Ques
Use the PV command to find the present value of each of the following future cash flows at a discount rate of 10% per year, compounded monthly: (Warning: Be sure to
use the rate thats appropriate for the calculations in each part of this problem. Lab
Course: FI 307
Financial Modeling
Summer 2015
Dr. John Zott
Senior Adjunct Professor
Ageno School of Business
GOLDEN GATE UNIVERSITY
Contact Information
Email:
[email protected]
Telephone: 831-464-7061
Office Hours: By appointment
Important Dates:
Fi
Part a
No. of period
Number of year
Interest per year
Present value
Payment
Future value
P/Y
N
I/Y
PV
PMT
FV
END/BEG
12
6
10%
-$81,642.73
1,500
0
1
Part b
P/Y
N
I/Y
PV
PMT
FV
END/BEG
12
6
10%
-$80,968.00
1,500
0
0
Part c
P/Y
N
I/Y
PV
PMT
FV
END/BEG
1
5
10
Present and Future Values of Growing Annuities
Annual saving (A)
Number of years (n, <= 20)
Interest rate (rr, % per year)
Growth rate (g, % per year)
$1,000
10
8.00%
4.00%
Adjusted interest rate (k, % per year)
3.85%
Computations using
Table
Formulas
Fun
Effect of Compounding Frequency
Nominal annual interest rate (APR)
Number of compounding periods per year
Amount of initial investment
Length of investment period (years)
8.00%
2
$100,000
10
Effective interest rate
Future value of investment (using formul
Session 4: Forecasting Seasonal Revenues
Objectives:
Financial Management
Recognize seasonal variations in a firms income and indicate their importance to
financial, sales, marketing, and operational management.
Explain what is meant by "seasonally adjust
Session 3: Forecasting Financial Statements
Objectives:
Financial Management
Use forecasts of annual sales and other considerations to forecast financial statements
as part of a firms long-range plans.
Analyze the impacts of potential changes in future
ABC Ended December 31, 20X2 and 20X1
Income Statement for the YearsCOMPANY
Value in $ thousand, except EPS
20X2
Total Operating Revenues (or Total Sales Revenues)
$2,575.0
Less: Cost of Goods Sold (COGS)
$1,150.0
Gross Profits
$1,425.0
Less: Operating Exp
Fi 307 Financial Modeling
Forecasting
Forecasting Revenues
Basing the future off of the past
Building revenues based on budgets
Optimism
Pessimism
Speed
Use of regression analysis.
See http:/en.wikipedia.org/wiki/Linear_regression
How to bake a reg
A
B
C
D
E
$-
Intercept, $ million
Slope, $ million/year
Coeff. of Correlation, R
1,924.77
9,699.14
0.98369
Coeff. of Determination,
R^2
0.96765
LINEST Output for Linear Model
9699.14
1924.77
591.1246
3497.1403
0.96765
6199.8
269.22046
9
1.03E+010 345,934,
Session 2: Forecasting Annual Revenues
Overview:
Forecasting annual revenues is an essential step in corporate planning. Forecasts help CFOs
arrange financing for capital expenditures, plan month-to-month borrowing to meet payrolls and
maintain inventorie
Overview
1. An Overview of the Firms Financial
Statements
2. The Income Statement
3. Corporate Taxes
4. The Balance Sheet
5. The Cash Flow Statement
1
Learning Objectives
1. Understand the content of the 4 basic financial
statements. Focus on
Income stat
Present and Future Values for Constant Annuities
Annual saving (A)
Number of years (n, <= 20)
Interest rate (rr, % per year)
$1,000
10
8.00%
Computations using
Table
Formulas
Functions
Annuity in arrears
Present value
Future value
$6,710
$14,487
$6,710
$1
The Condominium Project
Input data
Cost of project today (CNow)
Inflation rate (Infl)
Return on investment (Ret)
Collection growth rate (Grth)
Years till construction (NYrs)
$100,000
5.00%
8.00%
3.00%
10
Adjusted rate of return (AdjRet)
Future cost of pro
A
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
B
(a)
Solution
(b)
Solution
(c)
Solution
(d)
Solution
C
D
E
F
G
H
I
J
K
L
M
N
O
What is the present value of a high-quality bond with a face value of $1000 that makes semiannual payments of
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
A
B
I
J
K
L
M
DATA FOR A 5-INDUSTRY/15-COMPANY STOCK PORTFOLIO (MAXIMUM TOTAL RETURN)
Industry
Autos & Trucks
Company
Number of
Shares
A
B
C
D
E
F
G
1
I
J
KEYSTONE DEPARTMENT STORE
2
H
Cash Budget for First Six Months of Next Year
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Sales (Actuals and Forecasts)
Nov
Dec
Jan
Feb
March
April
May
June
600,000 $ 950,000 $ 300,000 $ 375,000 $ 45
Ques
Use the PV command to find the present value of each of the following future cash flows at a discount rate of 10% per year, compounded monthly: (Warning: Be sure to
use the rate thats appropriate for the calculations in each part of this problem. Lab
Ques
Problem Three: Accounts Receivable and Inventory Turnover
Analysts maintain that two of the most important ratios are Inventory turnover and Accounts receivable turnover.
a. You are analysing ABC Company, a computer manufacturer. You notice that inve
ABC COMPANY
Income Statement for the Years Ended December 31, 20X2 and Forecast for Next 3 years
Values in $ thousand, except EPS
20X2
20X3
20X4
20X5
Total Operating Revenues (or Total Sales Revenues)
Less: Cost of Goods Sold (COGS)
Gross Profits
Less: Op
A
Equipment cost
Salvage value
Life, years
Discount rate
Reinvest rate
Income tax rate
Year
Year-end annual benefit
Before-tax cash flow
Annual depreciation
Taxable income
Tax @ 40%
After-tax cash flow
Net present value
Internal rate of return
Modified in
A
B
C
D
E
F
G
1
2
H
I
J
June
$ 600,000
6-month
Total
$ 2,875,000
KEYSTONE DEPARTMENT STORE
Cash Budget for First Six Months of Next Year
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Sales (Actuals and Forecasts)
No
Session 6: Cash Budgeting
Objectives:
Financial Management
Understand the purpose of cash budgeting and its role in a companys financial and operating
plans.
Recognize the various inputs required for cash budgeting, and identifying the organizations that