FV PV 1 r
n
PV
1
1
n
1 r
PV
CF
r
PV
CF1
r
PV
NPV CF0
EAR 1 r
CF1
1 r1
FVn
1 r
n
CF
CF1
rg
1
n
FV 1
r
PV
PV
1
1
r r 1 r n
1 Real
CF2
1 r2
2
FV
ln PV
n
ln(1 r )
numberof compounding periods
1 Nom
1 Infl
CF3
1 r3
3
.
CFn
1 rn
Note: In responding to "WHY/Explain" you should
NAME_
give a meaningful explanation that would convince a skeptic.
FOSTER SCHOOL OF BUSINESS
QUIZ #1
FINANCE 350
Also write
your name on
the back.
PROF. JARRAD HARFORD
1. Identify and justify the goal of the
Finance 350 Midterm Solution
I. Multiple Choice Questions (36 points, 3 each)
1
2
3
4
5
6
C
D
B
A
D
D
7
8
9
10
11
12
C
C
C
C
D
C
II. Practice Problems
1. (9 points)
a. C oupon = (coupon rate face value) / number of coupons per year= (.08 1000) / 2 = $40
b
Note: In responding to "WHY/Explain" you should NAME_ give a meaningful explanation that would convince a skeptic. FINANCE 350 SCHOOL OF BUSINESS ADMINISTRATION QUIZ #3 PROF. JARRAD HARFORD
Also write your name on the back.
1. Under what circumstan
FIN 350 Help Session 3
Solutions
Winter 2015
Perpetuities
1. When Alfred Nobel died, he left the majority of his estate to fund 5 annual prizes
starting one year after he died (the 6th one, in economics, was added later).
(a) If he wanted the cash award o
FINANCE 350, WINTER 2007 BUSINESS FINANCE Final Exam Name Formulas:
FV PV 1 r m
n*m
INSTRUCTOR: ROBERT SCHONLAU LEWIS 212
VL
1 r 1 r *(1 r ) n
VU
PV (TS ) Costs rD D rD CF1 (1 r ) CF 2 (1 r ) 2 D
D
PV (ordinary _ annuity ) CF * PV ( growing _ pe
FIN 350 Business Finance
Homework 3
Fall 2014
Solutions
1. The yield to maturity of a $1,000 bond with a 7% coupon rate, semiannual coupons and two
years to maturity is 7.6% APR, compounded semiannually. What is its price?
The cash flows from the bond a
FIN 350 Business Finance
Homework 5
Fall 2014
Solutions
1. The prices and dividends for a stock over the last 5 years are:
Year
1
2
3
4
5
Price
9
10
8
10
9
Dividend
0
2
1
1
2
(a) What is the realized return of this stock for each year? Assume that the pri
FIN 350 Business Finance
Homework 3
Summer 2016
Due Date: July 10
1. The prices and dividends for a stock over the last 5 years are:
Year
1
2
3
4
5
Price
31
30
34
32
34
Dividend
2
2
1
1
Assume that dividends are paid during the year. Further, assume that
FIN 350 Business Finance
Homework 2
Summer 2016
Due Date: July 3
1. You are analyzing bond quotes to evaluate an investment strategy for your firm. Unfortunately, some entries in the table are missing. You know that the face value is
$1,000 and that coupo
FIN 350 Business Finance
Homework 1
Summer 2016
Due Date: June 26
1. The first comic book featuring Superman was sold in 1938. In 2016, the estimated
price for this comic book in good condition was about $3.2 million. This represented
a return of 24.8% pe
Q2.5
From the context, We know:
I = 1,200 skiers
T = 10 days
(a) Flow Rate = Inventory / Flow Time = 1200 skiers / 10 days = 120 skiers per day
(b) If the hotel is still fully booked, then:
I = 1,200 skiers
T = 5 days
New Flow Rate = Inventory / Flow Time
FIN 350 Business Finance
Homework 4
Fall 2014
Solutions
1. Your company has preferred stock with an annual dividend of $3.50 and a current price of
$43.75. What is the investors required rate of return on preferred stock?
Recall that the price of preferre
FIN 350 Business Finance
Homework 1
Summer 2016
Solutions
1. The first comic book featuring Superman was sold in 1938. In 2016, the estimated price for
this comic book in good condition was about $3.2 million. This represented a return of 24.8%
per year.
