Case Solutions Corporate Finance Ross‚ Westerfield‚ and Jaffe 9th edition CHAPTER 2 CASH FLOWS AT WARF COMPUTERS The operating cash flow for the company is: (NOTE: All numbers are in thousands of dollars) OCF = EBIT + Depreciation – Current taxes OCF = $1‚332 + 159 – 386 OCF = $1‚105 To calculate the cash flow from assets‚ we need to find the capital spending and change in net working capital. The capital spending for the year was: | |Capital spending
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0Chapter 10: Strategic Control and Corporate Governance * Organizations must have effective strategic controls if they are to successfully develop and implement their strategies. * This means having systems that allow the organization to effectively respond to environmental changes as well as balance and align the organization’s culture‚ rewards‚ and boundaries. * Overriding this is the goal of the firm’s owners (shareholders) and their elected representatives (board of directors)
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credits. Part 1: Multiple-choice questions (10 questions‚ 1 points each‚ 10 points total) 1) According to M&M Theorem in the absence of corporate taxes‚ an increase in leverage (i.e.‚ an increase in D/E ratio) will lead to a) Higher cost of equity b) Low cost of equity c) No change in cost of equity d) The information provided is not sufficient to chose any of the above questions Ans: A 2) According to M&M Theorem in the absence of corporate taxes‚ an increase in leverage (i.e.‚ an
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CORPORATE FINANCE 307 LITERATURE REVIEW Student Name / ID: Chay Yu Xi 15907811 Jacqueline Teo Hui Yun 15805054 Ting Heng Huat 14973837 Tutor: Leo Kee Chye Tutorial Day / Time: Monday / 2pm Table of Contents Abstract The Tech Bubble Introduction Lowering of Interest Rates Adjustable Rate Mortgage Securitization Mortgage Backed Securities Collateralized Debt Obligation Credit Default Swap Government Reaction and Policies Emergency TARP Repercussions
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CHAPTER 10: COST OF CAPITAL HOMEWORK 1. The Dempere Imports Company’s EPS in 2009 was $2.82‚ and in 2004 it was $1.65. The company’s payout ratio is 30%‚ and the stock is currently valued at $41.50. Flotation costs for new equity will be 15%. Net income in 2010 is expected to be $15 million. The market-value weights of the firm’s debt and equity are 40% and 60%‚ respectively. a. Based on the five-year track record‚ what is Dempere’s EPS growth rate? What will the dividend be in 2010?
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Corporate Finance – Chapter 2 – Long Quiz 1 1) Marvelous Entertainment Group‚ Inc. had net income of $32.7 million in 2005. The firm paid no dividends. If there were no further changes to the stockholders ’ equity accounts‚ then _____ by $32.7 million. [ ] common stock must have increased √ [ ] retained earnings must have increased [ ] total stockholders ’ equity must have decreased [ ] capital surplus must have decreased [ ] the market value of the firm ’s stock must have
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ratio = $225‚000/$475‚000 = 47.37% Instructor Explanation: Answer is: d Chapter 17 Capital budget $625‚000 Equity ratio 40% Net income (NI) $475‚000 Dividends paid = NI - (Equity ratio)(Capital budget) $225‚000 Dividend payout ratio = Dividends paid/NI 47.37% Points Received: 10 of 10 Comments: Question 2. Question : (TCO F) The following data applies to Saunders Corporation’s convertible bonds. Maturity: 10 Stock price: $30.00 Par value: $1‚000.00 Conversion price: $35.00 Annual
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Assignment of corporate finance If we need to find Z score of Fu-Wang ceramic industry ltd. Then at first we should know the formula of Z score. The formula of Z score is Z = 3.3(EBIT/Total Assets) + 1.2(Net Working Capital/Total Assets) + 1.0(Sales/Total Assets) + .6(Market Value of Equity/Book Value of Debt) + 1.4(Accumulated retained earnings/Total Assets) Now we are going to determining the Z score of Fu-Wang ceramic industry ltd. In the year of 2010 As we know the formula of Z score below
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[pic] School of Management Studies Finance Advanced Topics [BUS4083W] Corporate Finance Test 23 September 2010 Time Allocation: 120 minutes Total Mark Allocation: 90 marks Case Study: Anglo American On the 20th of February 2009‚ Anglo American announced that it would cut 11% of its work force and suspend its share buyback and dividend in the face of a poor economic outlook marked by "unprecedented" uncertainty. The miner said it was reducing its headcount by
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* PV(CF) = CF/(1+r)t AKA PV = FV/(1+r)t * NPV = PV(CFs) – Investment = -C0 +C1/(1+r)+C2/(1+r)2+C3/(1+r)3+… = ∑(Expected CFt)/(1+r)t – Investment * Perpetuity – pays a fixed amount C per period forever * P(C‚r) = C/r requires cash flow to begin NEXT period. If begin now‚ then PV = C + C/r * Annuity – fixed stream of cash flows that has a final period t * A(C‚r‚t) = C/r [1-1/(1+r)t] * Growing Perpetuity – G(C‚r‚g) = C/(r-g) C is initial cash flow‚ r is discount rate
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