13 October 2016
Capital Budgeting Project Amtek Ironworks
1. Based on the Net Present Value (NPV) of purchasing the Spartan Machine Molder versus not
purchasing it, Amtek should make the investment and purchase th
Firm value = PV of firms FCFs
Estimating firm value
o Who might want to estimate the value of the firm?
Competitors, creditors, shareholders, everyone
o What should we value?
Enterprise (assets of firm) or equity
MV enterprise = MV debt
Instructions for Project 2
The purpose of this project is to test the tools you learned to gain some understanding of the
IPO process, whereby a stock is priced for the first time. On the IPO day, market
participants act upon their guesses ab
Midterm 1 Review
Incremental cash flows
Kelly's Corner Bakery purchased a lot in Oil City five years ago at a cost of $690,000. Today, that lot has a
market value of $810,000. At the time of the purchase, the company s
Group Project 1
The goal is to use CAPM to estimate the cost of capital for Ameritrade, an all-equity firm.
Use information in the case to determine all CAPM inputs:
Risk-free rate (use current known rate at the time of the case)
If CAPM holds, are the following situations possible? Why?
DJIA Closing Price:
Sum Closing Price
AXP American Express
DD E I du Pont de Nem
XOM Exxon Mobil
GE General Electric
15 September 2016
Assignment #1 The Home Depot, Inc.
1. The Home Depot, Inc. is a large retailer of home improvement supplies that sells tools, construction
products, and services. The company operates warehouse-s