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
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
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