(1) Book Value Debt/Equity Ratio = 2500/2500 =
Market Value of Equity = 50 million * $ 80 =
Market Value of Debt = .80 * 2500 =
Debt/Equity Ratio in market value terms =
(2) Book Value Debt/(Debt+ Equity) = 2500/
To describe the forces that lead company officials to focus on the possibilities of
To explain standard cash flow analysis for foreign projects.
To examine various c
To determine the risk associated with investing in securities from different
markets and denominated in various currencies.
To calculate the return associated with investing in securities from d
To evaluate the arguments for and against foreign direct investment.
To list and describe modes of foreign investment.
To discuss foreign direct investment in the Third World.
To explain how to compute the weighted average cost of capital and its
component costs of capital
To discuss how corporate and country characteristics influence the cost of capital
To examine global control systems for foreign operations.
To discuss performance evaluation for foreign operations.
To consider the significance of national tax systems on internationa
Chapter 20: Solutions
Firms usually do not change their dividends very frequently. This is what is meant by "sticky" dividends.
Part of the reason for "sticky" dividends is that firms are reluctant to cut divid
Dividend Framework: Solutions
a. Dividend Payout Ratio = (2 * 50)/480 =
b. Free Cash Flows to Equity this year
- (Cap Ex - Depr ) (1-DR)
- (Chg in WC) (1-DR)
Dividends as % of FCFE = 100/235 =
FNCE 3010 (Durham). Fall 2011. Exam 1. Form A.
Multiple choice (3 pts each)
1. All else equal, the internal growth rate increases when the:
(a) retention ratio decreases.
(b) dividend payout ratio increases.
(c) net income decreases.
(d) Solution: total
Solutions to Present Value Problems
Present Value: Solutions
Problem 1 a. Current Savings Needed = $ 500,000/1.110 = b. Annuity Needed = $ 500,000 (APV,10%,10 years) = $ $ 192,772 31,373
Problem 2 Present Value of $ 1,500 growing at 5% a year for next 15
Risk in Practice: Solutions to Problems
Problem 1 a. Expected Return to Short-term Investor = 5.8% + 0.95 (8.5%) = (I am using the historical premium of 8.5% to estimate expected returns) b. Expected Return to Long-term Investor = 6.4% + 0.95 (5.5%) = c.
Hugh Rockoff of Rutgers University, The Wizard of Oz as a Monetary Allegory, Journal of
Political Economy, Vol. 98, 1990, pp. 739-760.
The Wizard of Oz is perhaps the best-loved American children's story. The movie, starring Judy
Taco Mac Nutritional Information
These values are based on our exact recipe. If the recipe is altered in any way, it will change the nutritional value.
All values are based on current products used but are subject to change based on availability of produc
Problem 1 a. False. The dividend discount model can still be used to value the dividends that the company will pay after the high growth eases. b. False. It depends upon the assumptions made about expected future growth and risk. c. F
POLS 3200 Study Questions
1 Briefly describe what Charles Tilly means when he compares the state to a protection racket.
2 Compare and contrast the social contract theory of the state with the predatory theory of the state. Which
better describes t
To describe the importance of working capital management and the constraints of
current asset management.
To list different channels available to move funds from one country to another.
To list and discuss the internal sources of funds for financing foreign investment.
To identify the principal instruments used by banks to service a multinational
company's request for a loan.
To describe the three important documents in foreign trade and reasons for
To list 14 steps necessary to complete a typical international trade.
To define countertrade and describe the spe
Capital Structure Changes
a. There are a number of ways in which BMD can increase its debt ratio _
1. It can borrow $ 1.15 billion and buy back stock.
2. It can borrow $ 1.15 billion and pay special dividends.
3. It can borrow more than $ 1.15 b
Capital Structure Choices
a. Annual tax savings from debt = $ 40 million * .09 * .35 =
b. PV of Savings assuming savings are permanent = $ 40 million * .35 =
c. PV of Savings assuming savings occur for 10 years = $ 1.26 (PVA,9%,10) =
d. PV of Sa
Study Guide to Accompany
Global Corporate Finance:
Text and Cases
Daniel W. Baack
St. Louis University
University of Detroit Mercy
Copyright Dan Baack and Stacey Banks, 2006.
First published 2006
All rights reserved. Instructo
To identify economic motives for companies to sell their goods and services to
To discuss benefits of open trade and reasons for protectionism.
To list and discuss th
Chapter 2: Problems and Questions
1. The objective of decision making in corporate finance is
(e) to maximize firm value / stock prices.
2. For maximization of stock prices to be the sole objective in decision making, and to be
socially desirable, the f
To define the balance-of-payments accounts.
To discuss the actual balance of payments.
To explain the means for correcting a balance-of-payments deficit.
Overview of the Balance of Paymen
To provide an overview of a successful foreign exchange system.
To explain how currency demand and supply are determined to achieve
equilibrium in the foreign exchange market.
To present a histo
To describe the size of the foreign exchange market.
To list major participants in the foreign exchange market and their functions.
To distinguish between the spot and forward marke
1. To discuss the currency futures market and its participants.
2. To distinguish between currency forward and futures contracts.
3. To explain how to read currency futures and options quotes.
4. To describe