CHAPTER 5
INTRODUCTION TO VALUATION: THE TIME VALUE OF MONEY
QUESTIONS AND PROBLEMS
Basic (Questions 115)
1.
Simple Interest versus Compound Interest (LO1) Bank of Vancouver pays 7
percent simple inte
Chapter 12
Some Lessons from Capital Market History
Multiple Choice Questions
1. Last year, T-bills returned 2 percent while your investment in largecompany stocks earned an average of 5 percent. Whic
Lecture 4 Deal Structure and Tax Impact
4.1) lntroductioa
If one ﬁrm buys another ﬁrm, the transaction may be taxable or tax free, depending on
the deal structure. In a taxable structure the sharehold
CHAPTER 9
NET PRESENT VALUE AND OTHER INVESTMENT
CRITERIA
Learning Objectives
LO1
LO2
LO3
LO4
LO5
LO6
LO7
How to compute the net present value and why it is the best decision criterion.
The payback ru
CHAPTER 7
INTEREST RATES AND BOND VALUATION
Learning Objectives
LO1 Important bond features and types of bonds.
LO2 Bond values and yields and why they fluctuate.
LO3 Bond ratings and what they mean.
CHAPTER 5
INTRODUCTION TO VALUATION: THE TIME VALUE
OF MONEY
Learning Objectives
LO1
LO2
LO3
LO4
How to determine the future value of an investment made today.
How to determine the present value of ca
CHAPTER 8
STOCK VALUATION
Learning Objectives
LO1 How stock prices depend on future dividends and dividend growth.
LO2 The characteristics of common and preferred stocks.
LO3 The different ways corpor
CHAPTER 1
INTRODUCTION TO CORPORATE FINANCE
Learning Objectives
LO1
LO2
LO3
LO4
LO5
The basic types of financial management decisions and the role of the financial manager.
The financial implications
CHAPTER 6
DISCOUNTED CASH FLOW VALUATION
Learning Objectives
LO1
LO2
LO3
LO4
How to determine the future and present value of investments with multiple cash flows.
How loan payments are calculated and
Lecture 1 Introduction
1.1) Study of Finance
1.1.1
1.1.2
There are 2 main branches in the study of ﬁnance:
0 Corporate Finance
0 Investments
Corporate Finance
It deals with how companies (in this case
Lecture 2 The Legal and Regulatogy Framework
Corporate Governance & Performance
2.1) Why Regulators?
M&A (takeovers) are carried out in securities markets and they can cause wide price ﬂuctuations
wit
Lecture 3 Accounting Treatmentsof M&A Activities
3.1) Background
Accounting is very important in M&A as:
0 one needs to see “behind” the numbers in a M&A transaction
0 combining ﬁrms always results in
Lecture 10 Going Private and Leverage Buyouts
10.] ) Deﬁnitions
Going Private refers to the transformation of a public corporation into a privately held ﬁrm.
A leverage buyout ( LBO ) is the purchase
Lecture 12 Takeover Defence
12.1) Why Defend against Takeover ?
Some takeovers are classiﬁed as Hostile Takeovers' in other words, it is an attempt by the
potential bidder to acquire the target agains
Lecture 11 Merger Arbitrage
11.1) What is Arbitrage ?
As we have learnt in other ﬁnance courses, arbitrage is an investment strategy to take advantage
of an opportunity in which:
I one can improve on
Lecture 8 Valuation of Private Companies for M&A Activities
8.1) Introduction
In Lecture 7, we have looked into valuating public companies using 2 methods:
0 the Comparable Companies Analysis ( for bo
Lecture cl History of Merger Activig & Statistical
Observation of M&A Performance
9.1) Background
After going through all the theories and causes on M&As in the previous lectures, this lecture
attempt
Lecture 7 Detailed Analysis of M&A Proiects when “Target”
Is a Public Company
7.1) Introduction
As discussed in Lecture 6, the ﬁrst step to determine whether a company is a potential
target is to go t
Lecture 6 Valuation of Potential Target Financial Performance
6.1) Why do some M&A Projects erode Shareholder Value ?
Often, bidders tend to overestimate targets’ values. People are subjected to cogni
Lecture 5 Why Buy up other Companies or their Assets ?
5.1) IntroductiOn
As discussed in Lecture 1, a public company’s mission is to enhance the share price
for its shareholders. A sure way of doing t
Appendix A: Draft Treasury
Policy Document
Note: This is a sample policy document. Genuine first time buyers of the Handbook of Global
Corporate Treasury can download this template and amend it to sui
Assignment #2
Due date: October 12, 2016
1. (a) Mike invested $3000 at 4.5% compounded semiannually. After 18 months the rate
changed to 4.25% compounded quarterly. What amount will Mike have accumula
and then ordering these r objects in r! ways.
Therefore
n
r
r!
!
r
= Pn .
Binomial Theorem.
(a + b)n =
n
X
k=0
!
n
k
ak b n k .
Some properties.
n
k
(1) Symmetry:
!
=
n
n
k
!
(2) Pascals triangle:
n
k
Denition: The cumulative distribution function (c.d.f.) F (FX ) of a random variable X
is
F (x) = P (X x) = P (cfw_s 2 S : X(s) x).
Properties of the c.d.f.:
1. 0 F (x) 1
2. If x y then F (x) F (y).
3
Example: Nissan sold three models of cars
in North America in 1999: Sentras, Maximas
and Pathnders. Of the vehicles sold, 50%
were Sentras, 30% were Maximas and 20%
were Pathnders. In the same year 12
Example: n dierent letters were sent to
4 dierent addressees at random. Find the
probability that at least one goes to the right
address.
Solution. Dene events
Ai = ith letter goes to the right addres
Capital Budgeting Techniques
A. NON-discounted CF (Cash Flow) techniques
1. Total Cash Flow (CF)
TCF = CF (NOT discounted)
2. Accounting rate of return (ARR)
Average annual [after tax] income
ARR =
Av
SECTION I Questions 1-5 are worth 2 marks each
Answer TRUE (T) or FALSE (F) by circling the appropriate letter
1) A project that has a discounted payback period longer than its life
must have a positi
SECTION I Questions 1-5 are worth 2 marks each
Answer TRUE (T) or FALSE (F) by circling the appropriate letter
1) By using a firm's WACC to analyze all potential investments, there is
no risk of T F *
CORPORATE TAXATION IN CANADA
Prof. Michel L. Bilodeau
1
Corporate Income Taxes
Corporate taxes paid to
both the federal and
provincial governments
Income from all Sources
Less
Allowable Expenses
and D