Lecture 8 The Basics of Capital
Budgeting
Learning Objectives
Understand the difference between normal and non-normal
cash flow streams.
Understand the difference between mutually exclusive and
independent projects.
Calculate and use the major capital
BONDS AND
THEIR VALUATION
CHAPTER
7
(Difficulty: E = Easy, M = Medium, and T = Tough)
Multiple Choice: Conceptual
Easy:
Interest rates
.
1
One of the basic relationships in interest rate theory is that, other things held constant, for a
given change in th
RISK ANDCHAPTER
RATES OF
5 RETURN
(Difficulty: E = Easy, M = Medium, and T = Tough)
Multiple Choice: Conceptual
Easy:
Risk concepts
1
.
Answer: e
Diff: E
Which of the following statements is most correct?
a. Risk refers to the chance that some unfavorable
AB1201
NANYANG TECHNOLOGICAL UNIVERSITY
SEMESTER 2 EXAMINATION 2014-2015
AB1201 - Financial Management
April 2015
Time Allowed: 2 hours
INSTRUCTIONS
1
This paper contains FOUR(4) questions and comprises TEN(10) pages and ONE(1)
appendix of FIVE(5) pages.
NANYANG TECHNOLOGICAL UNIVERSITY
SEMESTER 2 MID-TERM QUIZ 2014-2015
AB1201 - Financial Management
Time Allowed: 45 minutes
INSTRUCTIONS
1
This paper contains FIFTEEN(15) multiple choice questions (MCQs) and comprises
four(4) pages and ONE(1) appendix of T
AB1201 Semester 2 AY 2013-14
Exam Solution
Section A
Question 1
1.
D
2.
A
3.
D
4.
E
5
E
6.
E
7.
D
8.
E
9.
B
10.
C
11.
D
12.
B
13.
E
14.
D
15.
C
16.
A
17.
C
18.
C
19.
E
20.
D
21.
D
22.
C
23.
E
24.
D
25.
B
1
Section B:
Question2 (Total 10 marks)
(a) (7 mark
AB1201 - Financial Management
SEMESTER 2 MID-TERM QUIZ 2013-2014
Answer Key
(Correctanswerishighlightedinyellow)
SectionA
(1)
The primary objective for the management of a public company is
(A)
(B)
(C)
(D)
(E)
to maximize the total value of bondholders an
10/20/2015 Review Test Submission: Lecture 9: Online Assignment
Home Courses My Filing Cabinet Comr rl NBS ANG KWANG YEW 1
Content Lecture 9 - Cash Flow Estimation, Risk Analysis, And The Optimal Capital Budget Review Test Submission: Lecture 9: Onlin
A company has $500,000 debt outstanding. It has 100,000
common shares with current share price of $5. Its current cost of
equity is 15%, and the stock is in equilibrium. To change its
capital structure, the company plans to issue raise $100,000
debt, and
For two mutually exclusive projects, one
should choose the project with higher
NPV.
1. True
2. False
0%
1
0%
2
For two mutually exclusive projects, one
should choose the project with higher
IRR.
1. True
2. False
0%
1
0%
2
For two mutually exclusive projec
AB1201
NANYANG TECHNOLOGICAL UNIVERSITY
SEMESTER 2 EXAMINATION 2013-2014
AB1201 - Financial Management
April 2014
Time Allowed: 2 hours
INSTRUCTIONS
1
This paper contains FOUR(4) questions and comprises TEN(10) pages and ONE(1)
appendix of FIVE(5) pages.
Proposed Answer for AB 1201 Semester 1 Examination 2014-2015
Section A, Question 1: MCQ
1. D
2. E
3. E
4. A
5. B
6. C
7. E
8. C
9. B
10. A
11. C
12. A
13. B
14. B
15. D
16. E
17. D
18. D
19. C
20. A
21. C
22. D
23. C
24. B
25. B
Section B
Question 2
Part
NANYANG TECHNOLOGICAL UNIVERSITY
SEMESTER 1 MID-TERM QUIZ 2014-2015
AB1201 - Financial Management Answer Key
Section A
This section consists of TEN(10) multiple choice questions. Choose the correct answer from
the alternatives given. In your SCANTRON SHEE
AB1201 - Financial Management
SEMESTER 2 MID-TERM QUIZ 2014-2015
Answer Key
(Correct answer is highlighted in yellow)
Section A
(1)
Which of the following statements is NOT CORRECT?
