FINC 202
Assignment 4
Semester 2, 2017
Due Noon Wednesday, 4 October 2017
Due: Wednesday, 4 October at 12 noon in the dropbox at the North end of the 3rd floor corridor (outside
room 336). Note that l
280
Part 3 Valuation and the Firm
8.3 Alternative Decision Rules
Payback investment l'ule: Calculate the amount of time
it takes to pay back the initial investmen (the payback
period). ff the payback
2.?
Chapter 2 Introduction to Financial Statement Analysis 85
' Interest coverage ratios indicate the ratio of
the firms income or cash ows to its interest
expenses, and they are a measure of financ
316
Part 3 Valuation and the Firm
9.4 Other Effects on Incremental Free Cash Flows
An opportunity cost is the cost of using an existing
asset.
Project externalities are cash flows that occur when a
Chapter 4 Time Value of Money: Valuing Cash Flow Streams
145
The periodic payment on an N-period loan with principal
P and interest rate r is:
p
C = 1 (1
r
(4.9)
1
)
(l+r)N
The rate of return of an
280
Part 3 Valuation and the Firm
8.3 Alternative Decision Rules
Payback investment l'ule: Calculate the amount of time
it takes to pay back the initial investmen (the payback
period). ff the payback
Chapter 13 The Cost of Capital
13.3 A Second Look at the Weighted Average Cost of Capital
The WACC equation is
net debt, p. 438
My Finance Lab
Study Plan 13.3
debt-equity ratio, p. 440
levered value,
210
Part 2 Interest Rates and Valuing Cash Flows
6.4 Why Bond Prices Change
A bond will trade at a premium if its coupon rate
exceeds its yield to maturity. It will trade at a discount
if its coupon
Chapter 3 Time Value of Money: An Introduction
3.2 Market Prices and the Valuation Principle
Arbitrage is the process of trading to take advantage of
equivalent goods that have different prices in di
242
Part 2 Interest Rates and Valuing Cash Flows
CRITICAL
THINKING
1. Why does the stock value depend on its dividends?
2. Is it true that according to the constant dividend growth model the growth ra
50
Part 1 Introduction
1.6 Financial Institutions
In the basic financial cycle, money flows from savers and
investors to companies and entrepreneurs with ideas, and
then back to the savers and invest