Problems and Questions
1. The following table lists the stock prices for Microsoft from 1989 to 1998. The company did
not pay any dividends during the period
The Objective in Corporate Finance
If you dont know where you are going, it does not matter how you get
The Classical Viewpoint
Van Horne: "In this book, we assume that the objective of
The Big Picture
What is corporate finance?
Every decision that a business makes has financial implications, and any
decision which affects the finances of a business is a corporate finance
a. Current Savings Needed = $500,000/1.110 = $192,772
b. Annuity Needed = $500,000 (APV,10%,10 years) = $31,373
Present Value of $1,500 growing at 5% a year for next 15 years = $18,093
Future Value = $18,093 (1.0815) = $57
Chapter 3: The Basics of Risk
1. If we were restricted to invest in only one of the three securities, A would be most
preferable, since it has the highest expected return and lowest standard deviation of
returns of the three.
2. The average annual return
Chapter 4: Risk Measurement and Hurdle Rates in Practice
1. e. If you are doing the analysis in nominal pesos, you would use this rate.
2. A. b. Ceteris paribus, I would expect the publicly traded company to win since its cost
of capital would only reflec