Chapter 11 Berk
You are considering adding a microbrewery on to one of your firm's existing
restaurants.This will entail an increase in inventory of $8,000, an increase in Accounts
payable of $2,500,and an increase in property, plant, and equipment of $40
Chapter 10 Berk Study Guide
Consider a project with the following cash flows:
If the appropriate discount rate for this project is 15%, then the NPV is closest to:
Which of the following statements is FALSE?
The profitability index can be easily ad
Chapter 9 Keown Study Guide
The cost of new preferred stock is equal to preferred stock dividend divided by the
net selling price of preferred.
Due to changes in regulatory requirements, the transactions costs associated with
selling corporate securities
Chapter 8 Keown Study Guide
Which of the following statements concerning preferred stock is MOST correct?
Selected Answer: Correct Preferred stock dividends are typically the same each year,
allowing a preferred stock to be valued as a perpetuity.
Chapter 7 Keown Study Guide
Other things being equal, investors will value which of the following bonds the highest?
Two investors are considering the purchase of Corporation LMQ bonds. The bonds are
selling at their par value of $1,000
RISK & RETURNS
2 BEHAVIORAL FINANCE
Daniel Kahneman Ph.D. in Psychology
System 1 & System 2 thinking
2+2 vs 17x24
The standard finance academics viewpoint that investors make decisions
according to the assumptions of the efficient mark
Case Study: Oressa
From 1997 to 2010, Impress made many acquisitions focusing on Europe. Impresss business
was revolving around metal cans not glass. On 2010, when Ardagh Glass Group acquired Impress for
1.7 billion Euros, it is possible that executives o
Case Study: Ahold
Van der Hoeven was headhunted to become CFO for Ahold in 1985. He admitted in an
interview that he had a very little knowledge of accounting. It is pretty unusual for a CFO not
to know accounting. Why was he headhunted? After he became t
Case Study: Belgacom
Belgacom was the leading telecom service provider in Belgium including fixed-line,
broadband and mobile telephony services. It had more than 50% market share in Belgium,
which makes it the highest market owner in Europe. In addition t
Case Study: Goldman Sachs
When Goldman Sachs was founded in late 1880s, it was a 1-man company operating in one
room and dealing with promissory notes for small profit. Marcus Goldman was connecting
investors which were banks often to entrepreneurs. Nearl
Case Study: Cadbury
According to wall street words dictionary, squeeze-out means forcing stockholders to sell
their stock. It is to buy stocks of the minority group of shareholders without their consent.
Majority stock holders may force minority stock hol
Case Study: Chrysler
Since the incorporation of Chrysler in 1925, company was performing well in the US market.
When it was 1940, it was the second largest automaker in the industry. Chrysler was
performing between GM and Ford and the race for market domi
1. A firm has net working capital of $3,800 and current assets of
$11,700. What is the current ratio?
a. Current ratio = CA/CL
CL is unknown, but NWC = CA-CL or CL = CA-NWC = 11,7003,800 = 7,900
Current ratio = $11,700/$7,900 = 1.48
2. A firm has cash of$
1. If you are in charge of all fixed asset purchases, it means that you
are in charge of:
o Capital budgeting
2. Suppose a firm is financed with 40 percent debt and 60 percent
equity. This mixture of debt and equity is referred to as the firm's:
BIOL 319: Cell and Molecular Biology (4 credits)
Instructor: Dr. Faith Liebl ([email protected])
Office: SLW1120, 650-2509
Office Hours: M 11-12, W 2-3, and by appointment
Lab Instructors: Kaitlyn Maly ([email protected]), Office Hours: TBA
The Goal of the Firm: Maximization of shareholder wealth to be the goal of the firm, by which we mean
maximization of the total market value of the firms common stock.
II. Five Principles That Form the Foundations of Finance
A. Principle 1: C
Discount rate may be difficult to calculate
Cash flows may be easier to estimate
NPV may be calculated with a wide range
of possible discount rates
NPV Profile is a graph of possible NPVs (YAxis
Net Present Value (NPV) is the difference between the present value of cash inflows and the
present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of a
projected investment or project.
NPV (Net Present Value) the $ difference between an investment an investments market value and its cost. NPV = PV inflows Cost.
Rule: Accept project if NPV > 0
Discount Cash Flow (DCF) valuation the process of valuing an investment by
discounting its futu
FlN 320 i
Chapter 7 Review
Stock Valuation & Equity Markets
A. Stock Valuation
The value of a stock is Present Value of the EXPECTED future cash
flows. Cash flow is made up of dividends realized and capital gains
realized on the sale of a stock (w
Finance 320 Chapter 8 Review
Chapter 8 focuses on Return on Investment and the various ways businesses make
1. The most widely accepted and used are Net Present Value (NPV) and Internal Rate
of Return (IRR). We typically use Excel in determinin
Chapter 10 Review
Return on Investment in Capital Markets
Calculating Return on Investment
What is the Dollar Return on our investment?
Total Dollar Return = Dividend + Capital Gain (or Loss)
Cash from Sale of Stock = Initial Investment + Total Return
Finance 320-031 Spring 2015 1‘ yr; grit/2)
Midterm Exam #1 n v“ ‘ . .
1. Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt
and equity is referred to as the firm's:
) capital budget.
Finance 320-031 Spring 2015 ’ ’ a)?
Midterm Exam #2
1. Jamie earned $180 in interest on her savings account last year. She has decided to leave the $180
in her account so that she can earn interest on the $180 this year. The interest Jamie earns this yea
FIN 320 Chapter 11 Review
Risk & Return
1. How do we determine Future Economic Returns?
-Historical Stock & Market Performance
-Company Guidance & Outlook
-Market News and Information
-Efficient Market Theory
-Determining Risk & Return Probabilities
FIN 320 Chapter 9 Review
Important Concepts in Chapter 9
-What Are We Measuring When Considering a Project? We are measuring the
NPV of Cash Flows as they occur, after tax.
-Relevant Cash Flows: Those Cash Flows that impact the company as a result of