Chapter 6
Problems 2, 10, 15, 17, and 21
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be instal
Chapter 9. Question -1. Stock Values
The Starr Co. just paid a dividend of $2.15 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year, indefinitely.
If the investors require a return of 11 percent on the stoc
Chapter 5
Problems 3, 5, 8, 11, and 14
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be installe
Solution:Wehavethefollowingtablewithfuturecosts,cashflows,taxesanddepreciation.
OperationalRevenues
ProductionCosts
Depreciation
TaxesPaid
AfterTaxesCash
DiscountFactor
DiscountedCashFlow
Year 0
Year 1
$105,000
Year 2
$110,250
Year 3
$115,763
Year 4
$121,
Chapter 5. Question -15. Profitability Index versus NPV
Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different
technologies to develop wireless communicatio
Chapter 5, Question 6.
There are three common problems in capital budgeting process. They are
a) Future uncertainty: Capital budgeting decisions involve long term commitments. However
there is lot of uncertainty in the long term. The uncertainty may be wi
a)
The area or topic that I felt difficult is profitability index. Can anyone explain this little
more detail with a real time example?
b)
The simplest example of computing an Internal Rate Return is by using the example of a
mortgage with even payments.
Chapter 10
Problems 4, 6, 10, 18, and 19
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be instal
Chapter 9
Problems 14, 17, and 24
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
NOTE: Some functions used in these spreadsheets may require that
the "Analysis ToolPak" or "Solver Add-in" be installed in
Chapter 9, Question 5. Common versus Preferred Stock
Suppose a company has a preferred stock issue and a common stock issue. Both have just paid a
$2 dividend. Which do you think will have a higher price, a share of the preferred or share of the
common?
C
a)
Can someone explain and give a real time example for risk free rate?
b)
The annual rate of return that an investor expects to earn when investing in shares of a
company is known as the cost of common equity. That return is composed of the dividends
pai