FINA201: TUTORIAL 6 SOLUTION
1
a)
Using MM III and MM I, the WACC will be
B
$40m
.091 .30
.080
WACC k u 1 Tc
$100m $40m(.30)
VL
b) Using MM II, the cost of equity will be
k e k u ( k u k d )
2
B
$40m
(1 Tc ) .09 (.09 .065)
(1 .30) .10
S
$72m
c)
I
FINA201: TUTORIAL ASSIGNMENT 5
1
2
3
4
The Alpha Corporation has a capital structure comprising default free perpetual debt (paying
$1m interest per year) and 3m ordinary shares with a market value of $5 each. The prevailing
interest rate on default free
FINA201: TUTORIAL ASSIGNMENT 7
1
2
Telecom Corporation is contemplating the project described in Tutorial 6, Q2.
a)
Using the standard version of the CAPM to estimate the projects cost of equity and
all parameters given in Tutorial 6, Q2, what is the proj
FINA201: TUTORIAL ASSIGNMENT 6
1
2
Zeta Corporation has no debt, an equity value of $100m, and a cost of equity of .09. It is
contemplating borrowing $40m to substitute for equity finance and has been quoted a
borrowing rate of .065. The company tax rate
Victoria University of Wellington
Tutorials FINA 201, Trimester
Tutorial Questions Tutorial # 4 based on lectures 13 and 14
Problem 1
Assume you would have to make a capital budgeting decision. Which of the following
would you include as incremental cash
FINA201: TUTORIAL 3 SOLUTION
1 (a) The expenditure of $2m to date is a sunk cost and should therefore be ignored. The
expected salvage value in 6 years is $1.2m compounded up for 6 years inflation to
yield $1.35m. Accordingly the depreciation for each of
Chapter 7
Risk Analysis, Real Options, and Capital
Budgeting
FINA 201 & 211
Michael Keefe
1
Topics
Motivating Example
Sensitivity Analysis
Scenario Analysis
Real Options and Decision Trees
2
MOTIVATING EXAMPLE:
DOMINION POST ARTICLE
3
How Wellington could
Stock Valuation
RWJ Chapter 9
FINA 201 & 211
Michael Keefe
1
Topics
Dividend Growth Model
Applies growing perpetuity to value a firm
Estimating g from accounting statements
Interpreting stock price changes using the model
Using ratios to value compan
Name:_
Student ID:_
TEST THREE
HCMC TRIMESTER 1 2014-2015
FINA 201
Corporate Finance
Time allowed: 50 Minutes
Instructions: Closed book
Write your name and student ID on each page.
Non-programmable calculators or ones with the memory cleared
are allowed.
Name:_
Student ID:_
TEST THREE
HCMC TRIMESTER 1 2015-2016
FINA 201
Corporate Finance
Time allowed: 50i Minutes
Instructions:
Closed book
Write the information requested at the top of this page and write your
name and student ID on each page.
Non-programma
The Nature of Risk
Management
Alicia Garcia
What is it?
A potential gain or loss that occurs as a result
of an exchange rate change.
Should Firms Manage Risk?
They consider any use of risk management tools, such as
forwards, futures and options, as specu
Individual Learning Logs
Name: Zhong Heng
Student ID: 24839116
1. What concepts were covered in the
tutorial?
This week is talking about the two main
areas that are obscurity and rhetorical
devices. The language will mislead as the
results
of
jargon,
vagu
Individual Learning Logs
Name: Zhong Heng
Student ID: 24839116
1. What concepts were covered in the
tutorial?
This week tutorial is focuse on dealing
evidence. This topic shows the quality of
evidence depends on the source, the
relationship of evidence wi
IndividualLearningLogs
Name: Zhong Heng
Student ID: 24839116
1. What concepts were covered in the
tutorial?
The structure of arguments
-Contentions
-Reasons
-Objections
Rebuttal opposed opinions
2. What was the activity/ies
undertaken during the tutoria
16.3)
a)
The present values of the three alternatives are:
PV(liq) = 120
PV(A)=135/(1+rf)=135/(1+0%)=135
PV(B) = [(0.5 (161+0.569)]/(1+0%) = 115
Thus, project A has the highest present value.
b)
Yes, Jack and Jill should agree to loan the firm 20. If they
12.2)
The cash flows from the project (in $ millions) have the following tree diagram:
1000 or 500
PVu
PV0
200 or 100
PVd
-500 or -250
The tree diagram for the risk neutral probabilities derived from the returns to investing in the
market is:
u=.70 $1.20
9.5 A woman who has just turned 24 wants to save for her retirement through a defined benefit
employee pension scheme. She plans to retire on her 60th birthday and wants a monthly
income, beginning the month after her 60th birthday, of 2,000 (after taxes)
9.5 A woman who has just turned 24 wants to save for her retirement through a defined benefit
employee pension scheme. She plans to retire on her 60th birthday and wants a monthly
income, beginning the month after her 60th birthday, of 2,000 (after taxes)
14.2)
Initially, the expected payoff to equity is: (0.5) (210 50) + (0.5) (80 50) = $95
Therefore, the price per share is: 95/100 =0.95
14.3)
a)
In the good state, both the new debt and the existing debt are paid in full. In the bad state, the
debt holder
1. You are analyzing the beta for Hewlett Packard and have broken down the company into
four broad business groups, with market values and betas for each group. The firm has 36%
corporate tax rate.
Business Group
Mainframes
Personal
Computers
Software
Pri
12.3)
Sq foot
Cost/Sq foot
Good state
Bad state
Price Now/ sq
foot
Rent (% of
price now)
Apartment
10000
120
230
140
180
House
3000
100
300
200
225
20%
10%
a)
Since both house and condo values per square foot have to satisfy risk neutral valuation, we
can
10.2 Consider the purchase of a new milling machine. What purchase price makes the NPV of the project zero? Base
your analysis on the following facts.
The new milling machine will reduce operating expenses by exactly 20,000 per year for 10 years. Each of
TOPIC 3
CHAPTER 3: WORKING WITH FINANCIAL
STATEMENTS
BWFF2033/SemA161
KEY CONCEPTS AND SKILLS
Understand sources and uses of cash and
the Statement of Cash Flows
Know how to standardize financial
statements for comparison purposes
Know how to compute a
UUM COLLEGE OF BUSINESS
UNIVERSITI UTARA MALAYSIA
No.
Information on Course
1.
Course Name : FINANCIAL MANAGEMENT
2.
Course Code:
3.
Name(s) of Academic Staff:
4.
BWFF2033
DR. HASSAN KAMEL ALAARAJ (C)
DR. HANITA KADIR SHAHAR
PROF. MADYA DR. ANGAPPAN A/L R
Leasing
The process by which a frim can obtain the use of certain assets for which it must make a
series of contractual, periodic, tax deductible paymens.
Lessee is the receiver
Lessor is the onwer of the assets
Operting leasing:
Is normally a contractual
Lectures 1 & 2
Financial Evaluation of Investment Opportunities:
Discounted Cash Flow Valuations
MMPA 504
Trimester 1, 2016
Lecturer: Tina Wendel
Learning objectives
Explain capital budgeting in the context of corporate finance
Explain time value of mon