COMM370 Ting Xu
Practice for Lecture 5: Capital Structure: The MM Propositions
Question 1. Prove Modigliani-Miller proposition 1 with corporate taxes. As part of your
answer, clearly state the underlying assumptions, explain the intuition underlying the p
COMM 370 Final Exam Formula Sheet
Discounted Cash-Flow Analysis:
1
CdTC [1 .5(r )] SdTC
(r d) (1 r ) n
(r d)
(1 r )
PV of perpetual (CCA tax shield) =
Present Value of an n-payment annuity of $1
Present Value of a perpetuity of $C =
1
1
1
r
1 r n
C
r
Comm 370
Elena Simintzi
COMMERCE 370 MIDTERM EXAMINATION
October 16th, 2012 6:30 8:30 pm
Student Name:
Student #
Student Signature:
Section (circle your own section): 103 ; 104 ; 110
Directions:
This examination consists of 24 pages (including this cover
Information about COMM 370 Final Exam
Exam Date: Friday, December 13, 2013
Exam Time: 3:30 6:00 pm
Exam Location: SWNG 121 (Alejandras Sections 103 and 104 only)
All students must bring UBC photo identification with them to the exam.
The exam is clos
Lecture 7
The Massey Ferguson Case
1
Objectives
Explore the concept of an optimal debt ratio based upon
basic business risk and competitive risk.
Show the implications of an aggressive debt ratio policy
that is inconsistent with an aggressive corporate st
Payout Policy
Elena Simintzi
COMM 370
Lecture 10: Payout Policy
1
Methods of Cash Payments to
Shareholders
Suppose a firm generates excess cash. It can:
1. Pay it out
o As a cash dividend
o Through a share repurchase
Open market repurchase (most common)
COMM 370
Elena Simintzi
COMMERCE 370 PRACTICE FINAL EXAMINATION
Student Name:
Student #
Student Signature:
Section (circle your own section):
Directions:
This examination consists of 15 pages (including this cover page). Please make sure your
exa
Capital Structure:
The MM Propositions
Elena Simintzi
COMM 370
Lecture 5: MM Propositions
1
Choosing Capital Structure
We have left one major question unresolved: how do firms decide on their capital
structure, i.e. the optimal mix of debt and equity?
I
COMM 370
Elena Simintzi
COMMERCE 370 PRACTICE FINAL EXAMINATION
Student Name:
Student #
Student Signature:
Section (circle your own section):
Directions:
This examination consists of pages (including this cover page). Please make sure your exam
is complet
More on APV
Elena Simintzi
COMM 370
Lecture 9: APV
1
Objectives
We now focus on the case you would use APV and not
WACC or FTE: Debt financing has a fixed schedule!
Illustrate how financing effects other than interest tax
shields can be incorporated in
Introduction to
Corporate Finance
Elena Simintzi
COMM 370
Introduction & Overview
1
Basic Information
Instructor: Elena Simintzi
Web Page: http:/finance.sauder.ubc.ca/people/simintzi/
Office: Henry Angus 871
Phone: (604) 822-4886
Email: elena.simintzi@sau
Capital Budgeting
with Debt
Elena Simintzi
COMM 370
Lecture 8: Capital Budgeting
1
Valuing projects and firms
Understand how financing decisions (debt vs. equity) affect the
valuation of a firm or project and why.
Better understand how the weighted aver
Trade-off Theory & Other Theories
of Capital Structure
Elena Simintzi
COMM 370
Lecture 6: Theories of Capital Structure
1
What can explain firms
Capital Structure choices?
We showed that increasing debt increases firm value due to interest tax
shields, b
Mergers & Acquisitions
Elena Simintzi
COMM 370
Lecture 12: Mergers & Acquisitions
1
Outline
What is a Merger and a Takeover?
Why does a firm want to merge with or acquire another firm?
Do Mergers Create Value? For Whom?
Valuation of M&A deals and NPV to a
COMM370 Hernan Ortiz-Molina
Practice for Lecture 12: Mergers & Acquisitions
Questions 1-7 are simple background questions whose answers are in the class notes:
Question 1. What is a synergy and where do they come from?
Question 2. Which kind of merger cou
COMM370 Hernan Ortiz-Molina
Practice for Lecture 12: Mergers & Acquisitions
Questions 1-7 are simple background questions whose answers are in the class notes:
Question 1. What is a synergy and where do they come from?
Question 2. Which kind of merger cou
COMM370 Hernan Ortiz-Molina
Practice for Lecture 10: More on APV
Questions 1-3 are simple background questions whose answers are in the class notes:
Question 1. Carefully explain what a leveraged buyout (LBO) is and what is especial about
the pattern of d
COMM370 Hernan Ortiz-Molina
Practice for Lecture 11: Payout Policy
Questions 1-18 are simple background questions whose answers are in the class notes:
Question 1. How are cash dividends paid?
