MANAGEMENT DEVELOPMENT INSTITUTE (MDI) NMP-XIII CORPORATE FINANCE FOR ENHANCING VALUE (First Quiz) (Open book) Time Allowed: 10 minutes MM: 6 Note: Attempt all the questions. All questions carry equal marks. Correct answers should be marked by darkening the circles in the answer sheet provided. 1. The primary goal of a publicly-owned firm interested in serving its stockholders should be to: a. Maximize expected total corporate
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Formula: PV = Present Value CFi = cash flow for period i PV = CF1 / (1+r1) + CF2 / (1+r2) + CF3 / (1+r3) + CFn / (1+rn) PV = ∑ CFt / (1+rt) t B) Constant Annuity: CF is paid at the end of every year for n years. What is the present value? PV= CF*[(1-(1+r)-n)/ r] C) Perpetual Constant Annuity: CF is paid at the end of every year forever. What is the present value? PV= CF / r D) Other Helpful Formulas Constant growth of the cash flow for n periods:
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less than $5‚000 vested in the plan. However‚ you must begin to receive your benefits no later than April 1 following the last year of employment or age 70½‚ whichever is later. Defined benefit plans distribute their benefits through life annuities. In a life annuity‚ employees receive equal periodic benefit payments for the rest of their lives. A defined benefit pension plan allows joint distributions so a surviving
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FIN 521 Corporate Finance‚ Section A Case 2. Pension Plan of Bethlehem Steel Zhineng (Jason) Luo zluo7@illinois.edu 1. The stakeholders in the defined-benefit pension plans include: (1) Plan sponsor‚ often is employer‚ who is responsible for making fixed monthly payments to plan participants from retirement until death. (2) Plan participants‚ often are current or former employees‚ who are eligible for benefits
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Old Age Homes Why it can be a Lucrative Business Opportunity Synopsis Genesis In the Vedic times‚ human life of a hundred years was divided into four segments or ashrams. A seven year old was supposed to live in Brahmacharya - ashram / gurukul or a present day distant equivalent of a boarding school till his twenties. The second quarter of his life was to be spent as a householder or a Grhasthya. In the third quarter‚ he was to retire from routine household activities and set out into the forests
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way to go about reducing his taxable income for the current year. The best way for John to reduce his taxable income in this scenario would be to set up annuity payments. Taxpayers are allowed to recover their contributions free of tax to a non-qualified annuity. This would allow John to reduce his taxable income by the amount of the annuity payments. (IRC Sec. 72(b)) This would be preferable to having the entire $300‚000 settlement
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Fundamentals of corporate finance (European edition) by David Hillier Quartile 4 IBA Chapter 1 - 14 Chapter 1 Introduction to corporate finance 1.1 Corporate finance and the financial manager Corporate finance must be considered with three basic types of question: 1. What long-term investments to make 2. Where will we get the money for those investments from 3. How will we manage everyday financial activities 1. What long-term investment to make: To process of planning and
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Stock Market Boom [online] available from <https://www.stern.nyu.edu/sites/default/files/assets/documents/uat_024339.pdf> [Accessed: 30 March 2015] Duxbury‚ D.‚ Summers‚ B.‚ Hudson‚ R. and Keasey‚K. (2011) ‘How people evaluate defined contribution‚ annuity-based pension arrangements: A behavioural exploration’. Journal of Economic Psychology 34‚ 256-269. Even‚ W. E. and Macpherson‚ D. A. (2007) ‘Defined Contribution Plans and the Distribution of Pension Wealth’. A Journal of Economy and Society 46 (3)
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REVIEW QUESTIONS FOR TEST 1 (MULTIPLE CHOICE‚ SHORT ESSAY‚ FILL-IN-THE-BLANK ETC.) LECTURE 1 A. List the three basic forms of business organizations. PROPRIETORSHIP (about 75% of all businesses) - Ownership is by one person‚ who operates for his/her own profit. a) Strengths (1) Owner receives all profits and/losses (2) Low organizational costs (3) Single tax—individual (4) Independence (5) Secrecy b) Weaknesses: (1) Unlimited Liability (2) Limited fund-raising power
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Beta Part Two Q1. Annuity is fixed sum of money paid every year in at any other fixed interval shorter than a year. This annuity may be way of return of some principal plus interest payment of against money invested or by way of payment of other dues such as pensions after retirement. In any case it represents out flow of cash from one account to in flow of cash to another account. In this way all annuities involve movements of cash or funds. Therefore all annuities are cash flows that can
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