FINANCE 351 PROJECT
October 4, 2010
1
Evaluation
The project is due on December 7th, 2010. Any project turned in after December 7th
will be penalized one full letter grade. No projects will be accepted after the nal exam on
December 14th, 2010. Turn in on
Chapter 20 and 21 Notes, Questions, and Answers
1
Chapter 20
1.1
Liquidity Raitos
Current ratio =
Quick ratio =
current assets
currentliabilities
cash + short terminvestments + receivable
current liabilities
Accounts receivable turnover =
Inventory turnov
Chapter 16 and 17 Notes, Questions, and Answers
1
Chapter 16
1.1
Leverage
Degree of operating leverage (DOL)
Degree of Financing leverage (DFL)
Degree of total leverage (DTL)
1.1.1
operating leverage
[Q(P V )]
[Q(P V ) F ]
(1)
DF L =
[Q(P V )F ]
[Q(P V
Finance 351: Financial Management
Instructor: Shuming Liu
In-Class Exercise 1
Chapter 5 The Time Value of Money
Minicase
Old Alfred Road has reached his seventieth birthday and is ready to retire. He has accumulated
$180,000 in his investment portfolio wi
Finance 351: Financial Management
Instructor: Shuming Liu
In-Class Exercise 6
Chapter 10 Question 15
Modern Artifacts can produce keepsakes that will be sold for $80 each. Nondepreciation fixed
costs are $1,000 per year and variable costs are $60 per unit
Homework 4 Solutions
Homework Solutions Chapter 20
1.Starpucks has improved its liquidity over the ye ar and is now comparable to the
industry, therefore the liquidity situation looks good. However, the number of days in
inventory has increased since last
Finance 351: Financial Management
Instructor: Shuming Liu
Sample Quiz 2
1.
The following are all important items to look out for when you perform capital budgeting
for a company except
A) Be aware of allocated overhead costs.
B) Include all indirect effec
HW 5 Chapters 3 and 4
Use the information in the following tables to answer Problems 1 through 8.
Income Statement
2005
2004
2003
Revenues
25,000
22,000
21,000
Cost of Sales
20,000
18,000
17,000
Gross Profit
5,000
4,000
4,000
Selling expenses
500
500
800
Corporate Finance
Ross, Westerfield, and Jaffe
9th edition
Case Solutions
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis Tool
Homework 4 Chapters 20, 21
Chapter 20
1. Starpucks last year had a current ratio of 1.5 where as the industry had a current ratio of
1.8. This year they have a current ratio of 1.9 and the industry current ratio improved to
1.9. The number of days of inve
Finance 351: Financial Management
Instructor: Shuming Liu
Sample Quiz 1
1. An investor holds two bonds, one with five years until maturity and the other with
20 years until maturity. Which of the following is more likely if interest rates
suddenly increas
Chapter 12 and 13 Notes, Questions, and Answers
1
Chapter 12
Debt
Preferred equity
Common equity
1.1
Cost of debt
Yield to Maturity Approach
Debt-rating Approach
1.2
Preferred Stock
rp =
Where
P is the price of the preferred stock
D is the dividend
Finance 351: Financial Management
Instructor: Shuming Liu
Sample Quiz 2
1.
The following are all important items to look out for when you perform capital budgeting
for a company except
A) Be aware of allocated overhead costs.
B) Include all indirect effec
HW2Questions
Chapter3
I.
CostofDebtandEquity
1. TrueorFalse?Explain
a. Investorsdemandhigherexpectedratesofreturnonstockwithmorevolatility.
False.Ifitisadiversifiedinvestor,onlythereturnsensitivityofthestocktochangesinthemarketreturn(=beta)is
important.I
Sample Quiz 2 Fall 2010 FIN 351
Student: _
1. A firm issues 100,000 equity shares with a total market value of $5,000,000. The firm's market value of debt is
also of equal amount, i.e. $5,000,000. The firm is expected to generate $1.5 million in operating
HW 3 Chapter 16, 17
Chapter 16
Use the following information to answer questions 1-5:
Suppose # of units sold (Q) = 1,000,000
Price per unit (P) = $10
Variable cost (V) = $4
Fixed operating costs =250,000
Fixed financing cost = 100,000
Tax rate is 35%.
