LECTURE 12
MERGERS AND CORPORATE CONTROL
[CUSTOMIZED BOOK-CHAPTER 11]
[FOR PROBLEMS, PLEASE SEE THE CORRESPONDING
PDF FILE]
MERGERS
AND
CORPORATE CONTROL
1
MERGERS AND CORPORATE CONTROL: OUTLINE
[FOR PROBLEMS, PLEASE SEE THE CORRESPONDING
PDF FILE]
I.
RAT
LECTURE 10: OUTLINE
RISK ANALYSIS IN CAPITAL BUDGETING
[CUSTOMIZED TEXT-CHAPTER 10*]
[*MUCH OF THE LECTURE IS OUTSIDE THE TEXTBOOK]
1.
RISK ANALYSIS IN CAPITAL BUDGETING
A. DEFINITION
B. WHY IS IT IMPORTANT TO CONSIDER/DIFFERENTIATE PROJECT
RISKS?
C. RISK
LECTURE 4
TIME VALUE OF MONEY
[TEXTBOOK CHAPTER 4]
OUTLINE
I. Definitions
A.
Simple vs. Compound Interest
B.
Nominal vs. Effective
B.
Present Value vs. Future Value
II. PROBLEMS
A.
Future Value of a $: LUMP SUM
B.
Future Value of an Uneven Series (OMIT)
C
LECTURE 5
VALUATION OF STOCKS AND BONDS
[TEXT BOOK-CHAPTERS 5 AND 7]
OUTLINE
This lecture explores the different ways to define and calculated value of a
company.
I.
DEFINE VALUE
A.
B.
C.
D.
E.
Par Value
Liquidation Value
Book Value
Market Value
Intrinsic
LECTURE 3:
FINANCIAL STATEMENTS;
RATIO ANALYSIS
(CHAPTER 3]
OUTLINE
This Lecture covers the accounting financial statements important for Financial
Management and the types of analysis and ratios derived from accounting statements
that can be used to anal
LECTURE 1
BIRTH OF A CORPORATION; MANAGERIAL GOAL AND FUNCTIONS
(TEXTBOOK CHAPTER. 1
OUTLINE
This lecture gives an overview of the common forms of business organization and their strengths
and weaknesses. The process of initial public offerings is outline
LECTURE 6
RISK
[TEXT BOOK-CHAPTER 6]
OUTLINE
This Lecture covers the concept, definition, and measurements of risk.
I.
RISK ANALYSIS
- Definition
A. Recognizing risk:
B. Measuring Risk: Three Perspectives
1.
Risk of an Asset in Isolation
a) Range
b) Histo
LECTURE 7
COST OF CAPITAL
(CHAPTER 9)
THIS LECTURE DISCUSSES THE WEIGHTED COST OF CAPITAL. WHY IT IS
IMPORTANT, HOW IT IS CALCULATED, AND HOW IT IS APPLIED TO A
COMPANY
I. WHY SHOULD A FIRM KNOW WHAT ITS COST OF CAPITAL IS?Cause we can use it
as minimum r
LECTURE 8A (OUTLINE)
CAPITAL BUDGETING BASICS
[CHAPTER 10]
This lecture discusses how a publicly-held large firm makes its investment
decisions in long-term projects.
I. OVERVIEW
A. Definition
B. Importance
C. Projects Types
a. By Objective
b. In Terms of
LECTURE 2
MAJOR TYPES OF SECURITIES-ISSUERS PERSPECTIVE
+
ASSOCIATED TERMS
(NO SPECIFIC CHAPTER IN THE BOOK-CHAPTER 5,8 and 9 HELPFUL)
OUTLINE
I.
THREE MAJOR TYPES OF SECURITIES
A. Corporate Bond
B. Preferred Stock
C. Common Stock
D. How to read the Wall
LAWN DEPOT, INC.
Capital Budgeting
I have contributed equally with other members of
the group in preparing for and presentation of the
assigned case.
In partial fulfillment of course requirements for FIN 6300
Submitted to Professor Tarun Mukherjee
A.
Case
Item
Short-Term Debt
Mortgage Bonds
Preferred Stock
Common Equity
Total
Value
$50 million
$310 million
$145 million
$110 million
$615 million
Weight
8%
50%
24%
18%
100%
Formula
RE x b/Equity Fraction +
Depreciation
Computation
.4(80,000)/.50 + 60 million
According to the CAPM, what is the expected market return given an
expected return on a security of 12.4%, a stock beta of 1.4, and a riskfree interest rate of 4%?
