Chapter 2.1: Annuity Present Value
Problem: An annuity pays $142.38 each period for 6 periods. For these cash
flows, the appropriate discount rate/period is 4.50%. What is the present value of
this annuity?
Assumption: The payment per period is assumed to

Five
10.1-10.7 FIRM AND PROJECT VALUATION Equivalent Methods
Inputs
Valuation Object
Date 0 Proj Investment or Firm Cap
Tax Rate
Unlevered Cost of Equity Capital
Riskfree Rate=Cost of Riskfree Debt
Infinte Horizon Growth Rate
Valuation Object
Fir
Project

Chapter 18.1
Problem: A companys Net Profit is $82, Pretax Profit is $153, EBIT is $583,
Sales are $3740, Assets are $5460 and Equity is $7230. Calculate the companys
ROE and decompose the ROE into its components using the Du Pont System.
Methodology: Ret

Chapter 9
Problem. Currently a stock pays a dividend per share of $43.37. A security analyst
projects the future dividend growth rate over the next five years to be 21.00%,
18.00%, 15.00%, 13.50%, 11.5% and then 11.00% each year thereafter to infinity.
Th

Chapter 5.1
Problem To purchase a house, you take out a 30 year mortgage. The present
value (loan amount) of the mortage is $217,832. The mortgage charges an interest
rate/year of 9.27%. What is the annual payment required by this mortgage? How
much of ea

Chapter 4.1
Problem: A project requires a current investment of $54.39 and yields future
expected cash flows of $19.27, $27.33, $34.94, $41.76 and $32.49 in periods 1
through 5, respectively. All figures are in thousands of dollars. For these expected
cas

Chapter 11.1-11.2
Question:
1. Given bond prices and yields as published by the financial press or other
information sources, obtain the US Treasury Yield Curve.
2. Given the yield curve as published by the financial press, consider a coupon
bond has a fa

Chapter 10.1-10.2
Problem 10.1-10.2:
Starting from their historical financial statements, forecast the expected future cash
flows for a real firm in two stages corresponding to two time periods. Stage one is a
finite horizon from years 1 to 5. Stage two i

Chapter 1.1
Problem 1.1: A single cash flow of $1673.48 will be received in 4 periods. For this
cash flow, the appropriate discount rate/period is 7.80%. What is the present value
of this cash flow?
Assumptions: The opportunity cost of capital is 7.80% an

Main Formula
F=Pv(1+r)^n
10
2
18
30
0.03
48000
to married
to child
to college
total
Infltion
tuition
tuition in 30 yrs
in 31
in 32
in 33
116508.599
120003.857
123603.972
127312.091
Rule of 72 Interest rate
Rule
Years to Double
10
72
7.2
Paying off a mortg

Ch. 11 Detroit Motors Latin America Expansion (Equity-for-Debt Swap)
Five-minute PowerPoint presentation to the class
Why I chose this topic
What a D-for-E swap is and how it works- include exchange rate
Info it gave us/ clarification/ Pros/Cons
Problem t

Rollins College of Professional Studies
Department of International Business
International Financial Management
Course: INB 372, Section 2
Class Times: Mondays & Wednesdays, 12.30pm - 1.45pm
4 CRS - CRN: 10224
Room: CSS 170
Professor: Dr. Marc Sardy: Tel:

Detroit Motors
Latin American
Expansion
Logan Gore
Why I chose this
topic?
Saw an easier way to finance deals outside
the United States.
Wanted to see how Detroit Motors did it.
Problem
Cost: $65,000,000
Prices for Bank Debt
Mexico:
$.4312/Peso
Venezue

Optimal
International
Portfolio
By Dean Roncati
S
Topics Covered
International Correlation Structure
Risk Diversification
Optimal International Portfolio (OIP) Selection
International Diversification with Small-Cap Stocks
Mini-Case Scenario
Problems
Resul

1.1 SINGLE CASH FLOW
Present Value
Inputs
Single Cash Flow
Discount Rate / Period
Number of Periods
$1,673.48
7.8%
4
Present Value using a Time Line
Period
Cash Flows
Present Value
$1,239.21
Present Value using the Formula
Present Value
$1,239.21
Present

4.1 NPV USING GENERAL DISCOUNTING
Nominal Rates
(in thousands of $)
Inputs
Period
Nominal Discount Rate
Net Present Value using a Time Line
Period
Cash Flows
Cumulative Discount Factor
Present Value of Each Cash Flow
Net Present Value
0
1
6.4%
2
6.2%
3
6.

