FIN 6100
Fall 2012
Exam #2
Multiple choice 3 points each 30 points total
1.
You are told that a project breaks even on a financial basis. The IRR of the project:
A. equal to zero.
B. greater than the required return.
C. equal to the required return.
D. le
Fnce 5101
Midterm Exam 1
Name_
You should work on 1-2,4,6-8,10,12-13. The other ones will be good
practice for test 2.
Directions:
Complete all 5 multiple choice questions (worth 4 points each).
Complete any 10 of the remaining 11 problems (worth 8 poin
Fin 3322
Investment Rules Homework
1.
You are considering the following two mutually exclusive projects that will not be
repeated. The required rate of return is 11.25% for project A and 10.75% for
project B. Which project should you accept and why?
Year
Finance 303
w/ David Bourff
Chapter 1
Forms of Business Organization
Proprietorship
Partnership
Corporation
Proprietorships and Partnerships
Advantages
Ease of formation
subject to few regulations
No corporate income taxes
Disadvantages
Difficult t
1.) Liquidity Ratios
a) Current Ratio = Total Current Assets/Total Current Liabilities
b) Quick Ratio = (Total Current Assets - Inventory)/Total Current Liabilities
c) Cash Position Ratio = (Cash + Mkt. Sec)/Total Current Liabilities
d) Days Sales Outstan
Guaranteed to be on the test
1. What is the efficient frontier?
a. The efficient frontier is all assets/ combos with max expected return for a given sigma
2. In CAPM, everyone who holds risky assets holds m=market portfolio. Why?
a. M has the highest rati
Current ratio: current assets/current liabilities (CL) Accruals
Expenses incurred, but not paid.Payables
Short Term ObligationsUnearned Income
Payments you received collected in advance of the performance of services or the delivery of goods
a. Quick rati
Final Warmup
1) A bond with an original maturity of 15 years has 5 years left to maturity. It has a 6% coupon
(paid semiannually) and $1000 face value. If the appropriate discount rate is 4%, what is the
bonds price?
2) The Allman Brothers Co. is expected
1st Finance Exam
P/E
high p/e high m/b = expensive
commonly called
growth stocks
glamor stocks
story
Low p/e low m/b = cheap
commonly called
value stocks
Want to have a large number of stocks from a variety of firms for a higher expected return.
What is t
SHORT ANSWER: (2 points apiece unless otherwise indicated)
1) Define financial slack.
Excess debt capacity
2) What is the after-tax cost of debt if a firm in the 40% marginal tax bracket is paying 10% to the bank?
.1(1-.4)=6%
3) In class we said sunk cost
FIN 303 Test 2
Guaranteed to be on the test- Short answer questions:
1. What is the efficient frontier?
a. The efficient frontier is all assets/ combos with max expected return for a given
sigma
2. In CAPM, everyone who holds risky assets holds m=market p
Exam 3 Practice Problems, FINAN303 Principles of Finance, Spring 2016
*These problems are representative of the types of problems you will encounter from the third
section of our class. This set, however, is not exhaustive.*
PART I: General Multiple Choic
FINAN303
Principles of Finance
Spring 2016
Capital Budgeting
1. Having resolved the ia versus if problem, we now look at the methods
used to evaluate the Asset Investment Decision.
a. Should a firm undertake a project? Does the project create
wealth for t
FINAN303
Principles of Finance
Spring 2016
Cash Flow Estimation
1. Assessing the impacts of the asset investment decisioninvolves the
estimation of the investments cash flows and its discount rate.
2. Estimating Cash Flows
a. Most difficult aspect of capi
n
E ( R ) pi Ri
i
1
State of
Economy
Ri - Return on state "I"
So we put in the information for
states 1,2 and 3 (Boom, Normal
and Recession)
Probability
Return
piRi
Boom
Normal
Slowdown
Recession
pi - Probability for state "I"
0.25
0.50
0.15
0.10
15.00
8.
Short Answer: 4 points
5. Answer the following questions (a sentence of two for each question is ne) about the concept of Beta as
discussed in class and your textbook (note, I dont want a formula or a description of a formula, but the key
ideas behind bet
Short Answer: 4 points
5. Answer the following questions (a sentence of two for each question is fine) about the concept of Beta as
discussed in class and your textbook (note, I dont want a formula or a description of a formula, but the key
ideas behind b
Principles of Finance
Boise State University
Department of Marketing and Finance
Instructor: Scott Roark
Office: MBEB 2213
Office Hours: Tue 1-3 or by appt
E-mail: scottroark@boisestate.edu
Prerequisites: Acct 206, Econ 201, Econ 202, Stat 207
Course: FIN