: Intermediate Business Finance
Exam 3: Formula Sheet
FORMULAS:
CHAPTER 12
n
NPV =
t=1
n
PI =
t =1
CF t
(1+ R)t
CF t
t
(1+ R)
CF 0 Net Present Value=Present Value of Cash FlowsInitial Cost
/|CF 0|=
NPV +|CF 0|
|CF 0|
Profitability Index=
Present
CHAPTER 16
Capital Structure Decisions
1
How Capital Structure
Affects Firm Value
The impact of capital structure on value
depends upon the effect of debt on:
WACC
FCF
V = value of firm
FCF = free cash flow
WACC = weighted average cost of capital
rs an
Chapter 4
Bond Valuation
4.1 4.14
1
Introduction Lecture Points
You are responsible for the following concepts
introduced in the video lecture:
Bond features: maturity, coupon, face value, YTM
Bond valuation: using the financial calculator to
compute b
CHAPTER 16
Introduction Lecture
Capital Structure Decisions
1
Introduction Lecture Points
Review of corporate valuation problems from
Chapter 11.
Focus on zero-growth examples to compute the
value of operations.
Use the corporate valuation to calculate
Excel Project Chapter 11: WACC
1. Based on your FIRST name, you will be computing an estimate of the WACC for one of the following
firms that use only debt and equity financing. Your grade is based both on having the correct
information in your Excel file
Chapter 13 Excel Project
FIN 36054
Due via Blackboard on Tuesday, April 11 th at 11:59 p.m.
You are to create an Excel spreadsheet to model the cash flows for a project using the information provided in this email.
The project life is the number of years
Chapter 9 Excel Project
FIN 36054
Due via Blackboard on Thursday, February 16 th at 11:59 p.m.
Use the financial statements available via download from Blackboard which contain three years of income statements
and balance sheets for Zieber company. Once y
8/15/2014
Key Features of a Bond
Par value: Face amount; paid at maturity. Assume $1,000.
Coupon interest rate: Stated interest rate. Multiply by par
Chapter 4
Introduction Lecture
value to get dollars of interest. Generally fixed. Normally paid semiann
FIN 36054 Intermediate Business Finance
Chapter 16
Possible Multiple Choice Questions: Answers 1. A; 2. A; 3. B; 4. D
* THESE QUESTIONS ARE NOT SUFFICIENT TO STUDY FOR THE EXAM *
* THEY ARE SAMPLE QUESTIONS ONLY*
1. Which of the following M&M models do no
Chapter 9
Questions and Problems
1. Calculating Payback What is the
payback period for the following set of
cash flows.
To calculate the payback period, we need to find the time
that the project has recovered its initial investment. After
two years, the
CHAPTER 9
Financial Planning and
Forecasting Pro Forma
Financial Statements
1
Financial Planning and Pro
Forma Statements
Three important uses:
Forecast the amount of external financing that
will be required
Evaluate the impact that changes in the
operati
CHAPTER 13
Capital Budgeting:
Estimating Cash Flows
and Analyzing Risk
1
Incremental Cash Flow for a
Project
Cash flows, not accounting income
Projects incremental cash flow is:
Corporate free cash flow with the project
Minus
Corporate free cash flow with