IEOR 4003
Industrial Economics
Fall 2012
Problem Set #3
Due date: Thursday Nov 29th in class
1)
Compute the present value of a cash flow that follows the pattern below, with
15% interest compounded c
Sample Exam IEOR E4003/4403 Fall 2012
Problem 1: Wall Street Journal
Problem 2: Eye of J :) (Figures of Merit)
Period n
Cash flow Fn
0
$-1,700
1
$3,400
2
$5,500
3
$-6,800
a) Determine whether this is a simple or non-simple investment. Explain.
b) Find the
Securitization
Cyrus Mohebbi
What is Securitization?
2
What Is Securitization?
Securitization is a financing tool
Similar to secured debt
Securities backed by specific assets
Cash flow from assets pays back securities
Special cases
Risk transfer device
3
Outline
Project Cash Flows: A First Look
Incremental Cash Flows
Pro Forma Financial Statements and Project
Cash Flows
More on Project Cash Flow
Alternative Definitions of Operating Cash Flow
Some Special Cases of Cash Flow Analysis
1
Asking the Righ
Lecture 1: Introduction
Outline:
What is Corporate Finance?
What is the role of Financial Managers in a
corporation?
The separation of ownership and
management
The Goal of a corporation
What is Corporate Finance?
Corporate finance deals with the fina
Outline
What is Financial Planning?
Financial Planning Models: A First Look
The Percentage of Sales Approach
External Financing and Growth
Some Caveats Regarding Financial
Planning Models
1
Elements of Financial Planning
Investment in new assets determin
Outline
Net Present Value
The Payback Rule
The Discounted Payback
The Internal Rate of Return
The Profitability Index
The Practice of Capital Budgeting
1
Good Decision Criteria
We need to ask ourselves the following
questions when evaluating capital
budg
Corporate Finance for Engineers IEOR 4003
Homework set 3 (due 10/6)
1. The Hegel Company is considering operating in a new market area
at an initial cost of
$100,000. The company expects to realize after-tax cash flows from
this operation as summarized be
Corporate Finance for Engineers
Homework 2 solutions (S&S Air long term financial planning):
1. IGR internal growth rate; SGR sustainable growth rate
The internal growth rate is the growth rate that the company can achieve with no outside
financing of any
Solutions to Homework 4 Corporate Finance for Engineers
1. Market value of debt = 8,000*1,020 = $8.16M
Market value of common stock = 230,000*40 = $9.20M
Total market value of debt and equity = $17.36M
Weight of debt financing = Rd = 8.16/17.36 = 0.47
Wei
PracticequestionsCorporateFinanceforEngineersIEOR4003
Fall2016
1. Hightower Labs declared a dividend on Monday, May 7 to holders of record on Monday, June 11. The
dividend is payable on Monday, July 2. The last day you can purchase shares of this stock an
IEOR E4003/E4403
Industrial Economics/
Advanced Engineering and Corporate
Economics
Fall 2013
Professors Soulaymane Kachani and Cyrus Mohebbi
Evaluating Economic Performance
of Companies and Industrial Projects
Figures of Merit
1
Figures of Merit
The Net
Agenda
Continuous Compounding
Classification of Investment Projects
Reinvestment Issues
Formula Derivation
We know that for a discrete compounding
of period m the capitalization factor can be
written as follows (1+ r )mT
m
Continuous compounding is the li
Securitization
Analytics
Cyrus Mohebbi
Managing Director
Morgan Stanley
Michael Sternberg
Managing Director
Morgan Stanley
Copyright 2011 American Securitization Forum, Inc. All Rights Reserved.
2012
1
Analytics for Securitization
Collateral analysis
Revi
Corporate Finance for Engineers
Minicase: Ratio Analysis at S&S Air, Inc.
Chris Guthrie was recently hired by S&S Air, Inc., to assist the company with its financial
planning and to evaluate the companys performance. Chris graduated from college five
year
Corporate Finance for Engineers
Long Term Financial Planning Practice Problems
1). Andrew's Specialty Store has sales of $200,000, net income of $18,500, total assets of
$300,000, and total equity of $250,000. The firm paid $7,400 in dividends and maintai
IEOR E4003
Industrial Economics
Fall 2012
Professor Sadighian
WACC
Deterministic Capital
Budgeting
0
Weighted Average Cost of Capital
Outline
Why do we use WACC?
WACC tree
Guidelines for estimating WACC parameters
Cost of debt
Cost of equity and CAPM
IEOR
Lecture Notes to Accompany
Brealey and Myers
Principles of Corporate Finance
by
Matthew Spiegel
Yale School of Management
Box 208200
New Haven, CT 06520-8200
[email protected]
and
Richard Stanton
University of California, Berkeley
Haas School of Bu
IEOR 4003
Discrete compounding If G=100, N=10 and i=8% Interest rate G # of periods 8.0% $100 10
Interest rates
Linear Gradient Series
COMPUTE
Linear gradient series future worth factor
F
$2,598
ERASE
IEOR E4003 Industrial Economics
Prof. S. Kachani
Homework # 4
Problem 1 In many decision environments the total number of major projects to be considered is ten or fewer. Thus, enumeration of all combinations would be feasible, since there would be 210 =
IEOR 4003 Industrial Economics
Professor S. Kachani
Homework # 5
Problem 1: Consider a homeowner with the utility function given by the equation u(W) = 1 e 0.00001W where W is the dollar amount of wealth. Assume that the individual's initial total wealth,
IEOR E4003
Industrial Economics
Fall 2012
Professor Sadighian
Deterministic Capital Budgeting
33
Deterministic Capital Budgeting
Outline
Introduction
Review of linear programming
Pure capital rationing, with no lending or borrowing allowed
Capital budgeti
IEOR 4003 Industrial Economics
Fall 2012
Homework #4
Due at the beginning of the review session on December 9th, 2012
Problem 1
a. All non-trivial linear programs must have (check all that necessarily apply):
1) Objective function
2) Dual solution
3) Opti
Industrial Economics
IEOR E4003
Fall 2012
Problem Set #2
Due Date: Tuesday, October 23
1. The following equation describes the conversion of some cash flow into an equivalent
equal-payment series A with n = 10. Draw the diagram of the original cash flow.
Industrial Economics
IEOR E4003
Fall 2012
Problem Set #1
Updated as of September 25
Due Date: September 27
1. Quiz. Please give one-word answers only (yes, no, better, etc):
a. K.Q. Whale, a large bank, is facing near-term cash outflows despite having
suc
Problem 1: WSJ questions
1.
2.
3.
4.
5.
b
c
c
c
d
Problem 2: Accounting
Problem 3: Ratios
a) If the ROE is equal to the ROIC, compute the Net Income.
ROE=NI/SE and
ROIC=EBIT*(1-t)/(interest bearing debt + SE)=(NI/(1-t)+interest exp)*(1-t)/(interest bearin
IEOR E4003 Industrial Economics
Fall 2012, Professor Sadighian
Class Exercise 1:
Find the effective interest rate per quarter at a nominal rate of 18% compounded
a- Quarterly
b- Monthly
c- Continuously
Class Exercise 2:
Suppose we are in the market for a
E4003 Industrial Economics
Fall 2012, Professor Sadighian
Class Exercise: Develop the Statement of Cash Flows of E4003 Inc.
Balance Sheet of E4003 Inc.:
12/31/2010
Assets:
Cash
Marketable Securities
Accounts Receivable
Inventories
Current Assets
12/31/201