Seagate Technology Buyout
Each group should write down the answers to the first 2 questions and hand them in at
the beginning of the class on December 1.
1. Why is Seagate undertaking this transaction? It is necessary to divest the Veritas
shares in a sep
Chapter 2
1) _ is calculated by adding back noncash expenses to net income and adjusting for
changes in current assets and liabilities.
a. Total cash flow
b. Capital spending
c. Net working capital
d. Cash flow from operations
e. Cash flow to creditors
2)
In-Class Assignment 7
Group Number:
1. The Nantucket Nugget is unlevered and is valued at $640,000. Nantucket is currently deciding
whether including debt in its capital structure would increase its value. The current cost of equity
is 12%. Under consider
Chapter 7
1. The advantages of the payback method of project analysis include the:
I. application of a discount rate to each separate cash flow.
II. bias towards liquidity.
III. ease of use.
IV. arbitrary cutoff point.
a. I and II only
b. I and III only
c
Solutions to Textbook Recommended Problems
4-1.
You have just taken out a five-year loan from a bank to buy an engagement ring. The ring costs
$5000. You plan to put down $1000 and borrow $4000. You will need to make annual payments
of $1000 at the end of
Study Guide for Mercury Athletic Footwear
Each group should write down the following questions and hand them in at the beginning
of the class on December 7.
1.
Is Mercury an appropriate target for AGI? Why or why not?
2.
Review the projections formulated
CorporateFinance:TheCore(Berk/DeMarzo)
Chapter5-InterestRates
5.1InterestRateQuotesandAdjustments
2)Whichofthefollowingequationsisincorrect?
A) k 1 + EAR -1=APR
B)Equivalentn-PeriodDiscountRate=(1+r)n-1
k
C)
APR
1+EAR= 1 +
k
D)
InterestRateperCompounding
Chapter 7
1. All else constant, the net present value of a typical investment project increases when:
a. the discount rate increases.
b. each cash inflow is delayed by one year.
c. the initial cost of a project increases.
d. the rate of return decreases.
Chapter 16
1. Dividend policy changes are decided by:
I)
The managers of a firm
II)
The government
III)
The board of directors
A.
B.
C.
D.
I and II only
III only
I only
II only
Answer: B
2. Two corporations A and B have exactly the same risk, and both hav
Chapter 004 Discounted Cash Flow Valuation
1. The interest rate charged per period multiplied by the number of periods per year is called the
_ rate.
a. effective annual
b. annual percentage
c. periodic interest
d. compound interest
e. daily interest
2. Y
In-Class Assignment 5 - 6
Group Number:
Student 1 (Last Name / First Name):
Student 2 (Last Name / First Name):
Student 3 (Last Name / First Name):
Student 4 (Last Name / First Name):
Student 5 (Last Name / First Name):
1. You have a $1,000 portfolio that
In class assignment 2
1. Turner's Inc. has a price-earnings ratio of 16. Alfred's Co. has a price-earnings ratio of 19.
Thus, you can state with certainty that one share of stock in Alfred's:
A. has a higher market price than one share of stock in Turner'
Kirk Clemons
FINA 5170
CH 17 HW
1. AFN = Projected increase in assets spontaneous increase in liabilities increase in retained
earnings
(A0 / S0) S (L0 / S0) S MS1(1-Payout)
Sales in 2012 is 6 million
change in sales at 20% S is 1 million
Assets in 2012 A
Kirk Clemons
FINA 5170
CH 3 HW
2. EBT = Net income / Tax rate = 3.00 million / 0.6 = $5.00 million
Taxes = EBT x Tax rate = $5.00 million x 0.4 = $2.00 million
Interest expense = EBIT EBT = 6.00 million 5.00 million
Interest expense = $1.00 million
Income
Kirk Clemons
FINA 5170
CH 4 HW
2. Debt ratio = total debt / total assets
equity multiplier = total assets / equity
equity ratio = equity / total assets
equity ratio = 1 / (total assets /equity) or 1/equity multiplier
total assets = debt + equity , deb
Kirk Clemons
FINA 5170
CH 5 HW
16.
perpetuity = $100 with I = 7%
perpetuity / I = 100 / 0.07
PV of perpetuity $1428.57
perpetuity = $100 with I = 14%
perpetuity / I = 100 / 0.14
PV of perpetuity $714.29
20.
Contract 1 at N =4 and I 10%
PV = (3,000,000 / (
FINA 5170
Midterm
October 19, 2011
The exam will consist of 20 to 30 multiple choice questions.
I will select questions from the homework for Chapters: 1, 2, 3, 4,5, 6, 7, 8.
You have the solutions at: http:/www.cob.unt.edu/firel/mantecon/course_section3.
Study Guide for Marriott
Each group should write down the answers to the following questions:
How does Marriott use its estimates of its cost of capital? Does this make sense?
Be ready to compute the Cost of Capital for each division. Make sure that you
e
FINA 5170
Final Exam
December 14, 2011
I will write two exams, Final Exam, with questions from the Final Exam study guide (see
below) and Midterm Second, with questions from the midterm study guide (see below). Final
Exam will consist of 15 to 20 multiple
CHAPTER 6
STOCK VALUATION
Answers to Concept Questions
1.
The value of any investment depends on the present value of its cash flows; i.e., what investors will
actually receive. The cash flows from a share of stock are the dividends.
2.
Investors believe
In-Class Assignment 2
Group Number:
Student 1 (Last Name / First Name):
Student 2 (Last Name / First Name):
Student 3 (Last Name / First Name):
Student 4 (Last Name / First Name):
Student 5 (Last Name / First Name):
1. Which of the following amounts is cl
In-Class Assignment 4
Group Number:
Student 1 (Last Name / First Name):
Student 2 (Last Name / First Name):
Student 3 (Last Name / First Name):
Student 4 (Last Name / First Name):
Student 5 (Last Name / First Name):
1. Based on the net present value metho
1. What is the net working capital for 2010?
A. $345
B. $405
C. $645
D. $805
*E. $812
Net working capital = $75 + $502 + $640 - $405 = $812
Difficulty level: Medium
Topic: Net Working Capital
2. What is the change in net working capital from 2009 to 2010?
Chapter 7
1. The advantages of the payback method of project analysis include the:
I. application of a discount rate to each separate cash flow.
II. bias towards liquidity.
III. ease of use.
IV. arbitrary cutoff point.
a. I and II only
b. I and III only
c