F301 Problem Set 5 Solutions
Spring 2011
Write your answers on a separate sheet of paper. You do not need to return this page.
You must show your work in logical sequence in order to receive full credit.
To show work, you may show mathematical formulas

F301 Problem Set 4
Spring 2011
Write your answers on a separate sheet of paper. You do not need to return this page.
You must show your work in logical sequence in order to receive full credit.
To show work, you may show mathematical formulas or calculato

F200
FOUNDATION
S OF
FINANCIAL
MANAGEMEN
T
F20
0
7.1.1
RISK &
RETURN
SEVEN
ASSET SPECIFIC RISK
PORTFOLIO RISK
CAPM & MARKET EQUILIBRIUM
F20
0
WHAT IS RISK?
7.1.2
EXPECT
ED
RETUR
N
ACTUAL
RETUR
N
ESTIMATING ASSET RISK & RETURN
RISK
EXPECTED
RETURN
7.1.3
7.

Solution to Vaughn and Bushnell WACC practice problem
Vaughn and Bushnell Manufacturing (V&B) has 10,000 bonds outstanding with an 11%
coupon rate, paid semiannually. The bonds have 10 years till maturity and are current ly
selling at 95% of their $1,000

Solutions to TVM Practice Set II 1. In this problem you are solving for the monthly rate of return and then the yearly rate of return. There are 228 months in 19 years (19 * 12 = 228). $13,438 228 ) 1 = 1.104% $1,100 N = 228, PV = -$1,100, FV = $13,438; c

TVM Practice Problems II 1. Nineteen years ago, your grandfather placed $1,100 in a trust fund for you. The fund is now worth $13,438. a) What is the funds monthly rate of return? b) What is the funds rate of return if expressed on a yearly basis? 2. One

Solutions to TVM Practice Set I 1. The future value is $12,000 in four years, so you wish to find the present value, at a discount rate of 4.5% per year. The timeline looks like this:
0 PV = ? 1 2 3 4 12,000
Using the PVIF, compute the PV as follows: 1 12

TVM Practice Problems I
1. You are planning to purchase a house four years from now, and you will need $12,000 for a down payment at that time. Suppose you can earn 4.5% per year in a money market fund. How much do you need to deposit into the fund today,

SOLUTIONS STOCK AND BOND PRACTICE SET
1. A coupon rate of 9% means the total annual payment is $90.
a. Current price is the present value of all coupon payments plus present value of the
face value.
1
1
(1.068) 6
PV coupons = 90
.068
1000
PV face value =

F301
Exam 2
Practice Problems
Solutions are in bold.
1. To calculate the change in net working capital, which of the following would be considered a
cash outflow?
a. An increase in sales
b. A decrease in sales
c. A decrease in accounts receivable due to

F200
FOUNDATION
S OF
FINANCIAL
MANAGEMEN
T
F20
0
8.1.1
REAL ASSET
INVESTMENTS
EIGHT
NET PRESENT VALUE, IRR &
PAYBACK
PROJECT TYPES & PROFILES
CASH FLOW ANALYSIS
F20
0
8.1.2
CAPITAL
BUDGETING
FIXED
ASSET
S
INVESTOR
S FUNDS
CASH
FLOW
WEALT
H
VALUE, INVESTME

F200
FOUNDATION
S OF
FINANCIAL
MANAGEMEN
T
F20
0
3.1.1
FINANCIAL
MARKETS
THREE
ROLES & TYPES OF FINANCIAL
MARKETS
RAISING CAPITAL
APPLICATION PROBLEMS (1)
F20
0
3.1.2
FINANCIAL MARKETS: THE
BIG PICTURE
SURPLU
S
FUNDS
INDIVIDUA
LS
FIRMS
INVESTOR
S
INSTITUT

SYLLABUS and COURSE OUTLINE
F301 Financial Management
Fall 2010
Instructor:
Office:
Phone:
Assistant:
E-mail:
Office Hours:
James C. Smith
BS 4000A
(317) 278-8430
Joyce Sparks (274-0870)
jamcsmit@indiana.edu (Please do not use Oncourse messages.)
Many tim

F301 Financial Management
Quiz 3 Practice Problems
1. What is the rate of return on the following portfolio?
Asset
A
B
C
Investment
$200
$300
$500
Return
-8%
10%
15%
8.9%
2. Consider the securities below.
Security
X
Y
T-bills
Std. Dev.
10%
14%
Beta
1.4
0.

F301 Financial Management
Final Exam information
There will be 15 or 16 multiple-choice questions on the Final Exam. Then there will be four or five
written-answer problems.
Approximately two-thirds of the exam will be based upon the new material (chapter

F301 Financial Management
Problem Set 3
IndianaUniversity
KelleySchoolofBusiness
Fall2012
To receive credit, you must show your work in a professional, businesslike fashion. It should
be neither messy nor illegibly tiny. Make this assignment look like som

F301 Financial Management
Problem Set 2
IndianaUniversity
KelleySchoolofBusiness
Fall2012
To receive credit, you must show your work in a professional, businesslike fashion. It should
be neither messy nor illegibly tiny. Make this assignment look like som

Stock and Bond Practice Problems
1. Youareevaluatinga9%couponcorporatebondwithafacevalueof$1000.The
bondmaturesinsixyears.Theyieldtomaturityis6.8%andthecouponispaid
annually.
a. Whatshouldbethecurrentpriceofthebond?
b. Drawthetimelineforthisbond,showingcu

F301 Financial Management
Case Assignment Spring 2011
OVAL TRACK TRANSMISSIONS
Background
When the Harris brothers began building and racing stock cars, they took a careful and
painstaking approach to their main objective: speed. Dozens of small details,

F301
Exam 2
Practice Problems
Solutions are in bold.
1. To calculate the change in net working capital, which of the following would be considered a
cash outflow?
a. An increase in sales
b. A decrease in sales
c. A decrease in accounts receivable due to

Practice Problems for Exam 2
Part I
1. Your company is considering two projects with the following cash flows:
Time
0
1
2
3
4
5
Project A
Project B
Cash Flow
Cash Flow
-22,000
-50,000
6,000
20,000
7,000
15,000
8,000
15,000
9,000
13,000
10,000
13,000
a) Ca

F301 Financial Management
Exam 2 Solutions
Spring 2011
You can click on a cell to see the formula and cell references used.
Version A
Use the following information to answer questions 1 and 2.
Your division manager has asked for your help in evaluating a

F301
Exam 1 Practice problems
Note: For additional practice material, go to: www.mhhe.com/rwj. Click on the textbook for this
course and then go to the online learning center.
1. Which of the following is a disadvantage of the corporation compared to a so

Exam 1 High Priority Practice Problems
1. A bank wishes to earn an annual rate (EAR) of 10.6% on its loan to you. The loan
requires monthly payments. What APR (compounded monthly) must the bank
disclose on this loan?
Find the rate per month.
(1 + r monthl