Assignment # 1
1. Suppose a stock had an initial price of $84 per share, paid two dividend of $2.05 per share
during the year, and had an ending share price of $97.
(a) What was the dividend yield?
(b) What was the capital gains yield?
(c) What is the tot

Assignment # 2
1. Company A needs to raise $60 million to finance its expansion into new markets. The company
will sell new shares of equity via a general cash offering to raise the needed funds. If the offer
price is $21 per share and the companys underw

FYANGCOMM363_2011WIN
1/6/2014
Chapter 17
COMM363 INTERMEDIATE
CORPORATE FINANCE
Different forms of dividend
Dividend policy
ch17to25
Dividend and dividend policy
Types of Dividends
Should the firm pay out money to its
Dividends are a permanent distrib

Chapter 12:
1.
The dividend yield is the dividend divided by price at the beginning of the period price, so:
Dividend yield = $2.05 / $84 *2= .0488 or 4.88%
And the capital gains yield is the increase in price divided by the initial price, so:
Capital gai

Answers to the home exercise:
Suppose your company has an equity beta of .58 and the current risk-free rate
is 6.1%. If the expected market risk premium is 8.6%, what is your cost of equity
capital?
Re = Rf + B*(Rm-Rf) = 6.1% + 0.58*8.6% = 11.1%
Equity

Assignment # 3
Figure 1: (questions 1 and 2 are based on figure 1)
Figure 2 (question 8 is based on figure 2)
Figure 3 (question 9 is based on figure 3)
1. Take a look back at Figure 1 to answer the following questions:
(a) If you have $100, how many euro

Assignment # 1
1. Suppose a stock had an initial price of $84 per share, paid a dividend of $2.05 per share during
the year, and had an ending share price of $97.
(a) What was the dividend yield?
(b) What was the capital gains yield?
2. Using the followin

1.
This is basically the same as the previous problem, except we need to include the $900,000 of expenses in the
amount the company needs to raise, so:
X(1 .09) = ($60,000,000)
X = $65,934,065 required total proceeds from sale.
Number of shares offered =

4/11/2014
Chapter 12
Review class
Dollar and percentage returns
Lessens from Historical returns, mean and variance
Average returns
Variance
Normal distribution
Value at risk
Efficient market hypothesis
Chapter 13
Portfolio theory
Single stock
Fu

Chapter 12:
1.
The dividend yield is the dividend divided by price at the beginning of the period price, so:
Dividend yield = $2.05 / $84 = .0244 or 2.44%
And the capital gains yield is the increase in price divided by the initial price, so:
Capital gains

Answer Key
1.
Using the quotes from the table, we get:
a.
$100(1/($1.6725 /1.00) = 59.79
b.
$1.6725 CDN
c.
5M($1.6725/) = $8,362,500
d.
Australian dollar
e.
Mexican peso
f.
SFr 0.9340/
This is a cross rate.
If you answer is 0.6567, it is also considered c

COMM 363 (04)
Intermediate Corporate Finance
Course Outline
2013/14 Term 2
The Edwards School of Business develops business professionals to build nations.
Instructor
Telephone
Office
Email
Office Hours
Lecture Time
Lecture Location
Tutorial
Course Coordi

1/6/2014
Chapter 12
COMM363 INTERMEDIATE
CORPORATE FINANCE
Historical returns (calculate dollar and
percentage returns).
Measure risk.
Relationship between risk and return.
Capital market efficiency.
ch1213
Dollar return on a stock (oneperiod)
You bo

Chapters 14
COMM363
INTERMEDIATE
CORPORATE FINANCE
Cost of Capital
WACC
Ch14-16
Why Cost of Capital Is Important
The return to an investor is the same as the
cost to the company
Our cost of capital provides us with an
Cost of Capital
Required Return

1
Chapter 23: Mergers and Acquisitions (10 Problems)
Q3) Consider the following pre-merger information about Firm X and Firm Y:
Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share.
Assuming