UNIVERSITY OF MARYLAND UNIVERSITY COLLEGE
FINC 620 LONG TERM FINANCIAL MANAGEMENT
Task 3
To illustrate and further support our strategic financial planning systems we
need to show the CFO and management team an example of the application of
the previously
Office Equation Objects
This file contains the major equations for EMGT 6100. Feel free to copy and paste these equations into
your homework to indicate what equation you are using in solving the homework problem.
Chapter 6
Sample Mean 61
n
xi
x= i=1
n
Submitted to:
In fulfillment of a requirement for FIN 620, Longterm Financial Management.
University of Maryland.
Compute Using Scenario 1:
Scenario #1: Use 10% cost of capital in computations and compute the good result and poor
result NPVs. Calculate t
In fulfillment of a requirement for FIN 620, Longterm Financial Management.
University of Maryland.
=After tax cash flow purchasing After tax cash flow leasing
=($10,000*(1.30) ($70,650/9)*(.30) = (7,000) (7850*.30) = 7,000 2,355= $9,355
Do you have
Step 2
Submitted to:
In fulfillment of a requirement for FIN 620, Longterm Financial Management.
University of Maryland.
Calculate WACC
WACC is the firms overall cost of capital. It helps by comparing returns from a specific
project and aiding in selecti
1. Compute the P/E ratio and market capitalization for everyone.
2. Compute the MVA and EVA for everyone.
3. Compare and contrast the ratios; what do the ratios convey to the investing public?
The price earnings ratio (PE) values the company based on the
Number of shares repurchased
$ 5,000,000/25 = 200,000 shares
Number of Shares will be outstanding after the stock repurchase is completed
= 15,000,000 200,000 = 14,800,000 shares
Pros of repurchases1. A repurchase announcement may be viewed as a positive
Submitted to:
In fulfillment of a requirement for FIN 620, Longterm Financial Management.
University of Maryland.
Required Rate Of Return:
The required rate of return is the minimum annual percentage or return earned by an
investment that will induce inv
As per the Walters Approach, in the long run share price reflects only the present value of
expected dividends. Market price is dependent upon two factors firstly the quantum of
dividend and secondly the profitable opportunities available to the company i
In fulfillment of a requirement for FIN 620, Longterm Financial Management.
University of Maryland.
When will the project breakeven on a simple cash basis?
Initial Cost  $1million
Reduce costs by $100,000
Useful life 30 years
WACC = .08 * .5 + .12 * .
The purchase method of accounting is one of the two primary methods that potentials
mergers and acquisitions are valued. The purchase method of accounting uses the sum of
the assets and liabilities that are under consideration for acquisition. Central to
Financial Analysis and Modeling Using Microsoft Excel
FIN 615

Spring 2017
Below are a list of potential capital budgeting projects for DVX Inc.
Create a vlookup which will populate the list of projects to be selected based on
the following criteria
1. Budget of $4,000,000
2. Populate the Include column to indicate what projects
Financial Analysis and Modeling Using Microsoft Excel
FIN 615

Spring 2017
Breakeven Analysis Case
In Year 1, Jay Company expects to sell 2,243 units at $110 per unit. Sales are expected to increase 25% each year for years 24. The unit
sales price will remain the same. Labor is 23% of sales, Overhead 10%, Materials 5%, and Var
Financial Analysis and Modeling Using Microsoft Excel
FIN 615

Spring 2017
You start a new job. They give you a variety of investments for your 401K plan. You have 4
choices
A money market fund that historically has returned 2.5% per year
A long term bond fund with an average annual return of 6%
A conservative common stock fund
Exhibit 15.15: DeskJet Demand Data from Europe
Europe Options
A
AB
AU
AA
AQ
AY
TOTAL
A
Beginning Inventory
Safety Stock
Quantity Requirement
Ending Inventory
A
Beginning Inventory
Safety Stock
Quantity Requirement
Ending Inventory
Lead Time
Manufacturing
Financial Management (BUSI 640)
Professor Fresard
Ocean Carriers
Case Questions
The purpose of this case is to estimate the relevant financial data necessary to
generate cash flow projections and calculate the Net Present Value (NPV) of an
investment oppo
Financial Management (BUSI 640)
Professor Fresard
Dells Working Capital
Case Questions
The purpose of this case is to practice constructing proformas and to understand
how firm operating and investment activities impact the financial deficit / surplus of
BUSI 640
Sep. 8, 2013
For this case, we would like to evaluate 8 projects which have different cash flows, payback
periods but same initial investments. Since all those projects put same amount of money in the
beginning, we will skip the part considering
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
Short report
Critical Evaluation of Arbitrage Pricing Theory
FINC 615 9040
Introduction
Theory of arbitration pricing dates back to 1976, when it was proposed by Stephen Ross. This
theory is the most common in terms of pricing and assets as well as many a
Input Area:
138:
Rwacc = .726 x 17% + .274 x 10% x .65 = 14.12%
Debttoequity ratio
Cost of equity
Cost of debt
Tax rate
45%
17%
10%
35%
Output Area:
WACC
14.12%
1312:
a.
b.
Input Area:
Debttoequity ratio
WACC
Tax rate
Cost of equity
Aftertax cost of
164:
Input Area:
Plan I:
Shares outstanding
a.
b.
240,000
Plan II:
Shares outstanding
Debt outstanding
Interest rate
160,000
$3,100,000
10%
EBIT
EBIT
Plan I
Plan II
EBIT
$750,000.00 $750,000.00
Interest
$0.00
$310,000.00
NI
$750,000.00 $440,000.00
EPS
$3
158:
Input area:
Call price
One year interest rates
$1,250
11.00%
Face value: $1,000
P= .60 * $1,250 + .40 * $1,000 = $1,150
P= 1,000 + 1,000/0.13 = $8,692.30
Probability of rate in one year
Rate in one year
60%
13%
Probability of rate in one year
Rate i
Michael L. Robinson
Dr. Michael G. McMillan
FIN 620 Midterm Exam
Due: 3/4/2012
Answer sheet
1. Average return = 6.59%; Variance = 3.35%
2. Discount rate = .1564 or 15.64%
3. Asset beta = .48
4. Expected return of companys common stock = 11.4%
5. Corporati
Chapter 17
Problems 1, 2, 3, 6, 10
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Addin" be installed in
Chapter 16
Problems 2, 6, 12, 16
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Addin" be installed in E
Chapter 15
Problems 6, 9
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Addin" be installed in Excel.
To