Chapter # 2 Homework
BU 926
Name
Questions 1 - 14 will require use of the balance sheet and income statement provided for BOD Corp.
1. Calculate the net working capital for both year end 2013 and 2014
2. List in order from most to least, the liquidity of
Chapter 13 - Leverage and Capital Structure
CHAPTER13
LEVERAGEANDCAPITALSTRUCTURE
Solutions to Questions and Problems
1.
a.
Atableoutliningtheincomestatementforthethreepossiblestatesoftheeconomyisshown
below.TheEPSisthenetincomedividedbythe3,600sharesouts
Chapter # 2 Homework
BU 926
Name
Professor Ansley
Questions 1 - 14 will require use of the balance sheet and income statement provided for BOD Corp.
1. Calculate the net working capital for both year end 2014 and 2015.
Net Working Capital = Current Assets
Chapter 06 - Interest Rates And Bond Valuation
CHAPTER6
INTERESTRATESANDBOND
VALUATION
Solutions to Questions and Problems
2.
Priceandyieldmoveinoppositedirections;ifinterestratesrise,thepriceofthebondwillfall.This
isbecausethefixedcouponpaymentsdetermine
CHAPTER8
NETPRESENTVALUEANDOTHER
INVESTMENTCRITERIA
1.
To calculate the payback period, we need to find the time that the project has
recovered its initial investment. After two years, the project has created:
$1,300 + 2,400 = $3,700
in cash flows. The pr
CHAPTER9
MAKINGCAPITALINVESTMENT
DECISIONS
Solutions to Questions and Problems
1.
The $7 million acquisition cost of the land six years ago is a sunk cost. The $9.8
million current aftertax value of the land is an opportunity cost if the land is used
rath
Chapter 12 - Cost of Capital
CHAPTER12
COSTOFCAPITAL
Solutions to Questions and Problems
1.
Withtheinformationgiven,wecanfindthecostofequity,usingthedividendgrowthmodel.Using
thismodel,thecostofequityis:
RE=[$2.20(1.06)/$43]+.06
RE=.1142or11.42%
2.
Herewe
Time Value of Money Challenge Problems
1) You have won the Florida State Lottery. Lottery officials offer you the choice of two
different payout plans. The first would pay you $10,000 one year from now. The second
would pay you $20,000 five years from now
Making Capital Investment Decisions
Isaac, Inc. is thinking about purchasing a new machine to replace an old one. The new
machine would cost $300,000. The machine will have a life of 6 years and will be
depreciated using the 5-Year MACRS table (page 275 i
BU 926
Business Finance
Spring 2015
Final Review
Todays Schedule
Homework Chapters 14 & 16
Excel Project Review
Review for Final
Food & Drinks
Section 1
Test #1
Ratio Analysis
Current Ratio = Current Assets / Current Liabilities
Quick Ratio = (Current Ass
CHAPTER16
SHORTTERMFINANCIALPLANNING
Solutions to Questions and Problems
1.
a.
No change. A dividend paid for by the sale of debt will not change cash since the cash
raised from the debt offer goes immediately to shareholders.
b.
No change. The real estat
Chapter 04 - Introduction to Valuation: The Time Value of Money
CHAPTER4
INTRODUCTIONTOVALUATION:THE
TIMEVALUEOFMONEY
6.
Toanswerthisquestion,wecanuseeithertheFVorthePVformula.Bothwillgivethesameanswer
sincetheyaretheinverseofeachother.WewillusetheFVformu
CHAPTER 3
WORKING WITH FINANCIAL
STATEMENTS
Solutions to Questions and Problems
NOTE: All end-of-chapter problems were solved using a spreadsheet. Many problems require multiple
steps. Due to space and readability constraints, when these intermediate step
CHAPTER 5
DISCOUNTED CASH FLOW VALUATION
Solutions to Questions and Problems
NOTE: All end-of-chapter problems were solved using a spreadsheet. Many problems require multiple
steps. Due to space and readability constraints, when these intermediate steps a
12. To construct the cash flow identity, we will begin cash flow from assets. Cash flow from assets is:
Cash flow from assets = OCF Change in NWC Net capital spending
So, the operating cash flow is:
OCF = EBIT + Depreciation Taxes
OCF = $111,866 + 54,576
BU 926GA
Survey of Finance
Spring 2015
Chapter 1
Introduction to Financial Management
4 Basic Areas Of Finance
Corporate finance
Investments
Financial institutions
International finance
Why Study Finance?
Marketing
Budgets, marketing research, market
Chapter 04 - Introduction to Valuation: The Time Value of Money
CHAPTER4
INTRODUCTIONTOVALUATION:THE
TIMEVALUEOFMONEY
6.
Toanswerthisquestion,wecanuseeithertheFVorthePVformula.Bothwillgivethesameanswer
sincetheyaretheinverseofeachother.WewillusetheFVformu
Time Value of Money Challenge Problems
1) You have won the Florida State Lottery. Lottery officials offer you the choice of two
different payout plans. The first would pay you $10,000 one year from now. The second
would pay you $20,000 five years from now
BU 926GA
Survey of Finance
Spring 2015
Chapter 4 & 5
Todays Schedule
Review Homework from Chapter 3
Chapter 4 The Time Value of Money
Begin: Chapter 5 Discounted Cash Flow Valuation
Chapter 4
The Time Value of Money
Basic Definitions
Present Value earlier
CHAPTER9
MAKINGCAPITALINVESTMENT
DECISIONS
Solutions to Questions and Problems
1.
The $7 million acquisition cost of the land six years ago is a sunk cost. The $9.8
million current aftertax value of the land is an opportunity cost if the land is used
rath
Making Capital Investment Decisions
Isaac, Inc. is thinking about purchasing a new machine to replace an old one. The new
machine would cost $300,000. The machine will have a life of 6 years and will be
depreciated using the 5-Year MACRS table (page 275 i
BU 926GA
Survey of Finance
Spring 2015
Chapter 9
Key Concepts and Skills
Understand how to determine the relevant
cash flows for a proposed investment
Understand how to analyze a projects
projected cash flows
Understand how to evaluate an estimated
NPV
CHAPTER 4
INTRODUCTION TO VALUATION: THE
TIME VALUE OF MONEY
Solutions to Questions and Problems
6.
The time line is:
0
18
$45,000
$280,000
To answer this question, we can use either the FV or the PV formula. Both will give the same answer
since they are