Q3
Number of new shares: 15M/$50 = 300000
Let x = number of old shares
New Market value= 15M + 65X
$63.18= (15M+65X) / (300000 + X)
X= 2,172,527.4
X= 2,172,527
Q18
Let x = number of old shares
since 4
Ch19 Q13, 15
13. (a, b)
Total current earnings (u)
Firm Value (before) (v)
Firm Value (after) (v-cash spent)
Cash distributed per share (x)
No. of share after implementation
Share price (z)
EPS
Extra
Q6
(a)
Cash flow
Payment of Interest and
Principal on Debt
Distribution to stockholders
Steinberg Corporation
Boom(0.8) Recession(0.2)
2,700,000
1,100,000
900,000
900,000
Dietrich Corporation
Boom(0.8
10 p A n 'r 7 Long-Term Financing
SUMMARY AND CONCLUSIONS
This chapter has discussed cost of capital. The most important concept is the weighted av-
erage co'st of capital, or WACC, which we interpret
18
p A n 1- 1 Overview of Financial Management
SUMMARY AND CONCLUSIONS
This chapter has introduced yen to some of the basic ideas in business nance. In it, we
saw that:
1. Business nance has three m
FIN 2001 - Financial Management
1
Lecture 1
Introduction
2
Key Concepts and Skills
Know the basic types of financial
management decisions and the role of
the financial manager
Know the financial impli
Assignment 6 (Chapters 8 & 9 NPV and Capital Budgeting)
Ch. 8
QP 17.
a.
The profitability index for each project is:
Y: PI = ($14,000/1.12 + $12,400/1.122 + $14,800/1.123 + $10,400/1.124) / $31,000
PI
Assignment 7 (Chapters 10 & 11 Risk and Return)
Ch. 10
QP 20.
The arithmetic average return is the sum of the known returns divided by the number of returns, so:
Arithmetic average return = (.26 + .06
Assignment 4 (Chapter 6 Bond Valuation)
Ch. 6
QP 8.
Here, we need to find the coupon rate of the bond. All we need to do is to set up the bond pricing
equation and solve for the coupon payment as foll
Assignment 8 (Chapter 12 Cost of Capital)
Ch. 12
QP 14.
a.
Using the equation to calculate WACC, we find:
WACC = .081 = (1/1.55)(.11) + (.55/1.55)(1 .35)RD
RD = .0435, or 4.35%
b.
Using the equation t
Assignment 5 (Chapter 7 Stock Valuation)
Ch. 7
QP 10.
We need to find the growth rate of dividends. Using the constant growth model, we can solve the
equation for g. g is the growth rate of dividends
Assignment 2 (Chapter 4 Time Value of Money)
Ch. 4
QP 15.
The time line is:
0
7
$289,600
$242,300
To answer this question, we can use either the FV or the PV formula. Both will give the same answer
si
Topic 1c Real Estate Financing: Notes and Mortgages
True / False Questions
1. A mortgage is the same as a note.
2. Prepayment of a loan without penalty is a right of all borrowers.
3. A second mortgag
Topic 1b Real Estate Investment: Basic Legal Concepts
T/F
1. Real estate refers to the physical land and improvements constructed on the land.
2. Real property refers to the ownership rights associate
Topic 1b Real Estate Investment: Basic Legal Concepts
T/F
1. Real estate refers to the physical land and improvements constructed on the land. (T)
2. Real property refers to the ownership rights assoc
FIN3003
Lecture 6
Capital Asset Pricing Model - CAPM
(BKM Chapter 7)
1
Learning Objectives
Use the implications of capital market
theory to estimate security risk premiums.
Construct and use the secur
FIN3003
Lecture 5
Efficient Diversification
(BKM Chapter 6)
1
Learning Objectives
Show how covariance and correlation
affect the power of diversification to
reduce portfolio risk.
Calculate mean, var
FIN 3003 Principles of Investments 17S1
Home Assignment 1 (20 marks)
1. Equity-traded funds (ETFs) are exploding in popularity among small investors across
the globe. What is an ETF? What are the feat
FIN3003
Lecture 3
Securities Markets
(BKM Chapter 3)
1
Learning Objectives
Describe how firms issue securities to the
public.
Identify various types of orders investors
can submit to their brokers.
FIN3003
Lecture 7
Managing Bond Portfolios
(BKM Chapter 11)
1
Learning Objectives
Compute a bonds price given its yield to
maturity.
Analyze the features of a bond that affect
the sensitivity of its
FIN3003
Lecture 4
Risk and Return: Past and prologue
(BKM Chapter 5)
1
Learning Objectives
1. Compute various measures of return on multiyear investments.
2. Use either historical data on the past
per
FIN3003
Lecture 8
Options: Introduction
(BKM Chapter 15)
1
Learning Objectives
2
The Option Contract: Calls
A call option gives its holder the right to
buy an asset:
At the exercise or strike price
On
Suggested Answers to Home Assignment 1
1. An ETF, or exchange-traded fund, is a marketable security that tracks an index,
a commodity, bonds, or a basket of assets like an index fund. Unlike mutual fu
FIN3003
Lecture 1
Investments:
Background and Issues
(BKM Chapter 1)
1
Learning Objectives
Define an investment.
Distinguish between real assets and
financial assets.
Describe the major steps in the
FIN3003 Assignment 3
Requirement: Dont provide answers alone without showing your work.
Question 1
a. A 6% coupon bond paying interest annually has a modified duration of 10 years, sells for
$800, and