AB1201
FINANCIAL MANAGEMENT
Course Description and Scope
The objective of this course is to provide business and accounting students with a broad
understanding of all the important financial principles, concepts, and analytical tools. This is a first
cour
(1) Venture, Inc. expects its earnings and dividends
to grow at an annual rate of 40% for the next 4
years, after which the growth rate in earnings
and dividends would be zero. The companys
last dividend was $1.25, its stocks beta is 1.2,
the market risk
Companies should attempt to use as little
debt as possible for their business operations,
because debt financing would increase the
financial risk of the companies.
1. True
2. False
0%
1
0%
2
Other things held constant, an increase in
financial leverage o
When two stocks are combined, the expected
return of the portfolio is equal to the weighted
average expected return of the two stocks.
1. True
2. False
0%
1
0%
2
When two stocks are combined, the required
return of the portfolio is equal to the weighted
a
$800 is to be deposited into a bank account at
the end of each of the next four quarters. If
the effective annual rate earned from the
account is 8%, compounded monthly, what
amount of money will the account have 18
months from now?
(Ans: $3,423.70)
Ben
A 5-year project requires an investment of $10m in fixed assets.
At the end of the project, the salvage value of the assets is $2m.
Tax rate is 30%.
What is net cash flow from salvage if the assets are depreciated
on a straight-line basis over:
(a) 5 year
Some points to note when applying TVM:
1. To compute the periodic interest rate:
Use the nominal annual rate to divide by the
number of compounding periods in a year.
Never use the EAR to divide.
2. Use full precision for interest rates. Do not round off.
(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
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
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
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
AB 1201
NEWS CRITIQUE
1
News Article
Adapted from Business Times,
26/09/2013
2
Contents
Introduction to IPO
Advantages & Disadvantages of Listing
Listing Procedure
Role of Underwriter
Application
Conclusion
3
What is IPO?
Initial Public Offering: f
Tutorial 3 Questions (To be discussed on 7 Sep)
Present Worth
Equal-Life Alternatives
Non-Textbook question:
Two alternative water supply systems are being considered for a small community.
Compare the present worth of the costs of 20 years service (i.e.,
Tutorial 2 Questions
Textbook questions (from 6th edition)
Determination of F, P, A
Q2.13: A proximity sensor attached to the top of an endoscope could reduce risks during
eye surgery by alerting surgeons to the location of critical retinal tissue. If a c
CV4252/MT4252
Effects of Time and Interest
on Money
Lecture 3
From Last Lecture
Terminology & Symbols
P = present value or amount of money at time 0
Present worth (PW), present value (PV), net present value
(NPV)
F = value or amount of money at some futu
Tutorial 1 Questions
Textbook Questions (6th edition):
Basic Concepts
Q1.5. Discuss the importance of identifying alternatives in the engineering economic
process.
Equivalence
Q1.19. At what interest rate would $100,000 now be equivalent to $80,000 one ye
2.26. Find numerical value of (F/A, 19%, 20) by
a) interpolation, b) formula
(a) Interpolate between i = 18% and i = 20% at n = 20:
(F/A,18%, 20) = 146.6280
(F/A, 20%, 20) = 186.6880
19 18
x
20 18 186.6880 146.6280
Approximation
by linear interpolation
F/
CV4252/MT4252
Introduction to Interests
Lecture 2
In Last Lecture
Introduction to Engineering Economy
Roles of Engineering Economy
Performing a study
Key elements & Time Value of Money
2
Interest Rates
Lenders charge borrowers interest because:
Payments f
CV4252/MT4252
Gradient Series Factors
& Shifted Cash Flows
Lecture 4
In Last Lecture
To find
Given
Factor
Formula
Single-Payment Present
Worth Factor
P
F
(P/F, i%, n)
P = F(P/F, i%, n)
Single-Payment Compound
Amount Factor
F
P
(F/P, i%, n)
F = P(F/P, i%,
CV4252/MT4252
Decision Making Between
Alternatives (1)
Lecture 5
Evaluating Alternatives
Alternative 1
Alternative 2
. . .
Alternative n
Choose best alternative.which one?
Engineering Economics: economic comparisons
Formulating
Engineering
economy
Estimat
CV4252/MT4252
/
Decision Making Between
Alternatives (2)
Lecture 6
Last Lecture
Introduction to evaluating alternatives
Minimum Attractive Rate of Return
Present Worth Analysis
Equal-Life
q
Alternatives
Different-Life Alternatives
Introduction to Capitali
CV4252/MT4252
Engineering Economics & Finance
Lecture 1
13 Aug 2012
What is Engineering Economy?
Engineering economy is the dollar-and-cents side of decisions
that engineers make or recommend to maximize profits.
Engineering
Physical
Environment
Economic
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
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
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
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
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.
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