28. Earnings per share (EPS) is calculated by
a. dividing pretax income by the number of shares of common stock outstanding.
dividing the dividends paid by the number of shares of common stock outstanding.
) dividing earnings available for common stockhol
itans Electronics reports the following data for the past year:
Interest Paid
Market Price of $20
at is the current P/E ratio for Titans Electronics? . w
8.00 903 : egtnw
b. 10.00, [13'000 LUMVN at . EQ
c 15.50 m (000.000
). K. .7 M
@1667 \ZooolooO
18. The higher the interest rate and the longer the period of time,
a. the higher the future value and the lower the present value.
b. l the higher the future value and the higher the present value.
. the lower the future value and the lower the present v
1 1. Which of the following characteristics would disqualify a rm from being an S Corporation?
a. a rm with 51 different individual shareholders
@ the controlling majority shareholder is a Fortune 500 corporation
0. one of the shareholders of the proposed
7. What was the key impact of the Jobs and Growth Tax Reconciliation Act of 2003?
a. It greatly reduced the risk and liability of owning a small business.
b. It provided tax credits and incentives for corporations to maintain their operations in the
Unite
First Exam FIN 3303 June 8, 2007
Multiple Choice
Identify the choice that best completes the statement or answers the question.
1. Prudent Policy Life Insurance Co. offers a 10-year term life insurance policy with a $250,000 benet and annual
premiums of $
Required Return
Period
0
1
2
3
4
5
Net Present Value (Method 1)
Net Present Value (Method 2)
Net Present Value (Array Formula)
12% This worksheet demonstrates three different ways to arrive at the
NPV using Excel:
Cash Flow
(800) 1) Method 1 uses the NPV
FIN 4133
Midterm #2
Answers
1. C
2. B
3. B
4. A
5. A
6. C
7. E
8. D
9. A
10. A
11. E
12. B
13. A
14. A
15. C
16. A
17. B
18. D
19. C
20. E
21. C
22. B
23. A
24. C
25. B
26. C
27. A
Fall, 2016
FIN 4133
Midterm #1
1. B
2. B
3. A
4. D
5. E
6. D
7. C
8. D
9. C
10. C
11. C
12. E
13. D
14. A
15. B
16. B
17. C
18. E
19. A
20. C
21. C
22. D
23. D
24. E
25. C
26. B
27. E
Fall, 2016
FIN 4133
Midterm #1
Fall, 2016
Instructions:
1. 27 questions. Using a green scantron sheet, mark the best answer to each question. Multiple
answers will receive no credit.
2. If you are clueless about some question, take a guess. You have nothing to lose.
FIN 4133
Midterm #2
Fall, 2016
Instructions:
1. 27 questions. Using a green scantron sheet, mark the best answer to each question. Multiple
answers will receive no credit.
2. If you are clueless about some question, take a guess. You have nothing to lose.
The amount that someone is willing to pay today, for a single cash flow in the future is
the present value of the cash flow
By increasing the number of compounding periods in a year, while holding the stated annual interest rate constant, you will
increas
Poisoned Waters
PBS Frontline
Online Segment
(Fill out these first few questions as you watch the online Seattle segment of the documentary)
Seattles Stormwater Runof
1.
What's making this water [Puget Sound] so sick is what scientists have now labeled th
The Cola Wars
The Cola Wars
Questions
1.
The soft drink industry is a 100 billion dollar international juggernaut.
2.
Federal Regulation of food and drugs was years away in 1886 when Coca-Cola was
launched by an Atlanta pharmacy owner named John Doc Pembe
Objective: motivate the use of EAR as compared to APR
Suppose you have shopped around with your local banks and come up with the following three rates:
Bank A: 15 percent, compounded daily
Bank B: 15.5 percent, compounded quarterly
Bank C: 16 percent,
car price
11000
period
0
1
2
3
Option 1 Option 2 Differential CFs
-10000
-5000
5000
-2000
-2000
-2000
-2000
-2000
-2000
IRR
bank interest rate
Decision
9.70%
9%
Buy with Cash
Alternatively, if you calculate the NPV of the differential CFs at 9%,
The NPV o
Stock A
Exp Ret
variance
std dev
covariance
corr (A, B)
Stock B
7%
0.0064
0.08
0.00112
0.1
Risk-free asset
15%
0.0196
0.14
2%
0
0
Step 1: Construct the Ptfl Opportunity Set (that is, the collection of risky portfolios that can be formed from risky assets
Objective: draw different timelines in Excel
Example 1: a 10-period timeline
period
0
1
2
3
4
5
6
7
#
1
#
2
#
3
#
4
#
5
#
6
#
7
Example 2: a calendar timeline
date
period
#
0
Example 3: a timeline with a period equal to every six months
period
0
1
2
3
4
5
Portfolio Diversification Lowers Risk
Suppose for simplicity that all risky assets have a standard deviation of 30%
and all pairs of risky assets have a correlation of 40%. In this simple setting,
consider a portfolio diversification strategy of investing
Objective: build the financial planning model for Whimisical
Value Drivers Assumptions
Sales growth
Current assets
Current liabilities
Net fixed assets
Depreciation
Cost of goods sold
Interest rate on debt
Interest earned on cash
Tax rate
Dividends paid
Y
Ptfl Efficient Frontier and Optimal Risky Ptfl with 7 risky assets
Inputs
(Country Index Statistics and forecasts of excess returns (raw return - risk-free rate)
Country Expected Ret
US
0.0600
UK
0.0530
France
0.0700
Germany
0.0800
Australia
0.0580
Japan
discount rate
period
0
1
2
3
4
5
NPV for A
NPV for B
12%
project A Project B
-1000
-800
500
420
500
420
500
420
500
420
500
420
$802.39
$714.01
period
0
CF
-10000
PV of each Cash inflow
PV of all cash inflows
16387.94
1
-5000
PV of all cash outflow
-10000
Objective: Use the Data Table Technique to Replicate the FVIFA (future value interest factor for annu
Review: the FVIFA is the future value interest factor for Annuities. This factor can be conveniently used to
calculate the FV of annuities. To get the fu
Problem No. 3 Hint
You might want to set up the cash flows in each month of the year first.
Month additional a/c saving operating cost maintenance fee Depreciatio CF per month CF at month 12 end
1
2
3
4
5
6
20000
-9000
11000 11641.31
7
20000
-9000
11000 1
Historical Price and Returns on MCD from 12/31/1998 to 12/31/2008
Stock
Date
price Daily returns
31-Dec-98
31.69
Arithmetic Average return
0.0004236
4-Jan-99
31.75 0.001893
Number of returns
2515
5-Jan-99
31.61 -0.004409
Minimum return
-0.1282192
6-Jan-99
Chapter 6 Choosing a Discount Rate
Lecture objectives:
Understand the notion of risk-adjusted discount rate
Understand the funding cost as the discount rate
Understand WACC and its application to discount rate and firm valuation
1. Overview
1.1. Motivatin