Week 10 Cost of
capital
Jamie Dang
Jamie Dang
1
Cost of capital
What is the cost of capital?
Over the past couple of weeks, we have focused on capital budgeting,
which is deciding what project to invest in
Now we need money to purchase the capital for t
Week 12 Leverage and
Capital
Jamie Dang
Jamie Dang
1
What is financial leverage?
What is capital structure?
A companys choice of the mix of debt and equity which
will determine its total value
What is financial leverage?
The extent to which a company is
Week 6 Capital budgeting (NPV
and other investment criteria)
FINS1613 Business Finance
Jamie Dang
1
Role of financial manager
What kinds of decisions do financial managers make?
Capital budgeting
Choosing what to invest in
Capital structuring
Deciding
Week 8 Capital
budgeting III
Jamie dang
Jamie Dang
1
NPV
The NPVs we calculate are just estimates
All the information we are given are estimates, they
are not certain
A positive NPV is a good sign that we should take up
the project
Since they are just est
Week 3 Financial
Mathematics
FINS1613 Business Finance
Jamie Dang
1
Time value of money
A dollar today is worth more than a dollar
tomorrow
Suppose you could either receive $100 now or in
one years time. When would you want it? Why?
$100 now
Because y
Week 5
Investment Risk, Returns and the
History of Capital Markets
FINS1613 Business Finance
Jamie Dang
1
Importance of financial market
Why is the understanding the financial market
important?
It is where you can raise capital
It determines the prices
In Lecture Exercise
Wyvern Portal Comic Ltd (Wyvern Ltd) produces and prints two lines of comic books: Serpent Sword and
Galaxy Portal. Wyvern Ltd prints 12 issues of each comic line per year.
Wyvern Ltd is currently using a Volume Based Costing system (V
Australian School Of Business
FINS1613: Business Finance
Semester 1 2014
Tutorial Quiz 2
Name:
Rip Ip
Student number: 3461455
Tutorial:
Claire (M12A)
Instructions:
1. You must complete a Generalised Answer Sheet for this exam.
(a) Complete the top portion
Australian School Of Business
FINS1613: Business Finance
Semester 1 2014
Tutorial Quiz 3
Name:
Rip Ip
Student number: 3461455
Tutorial:
Claire (M12A)
Instructions:
1. You must complete a Generalised Answer Sheet for this exam.
(a) Complete the top portion
Capital Budgeting
Mark Humphery-Jenner
NPV
NPV =
N
X
t=1
ct
(1 + i)t
Solving for IRRs:
If there is only one cash outflow
c0 =
Thus
c1
1+i
c0 (1 + i) = c1
Thus,
i=
c1
1
c0
If there are two cash outflows:
c0 =
c1
c2
+
1 + i (1 + i)2
Let (1 + i) = k. The
CORPORATE FINANCE WORKSHOP QUESTIONS
WEEK 3 Questions based on Lecture 2, Financial Mathematics
1. Alex borrows $50,000 from a bank to pay his university tuition fees, and he agrees to pay back
$2,353.67 at the end of each month to the bank for two years.
T HE U NIVERSITY O F N EW S OUTH WALES
Australian School Of Business
School Of Banking And Finance
FINS1613: Business Finance
Semester 1 2012
Practice Questions for the Final
Answer Key
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
a
a
b
b
a
d
e
a
a
c
11.
12.
13.
14.
15
1.
a) Period of Time required for the return on the investment to repay the cost of the original investment.
It is calculated by letting NPV=0 and calculating for time. The Decision Rule is to accept the project If
the payback period Is within the accepta
Research Component: 3% course credit
Title:
Project Coordinator:
Consumer Decision Making 2-Jiang
Veronica Jiang (zixi.jiang@unsw.edu.au)
Your task: you will evaluate pictures and products.
You need to spend just 20 minutes to complete the study.
Date: 9
Research Project 3 (3% Course
Credit)
Title: Life Event and Product Evaluation Studies
Ethics Ref. No.:
Project Coordinator
Felix Septianto
Contact Details:
Telephone: 04 7858 0090
Email: f.septianto@unsw.edu.au
[180 students may participate in
this study
Ch 8.NPV and Other Investment Criteria
Answers to critical thinking and concepts review questions
3.
4.
5.
a.
Payback period is simply the break-even point of a series of cash flows. To actually
compute the payback period, it is assumed that any cash flow
Week 9 Risk and
Return and the CAPM
Jamie Dang
Jamie Dang
1
Computing expected returns
How do you find the expected return?
= =1
Where
is the probability that state i can occur
is the expected future return of the asset if state i occurs
n = total n
Week 11 Raising
Capital
Jamie Dang
Jamie Dang
1
Terminology
What is venture capital?
Financing for high risk start up projects
What is an IPO?
It stands for an initial public offering or a cash offering
It is when a company issues shares the public for
Week 13 Dividends
and dividend policy
Jamie Dang
Jamie Dang
1
Different types of dividends
What is a regular dividend?
A cash payment made directly to shareholders.
Periodic in nature, usually quarterly
What are extra cash dividends/special dividends?
A n
Week 4 Valuation of
Firm Securities
FINS1613 Business Finance
Jamie Dang
1
Bills of exchange
What is a bill of exchange?
A financial instrument that a borrower will provide to a
lender in return for a specified amount of money with that
will be paid back
Week 7 Capital budgeting II
FINS1613 Business Finance
Jamie Dang
1
Discount cash flow (DCF) analysis
From last week, we determined that NPV was the
tool we would use to determine which project to
invest in as other tools lead to:
Accepting a lower value
Leverage & Capital Structure / Modigliani & Miller
QUESTION 1A: Harambe in Perfect Capital Markets
Harambe Corp lives in M&Ms perfect capital markets world with no taxes & no bankruptcy
costs. The firm currently has no reinvestment opportunities or opport
1. Role of the financial manager:
- Capital Budgeting e.g. Would it be profitable to establish a new franchise
- Capital Structure e.g. Proportion of borrowing used to finance investment
- Working Capital management e.g. how would everyday activities of t