Agenda
Last Lecture
Return, Risk and the Security Market Line
Key Concepts and Skills
Real World Application
Estimating Microsofts Beta
2
Last Lecture
Returns
Holding Period Returns
Averages: Arithmetic Mean & Geometric Mean
Risk
Variance
Standard Deviat

Seminar Questions from Week 8 Lecture
Question 1
Suppose a stock had an initial price of $64 per share, paid a dividend of $1.75 per share during the
year, and had an ending share price of $72. Compute the percentage total return. What was the
dividend yi

Seminar Questions from Week 9 Lecture
Question 1
You own a portfolio that has $1200 invested in Stock A and $1900 invested in Stock B. If the expected
returns on these stocks are 11% and 18% respectively, what is the expected return on the portfolio?
Ques

Seminar Questions from Week 3 Lecture
Question 1
Superstar Enterprises has bonds on the market making annual payments, with 16
years to maturity, and selling for $87. At this price, the bonds yield 6.8%. What must
the coupon rate be on Superstar bonds? As

Answers to Tutorial Questions from Week 8 Lecture
Question 1
Suppose a stock had an initial price of $64 per share, paid a dividend of $1.75 per share during the
year, and had an ending share price of $72. Compute the percentage total return. What was the

Answers for Tutorial Questions from Week 4 Lecture
Question 1
An investment project costs $10000 and has annual cash flows of $2100 for six years.
What is the discounted payback period if the discount rate is zero percent? What if the
discount rate is 5%?

Answers for Tutorial Questions from Week 6 Lecture
Question 1
In each of the following cases, calculate the accounting break-even and the cash
break-even points. Ignore tax effects in calculating cash break-even.
Unit Price
$5
$21
$35 000
Unit variable co

Answers to Tutorial Questions from Week 9 Lecture
Question 1
You own a portfolio that has $1200 invested in Stock A and $1900 invested in Stock B. If the
expected returns on these stocks are 11% and 18% respectively, what is the expected return on the
por

Answers for Tutorial Questions from Week 5 Lecture
Question 1
Penguin Ltd. has a project with the following information: sales of $13,500, costs of $5,400,
depreciation expense of $1,200, and interest expense of $680. If the tax rate is 35%, what is the
o

Answers to Tutorial Questions from Week 10 Lecture
Question 1
Stock in Parrot Industries has a beta of 1.12. The market risk premium is 7.5% and T-bills are
currently yielding 4%. The companys most recent dividend was $1.50 per share, and dividends
are ex

Answers for Tutorial Questions from Week 1 and Week 2 Lecture
Week 1 Lecture
Question 1
What are the three main issues that corporate finance deals with?
Corporate finance deals with three major issues:
- What long term investments should the firm take on

Seminar Questions from Week 8 Lecture
Question 1
Suppose a stock had an initial price of $64 per share, paid a dividend of $1.75 per share during the
year, and had an ending share price of $72. Compute the percentage total return. What was the
dividend yi

2202AFE Practice question Needs analysis
The Smith family has come to you for advice on the amount of life insurance cover needed to
protect their family. Steve Smith, aged 40, is a truck driver and his wife, Penny, aged 38, is a
secretary. Steve and Penn

Study Questions
Topic Covered
Chapter Reference
1
The Super Scene How much is enough?
AMFPG Chapter 15 and 4 PLUS Supplementary Material
Demographic Trends and Issues
Question
1
Source: Lecture Notes
The Association of Superannuation Funds of Australia [A

Seminar Questions from Week 1 Lecture
Week 1 Lecture
Question 1
What are the three main issues that corporate finance deals with?
Question 2
What is the goal of the financial manager?
Question 3
What is a liquid asset?
Question 4
The 2004 balance sheet of

Seminar Questions from Week 4-5 Lecture
Question 1
The Robb Computer Corporation is trying to choose between the following two
mutually exclusive design projects:
Year
0
1
2
3
CF Project I
-30000
15000
15000
15000
CF Project II
-5000
2800
2800
2800
a) If

Seminar Questions from Week 2 Lecture
Question 1
What happens to the future value of annuity if you increase the rate r? What happens to the present
value?
Question 2
What is the relationship between the present value, interest rate and discount period?
Q

first of all, respectively describing the definition of business, government and globalization.
as well as analyzing the relations between business and government. Business, is a provision of goods and services required by customers organized behavior. Mo

2201AFE Corporate Finance
Week 11:
Financial Leverage and Capital Structure Policy
Readings: Chapter 19
Agenda
Last Week
Financial Leverage and Capital Structure Policy
Key Concepts and Skills
Real World Application
CDO101 A primer on collateralised debt

2201AFE Corporate Finance
Week 6:
Project Analysis and Evaluation
Readings: Chapter 9
Agenda
Last Week
Project Analysis and Evaluation
Key Concepts and Skills
Revision for Mid-semester Exam
Next Week
Quiz #2 is available this week!
Last Lectures
Ca

2201AFE Corporate Finance
Week 13:
Options
Final Exam Revision
Readings: Chapter 20
Agenda
Last Week
Options
Key Concepts and Skills
Final Exam Comments and Revision
Please complete the Student Experience Feedback
Quiz #4 is available this week
Due this

2201AFE Corporate Finance
Week 2:
First Principles of Valuation:
The Time Value of Money
Readings: Chapter 5
Agenda
Last Week
Time Value of Money
Key Concepts and Skills
Real World Application
Your First Million is the Toughest
Next Week
2
Last Lec

2201AFE Corporate Finance
Week 8:
Lessons from Capital Market History
Readings: Chapter 10
Agenda
Last Lecture
Some Lessons from Capital Market History
Key Concepts and Skills
Revision for Mid Semester Exam
Last Lecture
Evaluation of NPV Estimates
S

2201AFE Corporate Finance
Week 4:
Net Present Value and Other Investment Criteria
Readings: Chapter 7
Agenda
Last Week
Net Present Value and Other Investment Criteria
Key Concepts and Skills
Next Week
2
Last Lecture
Bonds
Bond value = PV coupons (a

2201AFE Corporate Finance
Week 10:
Cost of Capital
Readings: Chapter 17
Agenda
Last Week
Cost of Capital
Key Concepts and Skills
Real World Application
Investors Need A Good WACC
Quiz #3 is available next week
2
Last Lecture
Expected Returns and Variances

2201AFE Corporate Finance
Week 12:
Dividends and Dividend Policy
Readings: Chapter 18
Agenda
Last Week
Dividends and Dividend Policy
Key Concepts and Skills
Final Exam Formulae Sheet and Practice Questions.
Start doing the practice questions
Answers to sh

2201AFE Corporate Finance
Week 3:
Valuing Shares and Bonds
Readings: Chapter 6
Agenda
Last Week
Valuing Shares and Bonds
Key Concepts and Skills
Real World Application
Warren Buffett The Oracle of Omaha
Next Week
Quiz #1 is available this week
Du

BUS 438 (Durham).
HW 7 capital budgeting 4
1. What is forecasting risk? In general, would the degree of forecasting risk be greater for a new
product or a cost-cutting proposal? Why?
Solution:
Forecasting risk is the risk that a poor decision is made beca