1.
Confirming Pages
PART 1
THE AFI STRATEGY FRAMEWORK
Analysis: Getting Started
1. What Is Strategy and Why Is It
Important?
2. The Strategic Management
Process
External and Internal
11. Organizational Design: Structure,
Culture, and Control
12. Corporate Go
Finance 351: Financial Management
Fall 2011
Instructor: Shuming Liu
QUIZ 2
1
A
6
QUIZ PAPER A
B
11
2
D
7
C
12
C
17
D
3
C
8
A
13
B
18
C
4
D
9
D
14
C
19
B
5
A
10
C
15
A
20
C
1
B
6
A
B
16
C
2
C
7
D
12
D
17
C
3
A
8
C
13
C
18
B
4
D
9
D
14
B
19
C
5
C
10
A
15
C
SAN FRANCISCO STATE UNIVERSITY
COLLEGE OF BUSINESS
FIN 351-3: Financial Management
Fall 2011
INSTRUCTOR: Shuming Liu
OFFICE: SCI 330
PHONE: 338-6289
EMAIL: [email protected]
OFFICE HOURS: TTH 9am 9:25am, 3:25pm 5:00pm
Classroom: BUS 110 Meeting Time: TTH 9
Finance 351: Financial Management
Instructor: Shuming Liu
In-Class Exercise 3
Solution to Minicase for Chapter 7
The goal is to value the company under both investment plans.
The discount rate is the 11% that investors believe they can earn on similar-ris
Finance 351: Financial Management
Instructor: Shuming Liu
In-Class Exercise 4
Solution to Minicase for Chapter 8
None of the measures in the summary tables is appropriate for the analysis of this case, although the
NPV calculations can be used as the star
Finance 351: Financial Management
Instructor: Shuming Liu
In-Class Exercise 5
Chapter 9 Question 21
Revenues generated by a new fad product are forecast as follows:
Year
1
2
3
4
Thereafter
Revenues
$40,000
30,000
20,000
10,000
0
Expenses are expected to b
Finance 351: Financial Management
Instructor: Shuming Liu
In-Class Exercise 7
Chapter 11 Question 18
Using the data in the following table and consider a portfolio with weights of .60 in stocks and
.40 in bonds.
Rate of Return
Scenario
Probability
Stocks
Finance 351: Financial Management
Instructor: Shuming Liu
In-Class Exercise 8
Chapter 12 Question 19
You are considering the purchase of real estate that will provide perpetual income that should
average $50,000 per year. How much will you pay for the pro
Homework 1 - Chapter 2
I.
Capital Budgeting
A company is considering the purchase of a copier that costs $5,000. Assume a required rate of return of 10%
and the following cash flow schedule:
Year 1 $3,000
Year 2: $2,000
Year 3: $2,000
1. What is the pa
Finance 351: Financial Management
Instructor: Shuming Liu
In-Class Exercise 9
Solution to Minicase for Chapter 13
Bernice needs to explain to her boss, Mr. Brinestone, that appropriate rates of return for cost of
capital calculations are the rates of retu
Finance 351: Financial Management
Instructor: Shuming Liu
In-Class Exercise 10
Chapter 14
A corporation has authorized share capital of 1 million shares, of which 800,000 shares are
issued and 200,000 are treasury shares. Construct the equity portion of t
Topic Two: Capital Budgeting
Problems 1% refer to two projects with the following cash ows:
Vear Project A Project B
0 -$200 -$200
I 80 1 00
2 BO 1 00
3 80 100
4 BO
1. If the opportunity cost of capital is 11%, which of these projects is worth p