ROE (ROR on Balance)
Cash Out as % of Earnings
Earnings @ ROE=0%
Balance Before Withdrawal
Cash Withdrawal @ 0%
Balance After Withdrawal
Increase in Balance
Increase in Earnings
Increase in Withdrawals
Return on Equity is the rate you ex
THE UNIT CIRCLE
For the quarter circle and the pi experiment, see the graph below
The Yield Curve
Selected Interest Rates http:/www.federalreserve.gov/releases/h15/update/
Federal Reserve Board Statistics http:/www.federalreserve.gov/releases/
The Living Yield Curve http:/www.smartmoney.com/investing/bonds/the-living-yield-curve-7923/
To Calculate Loan Amortization Schedule for the Home:
Loan Principal (Po)
Interest Rate (r)
Term (n) cfw_20 max
200,000 A fully amortized loan is paid off in equal periodic installments (Pmt).
10.00% Each period, part of th
Employee Data and Sales Stats
Helpful Hints for Firm Valuations
Often the focus of a valuation is one or more of the following:
Total assets (TA)
Selected assets (A1, A2 )
Equity (or stock) (E)
Although the book values of the above items found on
This quiz is to be completed without help or assistance from anyone else.
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your name here
Complete the following:
Enter your name and 2-digit class # i
Rawls College of Business
Texas Tech University
Corporate Finance 1
Instructor: George D. Cashman
FIN 3322 T, Th 2.00-3.20; 3.30-4.50
Office Hours T, Th 10.00am-10.50am
Office: Rawls 317W
Syllabus for Finance 3322
Corporation Finance I
Dr. Robert J. Ritchey
Office: W314 Phone: 834-3956
Email: [email protected]
Office Hours: Tue & Thur: 12:30 2:00 and by appointment.
Occasionally I will not be able to meet these offic
Energy Coal Resources, Inc.
Conclusion of Value - Minority Basis
As of December 31, 2008
of Invested Capital +
Your business needs a different number of workers each day.
Once you schedule someone they work for 5 straight days.
Minimize the total extra workers without being short.
Example 6: Value of a resistor in an electrical circuit.
Find the value of a resistor in an electrical circuit that will dissipate the charge to 1
percent of its original value within one-twentieth of a second after the switch is clo
Example 4: Working Capital Management.
Determine how to invest excess cash in 1-month, 3-month and 6-month CDs so as to
maximize interest income while meeting company cash requirements (plus safety margin).
Example 5: Efficient stock portfolio.
Find the weightings of stocks in an efficient portfolio that maximizes the portfolio rate of
return for a given level of risk. This worksheet uses the Sharpe single-index model; you
can also use
Example 3: Personnel scheduling for an Amusement Park.
For employees working five consecutive days with two days off, find the schedule that meets demand
from attendance levels while minimizing payroll costs.
Example 1: Product mix problem with diminishing profit margin.
Your company manufactures TVs, stereos and speakers, using a common parts inventory
of power supplies, speaker cones, etc. Parts are in limited supply and you must determ
Example 2: Transportation Problem.
Minimize the costs of shipping goods from production plants to warehouses near metropolitan demand
centers, while not exceeding the supply available from each plant and meeting the demand from each
Using SOLVER to find Multiple IRR's
The SOLVER A
33.00% <- Cost of Capital
to find the Cost
the Net Present
Net Present V
Scale Models, Incorporated
Capital Budgeting and Cash Flow Analysis
Scale Models, Inc. is a small family
owned manufacturer of a line of radio
control scale model airplanes which it
markets directly to consumers. At present
their financial manager, Dudley
Roulette: "Bankroll Simulation"
There are 38 possible outcomes, two are double zero, 18 are black and 18 are red.
If you bet either black or red your chances of winning an amount equal to your bet is
18/38. If you win you keep your bet and receive an addi
Risk and Return Tradeoff
A & B are mutually
Return of A > Return of A = Return of A <
Return of B
Return of B
Return of B
Risk of A > Risk of B
Risk of A = Risk of B
Selected Risk Measures
Measures systematic (non-diversifiable/market related)
Appropriate for well diversified investors
Relative (as opposed to absolute) risk measure
Standard Deviation or Variance
Measures total (diversifi
Enter Your Name Here
Beyond year 2007:
All dollar figures in millions, except as noted
Dividend payout =
Tax Rate =
Look carefully at cells containing comments!
Long run growth =
<- Historical ->