A Tutorial on the Discounted Cash Flow
Model for Valuation of Companies
L. Peter Jennergren
Eighth revision, September 29, 2008
SSE/EFI Working Paper Series in Business Administration No. 1998:1
Abstract
All steps of the discounted cash ow model are outli
FNCE 101: Dr Chiraphol New Chiyachantana
Problem Set # 6 (Chapter 14)
1.
Blair Brothers stock currently has a price of $50 per share and is expected to pay a year-end dividend of
$2.50 per share (D1 = $2.50). The dividend is expected to grow at a constant
Review Questions
Question 1
A portfolio has 25% invested in Security C and 75%
invested in Security D. Security C has an expected return
of 8% and a standard deviation of 0.06. Security D has an
expected return of 10% and a standard deviation of 0.1.
The
BUS290 International Financial Markets and
Institutions
Practice Test Paper
1. Financial markets and institutions
A.
B.
C.
D.
2.
affect the profits of businesses.
affect the types of goods and services produced in an economy.
involve the movement of huge
FNCE101: Group Projects
Lee Yen Teik
Term 1, Year 2011/12
First of all, please form a group consisting of 5 students each. Team leader is to notify your
TA the name of your team members.
Project I: General Topics in Finance
Each team is to present a resea
5 14
Part 5
C apitalS tructure,D ividend P olicy,a nd W orking C apital M anagement
management rather than outside directors, this might result in the firm's retaining
more eamings than can be justified from the stockholders' point of view. Discuss
those
Practice Multiple Choice Questions (2)
1. Financial markets and institutions
a. Involve the movement of huge quantities of money
b. Affect the profits of businesses
c. Affect the types of goods and services produced in an economy
d. All of the above
e. On
Practice Multiple Choice Questions (2)
1. Every financial market has the following characteristic:
a.
b.
c.
d.
It determines the level of interest rates
It allows common stock to be traded
It allows loans to be made
It channels funds from lenders-savers t
Part 4
A
I nvestingi n L ong-Term ssets: apitalB udgeting
C
11-3
How should the capital structure weights used to calculate the WACC be determined?
11-4
S uppose a f irm e stimates i ts W ACC t o b e 1 0%. S hould t he W ACC b e u sed t o e valuate a ll o
FNCE 101: Dr Chiraphol New Chiyachantana
Problem Set # 9 (Chapter 16)
1.
Zippy Pasta Corporation (ZPC) has a constant growth rate of 7 percent. The company retains 30
percent of its earnings to fund future growth. ZPCs expected EPS (EPS1) and ks for vario
FNCE 101: Dr Chiraphol New Chiyachantana
Problem Set # 8 (Chapter 11)
1.
You are considering a new project. The project has projected depreciation of $720, fixed costs of
$6,000, and total sales of $11,760. The variable cost per unit is $4.20. What is the
FNCE 101: Dr Chiraphol New Chiyachantana
Problem Set # 3 (Chapter 8 and 17)
1.
A share of common stock has just paid a dividend of $2.00. If the expected long-run growth rate
for this stock is 15 percent, and if investors require a 19 percent rate of retu
FNCE 101: Dr Chiraphol New Chiyachantana
Problem Set # 5 (Chapter 24 and 25)
1.
A stock currently sells for $75 per share. A call option on the stock with an exercise price $70
currently sells for $5.50. The call option is (In-the-money)
2.
A stock curren
FNCE 101: Dr Chiraphol New Chiyachantana
Problem Set # 4 (Chapter 7)
1.
You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If
your nominal annual required rate of return is 10 percent with semiannual compoun
FNCE 101: Dr Chiraphol New Chiyachantana
Problem Set # 2 (Chapter 5 and 6)
1.
What is the present value of a security which promises to pay you $3,000 in 15 years? Assume that you
can earn 9 percent if you were to invest in other securities of equal risk.
FNCE 101: Dr Chiraphol New Chiyachantana
Problem Set # 1 (Chapter 12 and 13)
1.
Little John Industries sold for $1.90 on January 1 and ended the year at a price of $2.50. In addition,
the stock paid dividends of $0.20 per share. Calculate Little John's di
The Lee Kong Chian School of Business
Academic Year 2011 / 12 Term 1
FNCE 101 Finance
Instructor
Title
Email
Office
Office Hours
: Lee Yen Teik
: Adjunct Faculty of Finance
: [email protected]
: LKCSB Level 4, Room 4123
: Tuesday (1600-1800) & Wednesday (1