ACF214M Principles of Finance
Tutorial Questions 2015-2016
Alexey Akimov
Qiyu Zhang
Tutorial Questions Week 4
1. The following table shows the one-year return distribution of Startup Inc. Calculate the expected
return and standard deviation of the return.
Tutorial Solutions Week 3
1. You are a manager at Percolated Fiber, which is considering expanding its operations in
synthetic fiber manufacturing. Your boss comes into your office, drops a consultants
report on your desk, and complains, We owe these cons
Tutorial Solutions Week 9
1. Hong Kong has an unusual tax system. Dividends and capital gains are not taxable. The
Peng Corporation currently pays a quarterly dividend of HK$5 per share. It has 5 million
shares outstanding at a price of HK$267.
a. What wi
Tutorial Solutions Week 8
1. Markum Enterprises is considering permanently adding $100 million of debt to its capital
structure. Markums corporate tax rate is 35%.
a. Absent personal taxes, what is the value of the interest tax shield from the new debt?
b
Tutorial Solutions Week 7
1. You are an entrepreneur starting a biotechnology firm. If your research is successful, the
technology can be sold for 30 million. If your research is unsuccessful, it will be worth
nothing. To fund your research, you need to r
LANCASTER UNIVERSITY
Management School
Department of Accounting and Finance
AcF 215: Advanced Principles of Finance
Lent Term 2017
Problem Solving Workshop Week 2
Exercise 1
Consider the following lotteries
and three individuals: John, Oscar and Nicholas,
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Lecture outline
BOND VALUATION
BONDS
Valuation of
bonds
AcF 100
Lecture 11-12
Bonds price
changes
Bonds features
& types
Risk and rating
of bonds
Bonds markets
And quotes
Berk and DeMarzo Chapter 6
3
Bonds - Definitions
4
Bond certificate -
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Time value of money
TVM
TIME VALUE OF MONEY
AcF 100
Lecture 3-5
Single cash flow
Future value &
Compounding
Present value
& Discounting
Multiple cash flows
Finding
discount rate
Finding time
periods
Berk and DeMarzo Chapter 4
3
Time line of
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2
Recap
INVESTMENT
DECISIONS RULES
Time value of money
Future and Present values
Single and multiple cash flow scenarios
AcF 100
Lecture 8-10
Interest rates
Berk and DeMarzo Chapter 7
APR and EAR
Determinants
3
Investment decision crite
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2
Previously on AcF100
TVM
INTEREST RATES
Single cash flow
AcF 100
Lecture 6-7
Future value &
Compounding
Multiple cash flows
Present value
& Discounting
Finding
discount rate
Finding time
periods
Berk and DeMarzo Chapter 5
3
Previously on Ac
Department of Accounting and Finance
AcF 100, Lent term: Managerial Finance
Workshop Questions, Week 5
Investment Decision Rules
1. Create an example to illustrate why the internal rate of return can lead to faulty decisions
when deciding which one of two
Department of Accounting and Finance
AcF 100, Lent term: Managerial Finance
Workshop Questions, Week 3
Time Value of money and interest rates
1.
Should lending laws be changed to require lenders to report EARs instead
of APRs? Why or why not?
Yes, they sh
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Overview
INTRODUCTION TO
MANAGERIAL FINANCE
Administrative Issues
Areas of Finance
Defining Managerial Finance
Finance vs. Accounting
AcF 100 - Lent term
Lecture 1
Four Types of Firms
Ownership versus Control
Course Objectives
Core Te
Department of Accounting and Finance
AcF 100, Lent term: Managerial Finance
Workshop Questions, Week 2
Time Value of Money
1. For each of the following compute the missing value
Present Value
Years
Interest Rate
81550
17
12%
14
22%
PV = 886,073 / (1.22)14
Department of Accounting and Finance
AcF 100, Lent term: Managerial Finance
Workshop Questions, Week 5
Investment Decision Rules
1. Create an example to illustrate why the internal rate of return can lead to faulty decisions when
deciding which one of two
Department of Accounting and Finance
AcF 100, Lent term: Managerial Finance
Workshop Questions, Week 3
Time Value of money and interest rates
1.
Should lending laws be changed to require lenders to report EARs instead
of APRs? Why or why not?
2.
Prepare a
Department of Accounting and Finance
AcF 100, Lent term: Managerial Finance
Workshop Questions, Week 4
Interest rates and NPV
1. Suppose the term structure of interest rates is shown below:
Term
1 year
2 years
Rate (EAR%) 5.00%
4.80%
3 years
4.60%
5 years
Department of Accounting and Finance
AcF 100, Lent term: Managerial Finance
Workshop Questions, Week 4
Interest rates and NPV
1. Suppose the term structure of interest rates is shown below:
Term
1 year
2 years
Rate (EAR%) 5.00%
4.80%
3 years
4.60%
5 years
Department of Accounting and Finance
AcF 100, Lent term: Managerial Finance
Workshop Questions, Week 6
Investment Decision Rules
1. Answer the following two questions on zero coupon bonds:
a. Consider a zero coupon bond with 20 years to maturity. What sho
Department of Accounting and Finance
AcF 100, Lent term: Managerial Finance
Workshop Questions, Week 6
Bond Valuation
1. Answer the following two questions on zero coupon bonds:
a. Consider a zero coupon bond with 20 years to maturity. What should
be the
ACF 100 Financial Accounting Week 5 Additional book-keeping seminar
Question 1 basic book-keeping
Charles had the following trial balance at 1 January 2016
Trial balance for Charles as at 1 January 2016
Debit
Office furniture
1,630
Other payables - Brown
Question 1
Which of the following accounts reports as an asset?
Select one:
a. Bank loan account
b. Bank account
c. Sales account
d. Capital account
Question 2
Which of the following users of financial statements are most likely
to be interested in the fi
PART I
ACCOUNTING AND FINANCE
AcF 100 INTRODUCTION TO ACCOUNTING AND FINANCE
3 hours + 15 minutes reading time
Answer ONE question each from both sections A and B. Answer TWO questions from
Section C and then ONE question from section D. All questions in
Question 1. A credit
card has an APR of 14.9 percent and charges
interest monthly. The effective annual rate on this account:
Select one:
a. will be less than 14.9 percent
b. can either be less than or equal to 14.9 percent
c. will equal 14.9 percent
d. c
Question 1.Theresa
sold 300 shares of MNO stock on the NYSE
today. This transaction occurred in: the secondary market.
Question 2.Three
years ago, you took out a loan for 9,000. Over
those three years, you paid equal monthly payments totaling
11,826. What
LANCASTER UNIVERSITY
2012 EXAMINATIONS
PART I
ACCOUNTING AND FINANCE
AcF 100 INTRODUCTION TO ACCOUNTING AND FINANCE
3 hours + 15 minutes reading time
Answer ONE question each from both sections A and B.
Answer TWO
questions from Section C and then ONE que
LANCASTER UNIVERSITY
2013 EXAMINATIONS
PART I
ACCOUNTING AND FINANCE
AcF 100 INTRODUCTION TO ACCOUNTING AND FINANCE
3 hours + 15 minutes reading time
Answer ONE question each from both sections A and B.
Answer TWO
questions from Section C and then ONE que
1. Which one of the following methods is based on net income rather than cash flows?
Select one:
a. profitability index
b. internal rate of return
c. None of these
d. Payback period
2. Anderson, Inc. is considering a project with an initial cost of 28,000