USE CALC.
FV = 1000
PMT = (1000 x .035) = 35
N=7
PV = 698
I = ? = 963
.124 = .04 + 1.4 (Rm
1. An investor can design a risky portfolio based on two stocks, A and B. Stock A has
an expected return of 18% and a standard deviation of return of 20%. Stock B has an
expected return of 14% and a standard deviation of return of 5%. The correlation
coef
10 Problems
15 Theorectical
Q1. You buy a TIPS at issue at par for $1,000. The bond has a 4.5% coupon. Inflation turns out to be 3%,
3.2%, and 4.8% over the next 3 years. The total annual coupon income you will receive in year 3 is
_.
($45)(1.03)(1.032)(1
26.
A T-bill quote sheet has 90-day T-bill quotes with a 4.92 bid and a 4.86 ask. If the bill has a
$10,000 face value, an investor could buy this bill for _.
38.
An investor purchases one municipal bond and one corporate bond that pay rates of return
of
Chapter 12 Cash Flow Estimation in Capital Budgeting
Slide 2
Cash Flow Estimation
Chapter 12 Cash Flow Estimation
in Capital Budgeting
The cash flow to be estimated are cash flows
generated by the project that is available to the firm
as a whole (before
Review
Slide 2
Features of a Corporation
Review
Sudha Krishnaswami
Separate legal entity
Limited owner liability
Ownership easily transferred
Unlimited life
Taxed at the corporate rate
Greater access to financial markets
Professor of Finance
Sudha Krishna
Chapter 8 Financial Options
Slide 2
Financial Options
A derivative financial instrument that specifies a
contract between two parties for a future transaction
on an underlying asset at a pre-determined price.
Chapter 18
Financial Options
The buyer of th
Chapter 11 The Basics of Capital Budgeting
Slide 2
The Basics of Capital Budgeting
Capital budgeting involves assessing the
expenditures on assets that produce revenues.
Chapter 11
The Basics of Capital Budgeting
Multi-step process:
Estimate cash flows
Chapter 21 Merger Valuation
Slide 2
Merger Valuation
Two ways that the impact of a merger can be valued.
Chapter 21 Merger Valuation
Value the target including any synergies that will be
generated by the merger. Here, you value the target as if
it were
Chapter 20 Warrants & Convertibles
Slide 2
Warrants
Warrants are similar to call options; issued by firms.
They are a means of raising cash.
They are used in executive compensation.
Warrants dilute the equity of the current
shareholders if they are exerci
Chapter 9 Stocks and their Valuation
Slide 2
Features of Common Stock
Shareholders are owners.
Chapter 9
Stocks and their Valuation
Have claims to residual cash flows (typically dividends) of
the firm.
Have voting rights (majority voting or cumulative
Chapter 7 - Bonds and their Valuation
Slide 2
Types of Bonds based on Issuer
Chapter 7
Bonds and their Valuation
Treasury Bonds
Municipal Bonds
Corporate Bonds
Foreign Bonds
Sudha Krishnaswami
Professor of Finance
Sudha Krishnaswami Lecture Notes
Slide 3
Chapter 10 The Cost of Capital
Slide 2
The Cost of Capital
What is cost of capital?
Weighted average cost to the firm for raising an average
dollar of capital.
Chapter 10
The Cost of Capital
Why is cost of capital analysis important to a firm?
Sudha Kr
Chapter 6: Estate Tax
Quick Quiz 6.1
1. A court award for wrongful death paid to decedents family will be included in the
decedents gross estate.
2. The value of the decedents reversionary interest is calculated as of the moment
immediately before his dea
TRUE/FALSE:
Quick Quiz 1.1
1. Estate planning is the process of accumulation, management, conservation and transfer of
wealth considering only the estate tax consequences.
2. An effective transfer occurs when a persons assets are transferred to the person
INVESTMENTS
GOALS
Identify
and account for the three
types of debt securities
Identify and account for equity
securities under the equity and
fair-value methods.
Account for transfer of investment
securities between categories.
Discuss disclosure requ
1
S16 Anova Doc 9: Two-factors and Their Interaction + Anova Routine Overview
ANOVA: 3 procedures in comparison. Partition of Variation column in Excel output. In each
case, variation is measured in terms of sums of squared deviations (grand mean, row mea