Question 2. If capital markets are perfect, why does the stock
COMM370 Jinfei Sheng
Practice for Lecture 3: The Clarkson Lumber Case
Question 1. As a new credit official at CIBC, your first assignment is to evaluate T-Gels request
for a $50,000 loan. The bank does not have a previous relationship with T-Gel, nor its
Basic Financial Analysis
Elena Simintzi
COMM 370
Lecture 1: Financial Analysis
1
A. Basic Concepts
Lecture 1: Financial Analysis
2
The Balance Sheet
The balance sheet is a snapshot of the firms assets and
liabilities at a given point in time
Balance She
COMM370 Jinfei Sheng
Practice for Lecture 2: Financial Planning Models-Solution
Questions 1-4 are simple background questions whose answers are in the notes:
Question 1. Carefully explain what a firms external financing need (EFN) for next year is. As
par
COMM370 Jinfei Sheng
Practice for Lecture 4: Capital Budgeting
Question 1. Calculate the annual estimated free cash flow of a 10-year project from the
following information: The project will cost $15 million up front and the salvage value at
the end of ye
COMM370 Jinfei Sheng
Practice for Lecture 3: The Clarkson Lumber Case-Solution
Question 1. As a new credit official at CIBC, your first assignment is to evaluate T-Gels request
for a $50,000 loan. The bank does not have a previous relationship with T-Gel,
COMM370 Jinfei Sheng
Practice for Lecture 4: Capital Budgeting-Solution
Question 1. Calculate the annual estimated free cash flow of a 10-year project from the
following information: The project will cost $15 million up front and the salvage value at
the
COMM370 Jinfei Sheng
Practice for Lecture 5: Capital Structure: The MM Propositions
Question 1. Prove Modigliani-Miller proposition 1 with corporate taxes. As part of your
answer, clearly state the underlying assumptions, explain the intuition underlying
COMM370 Jinfei Sheng
Practice for Lecture 5: Capital Structure: The MM Propositions-Solution
Question 1. Prove Modigliani-Miller proposition 1 with corporate taxes. As part of your
answer, clearly state the underlying assumptions, explain the intuition un
COMM 370
Jinfei Sheng
COMMERCE 370 PRACTICE MIDTERM EXAMINATION
Solutions
Last Name:
First Name
Student #
Student Signature:
Section (circle your own section): 103 (2:30-4:00pm); 104 (4:00-5:30pm)
Directions:
This examination consists of 16 pages (includi
COMM 370
Jinfei Sheng
C O MM E R CE 3 7 0 P R A CT I CE MI DT E R M E X A MI NA T I O N
Jinfei Shengs Sections 103 and 104 only
Last Name:
First Name
Student #
Student Signature:
Section # (circle your own section): 103 (2:30-4:00pm); 104 (4:00-5:30pm)
Di
COMM370: CORPORATE FINANCE
Course Outline
COURSE INFORMATION
Division: Finance
Term/period: Fall 2015, Term 1
Instructor: Jinfei Sheng
Course duration: Sept 8 Dec 4, 2015
Email: jinfei.sheng@sauder.ubc.ca
Section numbers: 103 and 104
Office: HA 391
Class
COMM370 Elena Simintzi
Practice for Lecture 7: Tradeoff Theory & Other Theories of Capital Structure
Question 1. ML Inc. is an all-equity firm with 10 million shares outstanding which trade at
$15 per share, and it faces a 40% corporate tax rate. Although
COMM 370:Corporate Finance
Fall 2016
Module: Payout Policy
Part 1: Dividend Policy Basics and M&M
Irrelevance Proposition
Textbook Ch. 19
Prof. Aziz Alimov
Valuation and Payout Policy: Problem 1
ABC has a return on reinvested earnings (RORE, ROI or simpl
COMM 370:Corporate Finance
Fall 2016
Class 2: Financial Statements and Cash Flow
Textbook Chapter 2
Prof. Aziz Alimov
1
Financial Statement Information
Used extensively by external users
Bankers
loan decision and monitoring
Investors
intrinsic valuati
COMM 370:Corporate Finance
Fall 2016
Module 3
Capital Structure: Part 1
Textbook 16
Prof. Aziz Alimov
1
Chapter Outline
16.1 The Capital-Structure Question and The Pie Theory
16.2 Maximizing Firm Value versus Maximizing Shareholder
Interests
16.3 Financia
COMM 370:Corporate Finance
Fall 2016
Module 2
Capital Budgeting: Part 1
Textbook Chapters 8 and 13
Prof. Aziz Alimov
1
Today
1. Review of NPV and IRR rules
2. Review of Project Cash Flows
3. The Majestic Mulch and Compost Company:
An Example
4. Inflation
COMM 370:Corporate Finance
Fall 2016
Module: Payout Policy
Part 2: Dividend Policy
Textbook Ch. 19
Prof. Aziz Alimov
Last class: Dividends are irrelevant
The benchmark case
Modigliani & Miller (1961) showed that, under certain
assumptions, dividends do n