Nancy Gomez
Week 4 Homework FIN515
CHAPTER 6
pp. 258-259
6-1
An individual has $35,000 invested in a stock with a beta of 0.8 and another $40,000 invested in a stock
with a beta of 1.4. If these are the only two investments in her portfolio, what is her p
Chapter 3 -FI515
Nancy Gomez Homework Week 2
3-1 Days Sales Outstanding
Greene Sisters has a DSO of 20 days. The companys average daily sales
are $20,000. What is the level of its accounts receivable? Assume there
are 365 days in a year.
Day Sales Outstan
(2-6) Statement of Retained Earnings
In its most recent financial statements, Newhouse Inc. reported $50 million of net income and $810 million of retained earnings. The previous retained
earnings were $780 million. How much in dividends was paid to share
9-5 Cost of Equity: DCF
Summerdahl Resorts common stock is currently trading at $36 a share. The stock is expected to pay a dividend of $3.00 a
share at the end of the year (D1 = $3.00), and the dividend is expected to grow at a constant rate of 5% a year
13- 6 Value of Operations
Brooks Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years,
respectively; after the second year, FCF is expected to grow at a constant rate of 8%. The companys weight
11-4 Replacement Analysis
The Chen Company is considering the purchase of a new machine to replace an obsolete one. The machine
being used for the operation has both a book value and a market value of zero; it is in good working order,
however, and will l
5-1 Bond Valuation with Annual Payments
Jackson Corporations bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000
par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the
FI515 Lecture Example - Cash Flow Analysis for Capital Budgeting
Inputs
Equipment cost
Shipping
Installation
Increase in working capital
Salvage value, equipment, Year 4
Opportunity cost
Externalities (cannibalization)
Units sold per year
Annual change in
Time Value of Money Examples
1. Suppose your bank bays 3% interest compounded monthly on its 12-month CD. Another bank offers
the same CD only with interest compounded semi-annually. What nominal (quoted) interest rate must the
other bank set in order for
(2-6) Statement of Retained Earnings
In its most recent financial statements, Newhouse Inc. reported $50 million of net income and $810 million of retained
earnings. The previous retained earnings were $780 million. How much in dividends was paid to share
5 Years till college
Graduation 4 years later
Cost is $20,000 per year, with an increase of 4 % annually. (Inflation)
Requires 6 payments each year starting today.
Alicia has 7500 in account that pays 7.5%
N
I
PV
PMT
FV
Year 5 cost
5
4
20,000
0
CPT
FV= 24
Ch. 7
Coupon Rate: Annual Interest = MV x Coupon Rate Bonds with low coupon rates are most sensitive.
Required Rate of Return: if a bond is risky then you require a higher rate of return & vice versa.
All bond have a coupon rate = 10%, Maturity value = $1