NAME:
To complete the homework assignments in the templates provided:
1. The question is provided for each problem. You may need to refer to your textbook for
additional information in a few cases.
2. You will enter the required information into the shade
Financial Management
Risk and Return (Chapter 11 to 12)
Topics
I. Historical Performance
II. Expected returns
III. Risk
IV. Risk and Return in a portfolio context
V. Diversification
VI. Portfolio Theory
VII. Market risk and Beta
VIII. Capital Asset Pricin
Chapter 003 Accounting and Finance
Multiple Choice Questions
29. In general, what is changing as you read down the left hand side of a balance sheet?
A. The assets are more fully depreciated.
B. The assets are growing in value.
C. The assets are increasin
2. Which of the following statements regarding shareholder equity accounts is false?
A. Treasury stock refers to corporate investments in U.S. Treasury bills and bonds.
> A is correct because Treasury stock refers to stocks repurchased by the company.
My
1. The shareholders of the Pickwick Paper Company need to elect six directors. There are
400,000 shares outstanding. How many shares do you need to own to ensure that you can elect at
least one director if the company has cumulative voting?
A. 66,667 shar
1 A trust officer at the blackburg National Bank needss to determine how to
invest $100,000 in the following collection of bonds to maximize the annual
return.
Bond
Annual Return
Maturity
Risk
Taxfree
A
9.5%
Long
High
Yes
B
8.0%
Short
Low
Yes
C
9.0%
Lon
Chapter Seven: Valuing Stock
Financial Management
1
Topics Covered
1.
2.
3.
4.
5.
Three ways to value a firm
Nature of stock
Valuing Equity Securities
Growth Stock vs. Income Stock
Efficient Market Theory (optional)
2
1. Measures of Value
Three ways to va
Chapter 8 NPV and other investment criteria
TOPIC ONE: Linear interpretation Approach (the following results are
based on the example shown in chapter 8s ppt)
NPV
268
O
A
B
20
D
25
Discount
Rate (%)
704
C
E
ABD and ACE are similar according to AA theorem
Chapter One: Goals and Gover
nance of the Firm
FINC 210:
Financial Management
Chapter One
1
Chapter One
After studying this chapter you should be able t
o:
1. Understand the advantages and disadvanta
ges of corporations, partnership and sole pr
oprietorsh
Chapter Eight: Net Present Value
and Other Investment Criteria
FINC 210:
Financial Management
1
Topics Covered
Investment Evaluation Methods
Net Present Value
Payback Period
Internal Rate of Returns
Profitability Index
2
Investments are good if the p
InterestonInterestConsider a $2,800 deposit earning 7 percent interest
per year for 10 years. How much total interest is earned on the original
deposit (excluding interest earned on interest)?
$696.41
$196.00
$2,656.41
$1,960.00
Hint $2,800 * 7% *10 =
2. Which of the following statements regarding shareholder equity accounts is false?
A. Treasury stock refers to corporate investments in U.S. Treasury bills and bonds.
> A is correct because Treasury stock refers to stocks repurchased by the company.
My
Chapter Eight: Net Present Value
and Other Investment Criteria
FINC 210:
Financial Management
1
Topics Covered
Investment Evaluation Methods
Net Present Value
Payback Period
Internal Rate of Returns
Profitability Index (optional)
2
Investment Evaluati
Chapter Eleven: Risk
FINC 210:
Financial Management
1
Topics Covered
I.
II.
III.
IV.
V.
VI.
Historical Performance
Expected returns
Risk
Risk and Return in a portfolio context
Diversification
Thinking about Risk
I. Historical Performance: Rate of Return
Chapter Thirteen: Weighted
Average Cost of Capital
(WACC)
FINC 210:
Financial Management
1
Topics Covered
Weighted Average Cost of Capital
(WACC)
Measuring Capital Structure
Calculating Required Rates of Return
Calculating WACC
Interpreting WACC
Cost
Chapter Ten: Project
Analysis
FINC 210:
Financial Management
1
Topics Covered
1. How to handle uncertainty
a. Sensitivity Analysis
b. Scenario Analysis
c. Break Even Analysis
2. Operating Leverage
3. Real Options and the Value of Flexibility
2
1. How To H
Exercise for Chapter 9 to 12
Chapter 9 Cash flow analysis
1. Which of the following should be treated as an incremental cash flow when
computing the NPV of an investment?
a. A reduction in the sales of a company's other products caused by the
investment.
FORMULAR
FV = C0(1 + r)T
PV
Perpetuity
PV
PVIF
T
1T
1 r T
r
FV C0 1
m
PV
C
r g
1
1
PVIFA 1
r (1 r ) T
mT
Zero Growth
P0
C
r
PV
CT
1 r
Annuity
Div
R
C
r
FV
Stock valuation
Constant Growth
P0
Div
R g
1
1
T
(1 r )
C
(1 r ) T 1
r
Differenti
NET PRESENT VALUE and OTHER INVESTMENT RULES
1. Why Use Net Present Value?
Accepting positive NPV projects benefits shareholders.
NPV uses cash flows
NPV uses all the cash flows of the project
NPV discounts the cash flows properly
Reinvestment assumpti
Financial Management
Chapter Five Time Value of Money
Topic 1 : Derivation of Perpetuity formula

Pays an amount C starting next period and pays this same constant amount C in
each period forever.
PV ( Perpetuity ) =
Let
a=
C1
C
C
+ 2 2 + 3 3 +
(1+r) (1+
Financial Management
Chapter 5 Time Value of Money
Topics
I. The Basics
1. The Timeline
2. Basic rule
II. Value of cash flows that are moved forward in time
III. Value of cash flows that are moved backward in time
IV. Multiple cash payments
 FV and PV of
Assignment One _2014 Feb
Chapter 1 and 2
Chapter one: no. 6
a.
b.
c.
d.
e.
f.
A share of stock
financial
A personal IOU
financial
A trademark real
A truck
real
Undeveloped land real
The balance in the firms checking account
financial
g. An experienced and
Chapter Ten: Project
Analysis
FINC 210:
Financial Management
1
Topics Covered
1. How to handle uncertainty
a. Sensitivity Analysis
b. Scenario Analysis
c. Break Even Analysis
2. Operating Leverage
3. Real Options and the Value of Flexibility
2
Indeed, it
Financial Management
Final Exam Review
Final Exam Financial Management
1.
2.
3.
4.
Date:30th May 2013 (Friday), 9:30 to 12:30
Format: 20 multiple choices & seven questions
Coverage: Chapter 5 to 13
Consultation Time: 10:00 to 12:00 on 27th May and 29th
M
Chapter One: Goals and Gover
nance of the Firm
FINC 210:
Financial Management
Chapter One
1
Chapter One
After studying this chapter you should be able t
o:
1. Understand the advantages and disadvanta
ges of corporations, partnership and sole pr
oprietorsh