Notes on the Financial Calculators for Chapter 11.
For NPV calculations, please follow the following procedures.
Press CF
Press 2nd CE|C to clear the existing memory
Key in time 0 cash flow at CF0, make sure to do number first, then to indicate the negati
Bonus Question for the Final exam, 5 pts
Suppose you are facing the following capital budgeting proposal: $100,000 initial cost, to be
depreciated straight-line over 5 years to an expected salvage value of $5,000, 35% tax rate,
$45,000 additional revenues
Additional Practices for Chapter 9 Corporate Valuation Model
1.
Smith Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to
grow at a constant rate of 5% per year indefinitely. Smith has no debt or preferred
Practice Midterm II Due on November 3rd, at the beginning of the Midterm 2. (You only need to
turn in Part I and Part II for extra credits, 7.5 total.)
Part I: T/F Questions (Please circle your choice, 0.5pt each)
1. The Federal Reserve tends to take acti
Additional Practice Question for Chapter 9
Scenario
1
2
3
4
Prob.
0.1
0.4
0.4
0.1
Return on
Security 1
0.15
0.1
0.05
-0.05
Return on
Security 2
0.25
0.2
0.15
0.1
Return on
Security 3
-0.1
0.05
0.1
0.15
1. What is the expected return and Std.Dev for each s
1. Whats the current stock value for a firm that is expected to have extraordinary growth of
25% for 4 years, after which it will face more competition and slip into a constant-growth
rate of 5%? Its required rate of return is 14% and next year's dividend
Other solutions:
A new internet company is expected to do very well for the next 3 years, its dividend is expected
to grow at 20% for each of the next 3 years. After that, the growth rate is expected to slow
down, so the dividend is expected to grow at o
Final Exam (Take-home part due at the beginning of the in-class Final
on Tuesday, December 15th)
Part I. Multiple Choice Questions (4 points each, 60 points total)
1. Which of the following is NOT a capital component when calculating the weighted
average