FIN 350 Business Finance
Homework 6
Fall 2014
Solutions
1. Suppose Intels stock has a beta of 1.6 and Boeings stock has a beta of 1. If the riskfree
rate is 4% and the expected return of the market portfolio is 10%, according to the CAPM:
(a) What is the
Finance 350 Sample Midterm Solution
I. Multiple Choice Questions (36 points, 3 each)
1
2
3
4
5
6
D
E
C
B
C
C
7
8
9
10
11
12
C
E
E
B
A
D
II. Practice Problems (64 points, 8 each)
1.
a
NPV $228,000
$56,500
(1 .09)
1
$99,700
(1 .09)
2
$115,000
(1 .09)
3
; N
Note: In responding to "WHY/Explain" you should
NAME_
give a meaningful explanation that would convince a skeptic.
SCHOOL OF BUSINESS ADMINISTRATION
QUIZ #3
FINANCE 350
1.
PROF. JARRAD HARFORD
What is the price of a share of stock with the following expec
Note: In responding to "WHY/Explain" you should
NAME_
give a meaningful explanation that would convince a skeptic.
SCHOOL OF BUSINESS ADMINISTRATION
QUIZ #3
FINANCE 350
Also write
your name on
the back.
PROF. JARRAD HARFORD
For this quiz, assume the follo
1. Plan: The benefit of the rebate is that Honda will sell more vehicles and earn a profit
on each additional vehicle sold:
Benefit Profit of $6,000 per vehicle 15,000 additional vehicles sold $90 million.
Execute: The cost of the rebate is that Honda wil
1. Plan: Draw the time line of the cash flows for the investment opportunity. Compute the Net
Present Value of the investment opportunity at 2% interest per year to determine if it is an
attractive investment opportunity.
0
1
2
3
1,000
4,000
1,000
4,000
4
1. If they are paying 8% APR (4% per six months), then the PV of the annuity
payments at this rate must be $250,000.
1
1
PV $10,000
10,000 $254,852 $250,000
99
.04 .04(1.04)
Discounting the annuity payments at a rate of 8% APR results in a PV that ex
FIN 350 Business Finance
Quiz 1 Solution
I. Multiple Choice Questions (25 points, 5 each)
1
2
3
4
5
C
B
A
D
B
II. Practice Problems(75 points, 15 each):
6.
7.
8.
You should choose the olive oil. You can sell the olive oil for $5,400, buy the airline ticke
FIN 350 Business Finance
Quiz2 Solution
I. Multiple Choice Questions (25 points, 5 each)
1
2
3
4
5
B
A
A
D
D
II. Practice Problems(75 points, 15 each):
6.
1
1
FV
+
P = CPN 1
N
y (1 + y ) (1 + y ) N
1
1
1000
+
y=4
1163.51 = 30 1
20
y (1 + y ) (1 + y )2
FIN 350 Business Finance
Quiz3 Solution
I. Multiple Choice Questions (25 points, 5 each)
1
2
3
4
5
B
D
A
C
C
II. Practice Problems(75 points):
6.
Putting the dividends on a timeline will help us keep our work organized:
Year
0
1
2
3
4
5
6
1.2
1.44
4.32
4.
FIN 350 Business Finance
Quiz4 Solution
I. Multiple Choice Questions (25 points, 5 each)
1
2
3
4
5
C
A
A
B
B
II. Practice Problems(75 points):
6.
Stock A: average return = 3.67% and standard deviation = 8.71%; Stock B: average return =
8.17% and standard
Finance 350 Sample Final Exam Solution
I.
1
2
3
4
5
6
B
B
D
13.87%
B
C
7
8
9
10
11
12
C
B
B/D
C
B
D
II.
1.
Year 0
Year 1
Year 2
Year 3
Year 4
$40,000
$30,000
$20,000
$20,000
Year 1
Year 2
Year 3
Year 4
Revenues
40,000
30,000
20,000
20,000

Expenses
 16,
Note: In responding to "WHY/Explain" you should
give a meaningful explanation that would convince a skeptic.
Also write
your name on
NAME_the back.
FOSTER SCHOOL OF BUSINESS
QUIZ #3
FINANCE 350
PROF. JARRAD HARFORD
1. Your company is private and has cash
FIN 350 Help Session 1
Solutions
Winter 2015
Basics
1. The rst comic book featuring Superman was sold in 1938. In 2005, the estimated
price for this comic book in good condition was about $485,000. This represented
a return of 26.25% per year. For this to