FINC 727: Corporate transactions and business valuation
Professor Robert Hansen
Exercise 2. Some DCF Methods
BLAZER TELECOM s has perpetual earnings before interest and taxes of $400, the corporate tax rate is 40%. BLAZER uses a debt-to-equity rat
Financial Instruments
Money Market vs. Capital Market Maturity of 1 year or less vs. maturity of more than 1 year at time of issue Money Market Instruments T-bills Currently 1-month, 3-month and 6-months CDs Notes that banks write on themselves. Unde
FINC 727: Corporate transactions and business valuation
Professor Robert Hansen
Assignment 1. CAPM and WACC in valuation
BLAZER TELECOM s has perpetual earnings before interest and taxes of $400, the corporate tax rate is 40%. BLAZER uses a debt-t
FINC 727: Corporate transactions and business valuation
Professor Robert Hansen
Assignment 5. HLTs
BLAZER TELECOM's perpetual earnings before interest and taxes is $400, the corporate tax rate is 40%. To help finance the project BLAZER will use a
The Capital Asset Pricing Model
BKM Chapter 9
Assumptions of the CAPM Proof of the CAPM Intuition behind the CAPM The Security Market Line
Introduction Markowitz portfolio theory provides us with tools to select optimal portfolios given expected r
FINC 727: Corporate transactions and business valuation
Professor Robert Hansen
Exercise 3. Growth models: two-part exercise. Please complete both parts. I. Blazer s Growth BLAZER TELECOM s has perpetual earnings before interest and taxes of $400 f
1) Describe the methodological approach that should be used to value AirThread. How
should the cash flows be valued for 2008 through 2012? How should the terminal value
or going concern be estimated? How should the nonoperating investments in equity
affil
Suppose that the terminal market premium is 5% and the risk free rate stays the same as 4.25%.
Because the average unleveraged beta of the similar company is 0.82 and the average D/E ratio
is 40.1%, the leveraged beta of AirThread is 1.01. Suppose the cos
Case questions for Dows bid for Rohm and Haas
1) Why does Dow want to buy Rohm and Haas? Was the $78 per share bid reasonable?
Andrew Liveris, CEO of Dow, had announced the Dow of Tomorrow strategy in 2006, which
consisted of two parts.
The first part was
Portfolio Evaluation
Rate of Return = Amount you made Amount you invested
Example: Buy a stock for $100 and at end of year it is worth $106, plus you received a $2 dividend. Rate of Return = (106 100) + 2 100 = 8 100 = 8%
Dollar-Weighted Returns A
Questions for Kohler case
1) What is the total enterprise value of Kohler Co. using a discounted cash flow approach? What is
the total enterprise value using a multiples (market value of comparable companies) approach?
What is the value the share held by
1) Why is Boeing contemplating the launch of the 7E7 project? Is this a good time to do so?
Two years development, potential customers were unwilling to pay a premium for a faster ride. Overdue
to develop a new one to pull it out of its financial slump an
Research Roundtable
The Equity Premium
By:
IVO WELCH
Yale School of Management
Yale University
Ivo.welch@yale.edu
Yale University
Yale School of Management
46 Hillhouse Ave.
New Haven, CT 06520
(203) 436-0777
(203) 436-0779
Email
Postal:
Phone:
Fax:
Organ
After two years development, potential customers were unwilling to pay a premium
for a faster ride. Thus overdue to develop a new one to pull it out of its financial
slump and regain sales lost to Airbus. Meanwhile, Boeing is suffering from half
productio
WAL- MART Stores Inc.
WMT/ NYSE
Investment Rating:
UNDERVALUED- BUY
Analysts:
Milena Dragovic
Xinyan Sun
Wanyue Jiang
Yuan Ren
[WAL-MARTS BEST IS YET TO
COME]
According to our analysis, we believe that WAL-MART Stores Inc. is
undervalued and that the best
Finance 748 Fall 2007 Material for Final Exam
Question #1: You will be given returns data for four stocks along with their betas, the risk-free rate, and the market risk premium. You will need to use Excel to create a covariance matrix and use that,
Market Structure
Order specifies what to trade, how much, buy or sell, and conditions Orders are made because traders do not usually arrange their own trades go through a broker or dealer Terms Ask = offer Bid Size = quantity Firm Price for active
IPOs
IPO = Initial Public Offering SEO = Seasoned Equity Offering Two types of Underwriting Contracts 1. Best Efforts Underwriter can return any unsold shares to the issuer Smaller issuances 2. Firm Commitment Underwriter buys the entire issue as
Risk and Risk Aversion
BKM Chapter 6 part 1
What is risk? How do we measure risk? The trade-off between risk and return Risk-return assumptions of portfolio theory Utility functions and indifference curves
Risk Q) What is risk? A) Two definitions
Finance 748
Professor - Bill Reese Midterm Exam Spring, 2006
Instructions:
The first five pages consist of four problems. The first two are worth 20 points each and the second two are worth 10 points each. You need to show your work for problems 1 a
Chapter 10
Single-factor Model: ri = E(ri) + i F + ei i = sensitivity of asset i to the factor F = the factor in question CAPM is a single-factor model where the market's excess return (above the risk-free rate) is a proxy for all systematic risks, w
Capital Allocation between a risk-free and a risky asset BKM Chapter 6 part 2
One risky asset and one risk-free asset The capital allocation line Lending and borrowing portfolios Margin Transactions Optimal portfolio choice
One risk-free asset an
II. WACC and CAPM
We review basic valuation inputs. A. The cost of capital: r A B. FCFF C. Using r A to find the optimal capital structure D. More general cost of capital E. Using the CAPM to account for risk F. Measuring Beta; b, the risk free inter
FINC 727: Corporate transactions and business valuation
Professor Robert Hansen
Assignment 6. Salomon Scandal
Your group should examine the daily "abnormal returns" to Salomon's common stock from July 15, 1991 through December 31, 1991, to include
Chapter 8
The covariances between securities are usually positive, because the same macroeconomic factors affect all firms. Unexpected changes in these factors affect the entire market. We can sum all these macro factors into one indicator and assume
I. Debt and val ue
We examine two important stories for the benefit and cost tradeoffs from using debt. Later we will examine more stories A. Tax shields and bankruptcy cost B. Agency costs of debt and equity C. Sum up
1
Income Statement
Sales t CO
Finance 748
Professor - Bill Reese Midterm Exam Fall, 2006
Instructions:
The first five pages consist of four problems. The first problem is worth 15 points and the other three are worth 10 points each. You need to show your work for problems 1 and