LBO
High debt to purchase a public corporation
Collateral = assets of the target
Goal = to run the company better
Gain control by paying a premium
High debt means high debt service needs = reliable steady operation CFs
Mundane lines of business
Recession
A PECKING ORDER PRIMER
by
Wm R McDaniel
Motivation
In his presidential address to the American Finance Association, Stewart Myers [1984]
recommended his pecking order theory as a superior solution to the capital structure puzzle. Since then,
much conceptu
Dividend Policy: Theories and Empirical Facts1
I start with some restrictive assumptions to see what I can discern about
the effect of dividend policy and dividend payments on the value of the
corporations common stock. Later, I will relax each assumption
Extensions and Modifications of the Net Present Value for Application
Definition: The net present value is the value added to owners wealth by
acceptance of an expansion project or by the termination of an underperforming
existing project. The theory is t
Leasing from the Lessees Perspective
Define a symmetric lease as one where any cash inflow or benefit to the
lessor is an equal outflow or disadvantage to the lessee, and vice versa. The
lessor is a financial institution [or acting like one], and, as such
First check MIN, Chapter 9, p. 45 and 46.
A conversion ratio is how many shares of stock the bondholder can get for trading in the bond. A
conversion price is a nutty way of saying the conversion ratio. If you see converts to stock at
$50 or some such wor
OCS:
1.
On the board you see the theoretical model of the optimal capital structure. OK
a. Discuss the model, telling which assumptions must be relaxed for practical application.
b. And saying what changes must be made for practical applications.
c. Stres
Statement of cash flows contains information about the flows of cash into and out of a company, and the
uses to which the cash is put. The statement is comprised of three sections, in which are presented the
cash flows that occurred during the reporting p
MBA CLASS OF 2018
Final offer of elective
courses.
Detail of courses
SUMMER TERM
Intensive electives & Study Tours in all June and
1st & 2nd week of July
START
12 Jun
END
DOW
TIME
COURSE
PROFESSOR
STUDY TOUR CAPE TOWN
TBC
AM & PM
STUDY TOUR SOUTH KOREA
TB
Stock Valuation Problems
1. GAP Corporation's common stock dividend yield is 3.61%, it just paid a dividend of $2.75, and is
expected to pay a dividend of $2.89 one year from now. Dividends are expected to grow at a constant
rate indefinitely. What is the
Annual Compounding
4.1
Compute the future value of $1,000 compounded annually for
a.
b.
c.
d.
4.2
10 years at five percent
10 years at seven percent
20 years at five percent
Why is the interest earned in part (c) not twice the amount earned in part (a)?
C
CHAPTER7
7.1) Big Game, Inc., has 9% bonds, with an annual coupon, on the market with 12 years left to maturity.
If the yield to maturity is 8%, what is the bonds current price?
A) $1,075
B) $1,090
C) $1,000
D) $910
E) $928
7.2) Danny Co. issued 15-year b
TEST PREP - Interest Rates and Bond Valuation
Questions
1. The Walthers Company has a semi-annual coupon bond outstanding. An increase in the
market rate of interest will have which one of the following effects on this bond?
A. increase the coupon rate
B.
TEST PREP - Interest Rates and Bond Valuation
Questions
1. Mark just purchased a bond which pays $60 a year in interest. What is this $60 called?
A. coupon
B. face value
C. discount
D. call premium
E. yield
2. Boni owns a bond that will pay him $75 each y
3/30/2017 Assignment Print \ew
Score: 100/100 Points 100 %
http:/eztomheducation.com/hm_ nance.tpx?todo=printview 1/19 3/30/2017 Assignment Print \ew
Award: 5.55 out of 5.55 olnts
1' p 0 You received credit for this question in a previous attempt
The Jack
McDaniel's Infamous Notes
2016 Revision
by
Wm R McDaniel
Professor of Finance
1
1
CHAPTER 2
Projecting Cashflows
Numerical analysis for financial management decision making is based on forecasts of operating and
financial data in future possible states of
For each of the following, compute the future value: (Do not round intermediate calculations and
round your answers to 2 decimal places, e.g., 32.16.)
Present Value
$ 2,600
9,452
83,355
190,796
Years
10
8
15
6
Interest Rate
14%
8
13
5
Future Value
$ 9,638
1. For unemployed persons in the United States, the average number of months of unemployment at the end of
seven months. Suppose the following data are for particular region in upstate New York. The values in the first
number of unemployed persons
Months
Nominal GDP: totals the dollar value of all goods and services produced within the
borders of a country using their current prices during the year they were produced.
Modern economic growth: output per person rises
Saving current consumption is less than
Palamon Capital Partners/TeamSystem
S.p.A.
Case Analysis II
FIN 6806 Section 100
Dr. Knight Rainford
Seminar in Advance Financial Management Fall 2016
Marcia McLeod
1
Case Summary
Star River Electronics is a joint venture between Starlight Electronics Ltd
Chad Capraro
Finance Quizzes
Chapter 1
1. The primary goal of financial management is to:
A: Maximize the current value per share of the existing stock
2. Which of the following help convince managers to work in the best
interest of the stockholders?
B: C
Stock Valuation
The basic model of stock valuation recognizes the importance of income that the owner
of the stock will receive. That is,
Value =
Incomet
1 r
t
t 1
But there are some obvious problems with applying this model to stock prices:
1) Unlike b
The Weighted Average Cost of Capital
Cost of Capital the cost that a firm must pay for the capital it uses to finance new
investments and investment projects.
Capital comes from:
1) Debt
2) Preferred stock
3) Retained earnings
4) Common stock
Alternativel
CAPITAL BUDGETING
The process of developing and evaluating long term investment projects of the firm.
How to evaluate the alternative projects?
1. Calculate NPV of the cash flows derived from the project and then subtract the initial
cash outlay.
2. If PV
The Time Value of Money and Discounted Cash Flows
Calculator Setup (HP 10BII)
1)
Change 12 P_Yr to 1 P_Yr.
2)
Next, change the decimals shown on the screen to 6 or 8.
Time Value keys:
N:
I/YR:
PV:
PMT:
FV:
Other Useful Keys:
RCL
button
STO
Back Arrow Key