Week 1
Assignment (20 points)
Chapter 2 Practice Problems
2. Solution: Percentage Holding Period (HP) Return
i.
Ending Price = $44 x 100 = $4,400
ii.
Beginning Price = $40 x 100 = $4,000
iii.
Distributions Received = $40 x 100 = $4000
iv.
Calculation = (4
Assignment (40 points)
BASIC FINANCE CONCEPT MATRIX
Roles and Objectives of Financial Management
FINANCIAL MANAGEMENT
ROLES
Capital requirements estimation
Capital composition determination
Choice of sources of funds
Investment of funds
Surplus disposal
C
Assignment (20 points)
Chapter 3 Practice Problems
3.1
a. Solution: Accounts Receivable
a.i. Annual Credit Sales = $1,600,000
a.ii. Average Collection Period = 50 Days
a.iii. Calculation = $1,600,000/365 = $4,383.56 x 50 = $219,178
b. Solution: Average In
Assignment (20 Pts)
Chapter 6 Practice Problems
6-3
a. Solution: C/(1+i)n + M/(1+i)n
= $83.40 x (PV of twelve year $1 annuity at 7.0%) + $1,000 x (PV of $1 to be
paid in 12 years at 7.0%)
= ($83.40 x 7.943) + ($1,000 x .444)
= $662.45 + $444
= $1,106.45
b
Assignment (20 pts)
Chapter 5 Practice Problems
5-7
a. Calculation: $800(1.04)-8 = $584.55
b. Calculation: $800(1.08)-8 = $432.22
c. Calculation: $800(1.20)-32 = $2.34
d. Calculation: $800(1.0) -8 = $800
5-11
a. Solution: Bond Valuation
i. PV0 = $70(PVIFA
CHARACTERISTICS
FIXED INCOME SECURITIES
COMMON STOCK SECURITIES
Holders of these types of securities
receive relatively constant distributions of
interest or dividend payments over time and
have a fixed claim on the assets of the firm in
the event of bank
Chapter 8 Practice Problems
8-1
a. Expected Rate of Return = Probability X Return
Stock X
Stock Y
-.01
.004
.02
.014
.06
.036
.04
.03
.04
.016
Stock X = 15%
Stock Y = 10%
b. Stock X Stock Y
rj r rj - r (rj - r)2 pj (rj - r)2pj rj r rj - r (rj - r)2 pj (rj