FIN 3320 BUSINESS FINANCE
Stock Valuation
Round your final answers to two decimal places. Place your final answer on the space provided for each question. Show your
work below each problem.
_ 1. Sisterdale Corp. has an issue of preferred stock that pays a

Bond Valuation 2
1.
If a bond with a face value of $1,000 and a coupon rate of 8% is selling at a price of $970, is the bond's yield-to-maturity
more or less than 8%?
2.
A 6-year bond pays interest of $80 annually and sells for $950. What are its coupon r

Historical Average Return, Standard Deviation of Returns, and Normal
Distribution Mapping
Calculate the historical average return and the historical standard deviation of returns. Using these two pieces of
data, assume the returns are normally distributed

FIN 3320 BUSINESS FINANCE
Stock Valuation
Round your final answers to two decimal places. Place your final answer on the space provided for each question. Show your
work below each problem.
_ 1. Sisterdale Corp. has an issue of preferred stock that pays a

Capital Budgeting 2
Problems 1 - 7 refer to two projects with the following cash flows:
1.
If the opportunity cost of capital is 11%, which of these projects is worth pursuing?
2.
Suppose that you can choose only one of these projects. Which would you cho

Stock Valuation 3
1.
Integrated Potato Chips paid a $1.00 per share dividend yesterday. You expect the dividend to grow steadily at a rate of
4% per year.
a.
What is the expected dividend in each of the next 3 years?
b.
If the cost of capital for the stoc

Bond Valuation A
An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 10% annual coupon.
Bond L matures in 15 years, while Bond S matures in 1 year.
a.
What will the value of each bond be if the going market interest

TVM - 3
1.
Compute the present value of a $100 cash flow for the following combinations of discount rates and times.
a.
r = 8%, n = 10 years
b.
r = 8%, n = 20 years
c.
r = 4%, n = 10 years
d.
r = 4%, n = 20 years
2.
Compute the future value of a $100 cash

FIN 3320BUSINESS FINANCE
Capital Budgeting Problems
I. Indigo Industrial, Inc. is trying to determine which, if any, of five different projects it should undertake. Indigo
Industrial has a 8.25% required rate of return on projects that it undertakes. The

FINC 3320 Business Finance
Skills Review Assignment
1.
94
2.
1.3(1 0.09) 5
3.
6(1.08)
0.10 0.02
4.
69
5.
7.31
0.13 X
Solve for X
1
4
32
5
6.
3i
i 1
5(1 X )
(5 1.09)
7.
93
8.
225 X
620
10 X
Solve for X
Solve for X
9.
If the student body at SHSU inc

Stock Valuation - Questions
1.)
Bates, Inc. pays a dividend of $1.00 and is currently selling for $32.50. if investors require a 12% return
on their investment from buying Bates stock, what growth rate would Bates Inc. have to provide
investors?
2.)
Firm

FIN 3320BUSINESS FINANCE
Capital Budgeting Problems
I. Indigo Industrial, Inc. is trying to determine which, if any, of five different projects it should undertake. Indigo
Industrial has a 8.25% required rate of return on projects that it undertakes. The

Exam 3 Topics
Dividend Discount Model:
Solve for P0, D1, r, g
- Common Stock
- Preferred Stock
Constant g
Changing g
Understand the impact on P0 as a parameter (r, g, D1) changes.
*
Stock price and dividend table
Given Buy and Sell Dates, solve for
- Tota