2.1 ANNUITY
Present Value
Inputs
Payment
Discount Rate / Period
Number of Periods
$142.38
4.5%
6
Annuity Present Value using a Time Line
Period
Cash Flows
Present Value of Each Cash Flow
Present Value
$734.38
Annuity Present Value using the Formula
Presen

5.1 LOAN AMORTIZATION
Basics and Sensitivity Analysis
Inputs
Present value
Interest rate / year
Number of years
$217,832.00
9.27%
30
Outputs
Year
Beg. Principal Balance
Payment
Interest Component
Principal Component
1
2
3
4
5
6
7
8
9
10
11
$217,832.00 $21

Taxable vs. Traditional vs. Roth Savings
19.1 LIFE-CYCLE FINANCIAL PLANNING
Inputs
Salary
$50,000.00
Savings rate
Current Tax Rate
$0.10
$0.18
Retirement Years Tax Rate
$0.23
Current Age
25
Retirement Age
65
Expected Age of Death
Rate of Return on Retirem

5.1 LOAN AMORTIZATION
Basics and Sensitivity Analysis
Inputs
Present value
Interest rate / year
Number of years
Outputs
Year
Beg. Principal Balance
Payment
Interest Component
Principal Component
$217,832
9.27%
30
1
$217,832
$21,712
$20,193
$1,519
2
$216,3

LIFE-CYCLE FINANCIAL PLANNING
Inputs
Salary
Savings rate
Current Tax Rate
Retirement Years Tax Rate
Current Age
Retirement Age
Expected Age of Death
Rate of Return on Retirement Investments
Taxable vs. Traditional vs. Roth Savings
$50,000
10.0%
18.0%
23.0

Chapter 24.1
Problem. The value of the firm (V) is $780 million, the face value of the debt (B)
is $410 million, the time to maturity of the debt (t) is 1.37 years, the risk-free rate
(kRF) is 3.20%, and the standard deviation of the return on the firms a

DEBT AND EQUITY VALUATION
Inputs
Value of Firm (V)
Firm Asset Std Dev (s)
Risk-free Rate (kRF )
Face Value of Debt (B)
Time to Maturity (t)
$780.00
43.0%
3.2%
$410.00
1.37
Outputs
Black-Scholes Option Pricing
d1
d2
N(d1)
N(d2)
Call Price
Two Methods
1.617

Chapter 20.1
Problem: Suppose the Euro/Dollar exchange is 1=$1.283, the annual US riskfree
rate 3.61%, the US inflation rate is 2.69% and the annual Eurozone riskfree rate is
5.39%. What is the one year Forward Euro/Dollar exchange rate, the one year
ahea

Chapter 23.1
Problem. Download three months of daily stock prices for any stock that his listed
options on it and compute the standard deviation of daily returns. Lookup the
current stock price of your stock, use the standard deviation of daily returns yo

18.1 DU PONT SYSTEM OF RATIO
ANALYSIS
Inputs
Net Profit
$82
Pretax Profit
$153
EBIT
$583
Sales
$3,740
Assets
$5,460
Equity
$7,230
Outputs
ROE = Net Profit / Equity
Components of ROE:
Net Profit / Pretax Profit
Pretax Profit / EBIT
EBIT / Sales
Sales / Ass

11.1-11.3 THE YIELD CURVEObtaining and Using It
Yield Curve Inputs
Today's Date
One Month Treasury Bill
Three Month Treasury Bill
Six Month Treasury Bill
One Year Treasury Strip
Two Year Treasury Strip
Three Year Treasury Strip
Four Year Treasury Strip
Fi