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FINA2010H Financial Management
Assignment 2.1
(From Ross, Westerfield, Jaffe, Lim, Tan and Wong, 2014, Corporate Finance, Asia Global
Edition, McGraw-Hill)
Please refer to Instructions for
Solutions Manual
Fundamentals of Corporate Finance (2nd Asia Global Edition)
Ross, Westerfield, Jordan, Lim and Tan
Updated July 2015
CHAPTER 7
INTEREST RATES AND BOND
VALUATION
Answers to Concepts Re
Chapter 01 - Introduction to Corporate Finance
Chapter 01
Introduction to Corporate Finance
Multiple Choice Questions
1. Which one of the following terms is defined as the management of a
firm's long-
Exercise 2 (Chapter 3)
Textbook Questions
3-1. (Main point: definitions of NOWC)
The assets of Dallas & Associates consist entirely of current assets and net plant
254
7.2
Visit us at www.mheducation.asialoiclross
P A R T 3 Valuation of Future Cash Flows
Notice that we discounted the $1,000 back 40 periods at 6 percent per period, rather
than 20 years at 12 pe
Exercise 3 (Chapter 4)
4-3 (DuPont Model ROE and ROA) Doublewide Dealers has an ROA of 10%, a 2% profit
margin, and an ROE of 15%. What is the total asset turno
I C H A PT E R 6 Discounted Cash Flow Valuation 205
6.6 The cash flows on the car loan are in annuity form, so we need to nd only the
payment. The interest rate is 15% / 12 = 1.25% per month, and ther
Exercise: Chapter 1
1. What are the basic corporate finance functions?
a.
b.
c.
d.
e.
2. Summarize the advantages and disadvantages of proprietorships & partner
Exercise: Chapter 1 (Answers)
1. What are the basic corporate finance functions?
a. Financing (or capital raising)
b. Capital budgeting (or investment)
c. Financing ma
Exercise 4 (Ch.5) (You need to hand in this exercise in our next lecture (Feb 2 4). Please dont email it me. Write down
the equations and the workings for each question. Dont just write down the answe
Exercise 3 (Chapter 4)
4-3 (DuPont Model ROE and ROA) Doublewide Dealers has an ROA of 10%, a 2% profit
margin, and an ROE of 15%. What is the total asset tu
Chapter6
DiscountedCashFlowValuation
Key Concepts
Be able to compute the future value of multiple cash
flows
Be able to compute the present value of multiple cash
flows
Be able to compute loan paym
Chapter16
FinancialLeverageand
CapitalStructurePolicy
Outcomes
Recognize and determine the effect of financial
leverage on cash flows and the cost of equity
Understand the impact of taxes and bankru
CHAPTER 8
1. The constant dividend growth model is:
Pt = Dt (1 + g) / (R g)
So the price of the stock today is:
P0 = D0 (1 + g) / (R g) = $1.95 (1.06) / (.11 .06) = $41.34
The dividend at year 4 is th
CHAPTER 9
1. To calculate the payback period, we need to find the time that the project has recovered its initial
investment. After three years, the project has created:
$1,600 + 1,900 + 2,300 = $5,80
CHAPTER 10
Solutions to Questions and Problems
1. The $6 million acquisition cost of the land six years ago is a sunk cost. The $6.4 million current
aftertax
value of the land is an opportunity cost i
CHAPTER 14
1. With the information given, we can find the cost of equity using the dividend growth model. Using
this
model, the cost of equity is:
RE = [$2.40(1.055)/$52] + .055 = .1037 or 10.37%
3. W
CHAPTER 16
1. a. A table outlining the income statement for the three possible states of the economy is shown
below. The EPS is the net income divided by the 5,000 shares outstanding. The last row sho
FINA2010
Assignment 2
Due Date: March 19, 2014 (4pm at the collection box on the 2nd floor of CYT building)
Questions and Problems
Chapter 8
1, 2, 3, 5, 8, 10, 12 and 22 (for question 22. A very brief
FINA2010N/O/P
Assignment 1
Due Date: February 18, 2014 (4pm at the collection box on the 2nd floor of CYT
building)
Questions and Problems
Chapter 5
1, 2, 9, 14, 17, 18
Chapter 6
1,2, 3, 4,7, 12, 20,
Chapter1
Introductionto
CorporateFinance
Key Concepts
Know the basic types of financial
management decisions and the role of the
financial manager
Know the financial implications of the
different fo
Chapter7
InterestRatesand
BondValuation
Outcomes
Understand the important bond features and
bond types
Able to calculate bond values and its price
changes
Know bond ratings
Understand the impact o
Chapter8
StockValuation
Outcome
Understand how stock prices depend on
future dividends and dividend growth
Able to compute stock prices using the
dividend growth model
Understand how stock markets
Chapter5
Introductionto
Valuation:TheTime
ValueofMoney
Key Concepts
Be able to compute the future value of an
investment made today
Be able to compute the present value of cash to be
received at som
CHAPTER 6
1. To solve this problem, we must find the PV of each cash flow and add them. To find the PV of a
lump sum,
we use:
PV = FV / (1 + r)t
[email protected]% = $950 / 1.10 + $1,040 / 1.102 + $1,130 / 1.103
FIN2010 Financial Management
Lecture 6
Risk and Return
Instructor: Prof. Chen (Alison) Yao
CUHK Business School
Page 1
Lecture 6: Risk and Return
Motivation
NPV and other valuation techniques need req
Tsang Wan Chung 1155064766
Assignment 2
FINA 2010K
Assignment 2 (Due date: 11:59 pm March 17, 2016)
1. Company Y does not plow back any earnings and is expected to produce a level dividend stream of
$