(A)
(B)
(C)
(D)
(E)
The Free Cash Flow is the amount of cash that could b
NANYANG TECHNOLOGICAL UNIVERSITY
SEMESTER 2 MID-TERM QUIZ 2013-2014
AB1201 - Financial Management
Time Allowed: 45 minutes
INSTRUCTIONS
1
This paper contains FIFTEEN(15) multiple choice questions (MCQs) and comprises
four(4) pages and ONE(1) appendix of T
AB1201
NANYANG TECHNOLOGICAL UNIVERSITY
SEMESTER 1 EXAMINATION 2014-2015
AB1201 - Financial Management
November 2014
Time Allowed: 2 hours
INSTRUCTIONS
1
This paper contains FIVE(5) questions and comprises TWELVE(12) pages and
ONE(1) appendix of FIVE(5) p
Lecture 9 Cash Flow Estimation, Risk Analysis,
and Optimal Capital Budget
Learning Objectives
Understand and identify what are relevant cash flows that
should be included in cash flow estimation.
- Discuss sunk costs, opportunity costs, and externalities.
AB1201: Financial
Management
Course Wrap-Up
By: Angie Low
Course Wrap-up Review of Topics
Congratulations! You have completed all the
contents of this course and learnt many concepts
in finance.
Lecture 1: Overview of financial management
Goal of finan
Suppose a company is expected to make earnings per share of $1 in the coming year. The
company is deciding whether to retain 90% of the earnings to invest in projects with a return
of 10% or to give out all the earnings as dividends. The dividend policy,
NANYANG TECHNOLOGICAL UNIVERSITY
SEMESTER 1 MID-TERM QUIZ 2014-2015
AB1201 - Financial Management
Time Allowed: 45 minutes
INSTRUCTIONS
1
This paper contains FIFTEEN(15) multiple choice questions (MCQs) and comprises
six(6) pages and ONE(1) appendix of fi
A company has 2m common shares with book value of $2m, 1m
preferred shares with book value of $1m, and 10,000 bonds with
par value of $1,000 each. The market prices for its common
shares, preferred shares and bonds are $30, $50, and $950
respectively. The
AB 1201
LECTURE 4
Bonds and Their Valuation
4-1
Bonds and Their
Valuation
What is a Bond?
Key Features of Bonds
Bond Valuation
Measuring Yield
Assessing Risk
4-2
What is a bond?
A long-term debt instrument in which a
borrower agrees to make payments
AB 1201
LECTURE 8
The Basics of Capital
Should
Budgeting
we
build this
plant?
8-1
What is capital budgeting?
Analysis of potential projects, e.g.,
investments in tangible and intangible
assets, marketing campaigns, etc.
Long-term decisions; involve large
AB1201 FINANCIAL
MANAGEMENT
Angie Low
[email protected]
1-1
Clickers - Steps to set the channel of the
clickers
Press and release the Ch button (GO
for the older model). While the light is
flashing red & green, enter the 2 digit
channel code (i.e., Channe
AB 1201
LECTURE 7
The Cost of Capital
1
Chapter 11
The Cost of Capital
Sources of Capital
Component Costs
WACC
Adjusting for Flotation Costs
Adjusting for Risk
11-2
The Gist of the Chapter
WACC = wdrd(1-T) + wprp + wcrs
Found using
bond
formula
Foun
AB1201 Financial Management
AB1201
Financial Management
_
Academic Year
: 2013/2014
Pre-requisites
: Nil
No. of AUs
: 3
Semester
: 1
Course Description and Scope
This course aims to provide business and accounting students with a broad understanding of al
AB 1201
LECTURE 3
Time Value of Money II Loan
Amortization
Interest Rates
3-1
Recap
Future value of lump sum after N years:
Present value of lump sum due in N years:
FVN = PV(1 + I)N
PV = FVN /(1 + I)N
PMT
1 I N 1
FV
I
Future value of ordinary annuity:
P
AB 1201
Lecture 11
Distributions to Shareholders
Investor Preferences on Dividends
Signaling and Clientele Effects
Dividend Reinvestment Plans
Stock Repurchases
Stock Dividends and Stock Splits
Omit section 16-3a
11-1
What is dividend policy?
The decisio
AB 1201
LECTURE 2
Time Value of Money I
2-1
Time Lines
Show the timing of cash flows.
Tick marks occur at the end of periods,
so Time 0 is today; Time 1 is the end of
the first period (year, month, etc.) or
the beginning of the second period.
0
1
2
3
CF1
(1) A 10-year, 9% semiannual coupon bond is
selling at par ($1,000). A bond of equal
maturity and risk pays quarterly coupons
with a 9% coupon rate. If the quarterly
coupon bond has a par value of $1,000,
what will be its price?
(Ans: $1,006.51)
(2) A fir