MAF302 Corporate Finance Study Guide Important Instruction This study guide provides you of an overview for each of the topic taught in this unit. These overviews however are not sufficient to learn all the materials in each of the topic. I therefore would suggest you to follow the materials in lecture notes and workshops. It is also essential to read and consult the corresponding text book chapters to develop your concept and knowledge in this unit. You will also find some references
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CORPORATE FINANCE Formative Assessment Some reading: Adams‚ R. B.‚ Hermalin‚ B. E.‚ and Weisbach M. S. (2010) The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey‚ Journal of Economic Literature‚ Vol 48‚ No.1‚ pp. 58–107. Aggarwal‚ R. et al (2009) Differences in governance practices between US and foreign firms: measurement‚ causes and consequences‚ Review of Financial Studies‚ Vol. Bhagat‚ S.‚ and Bolton B. (2008) Corporate Governance and Firm
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interested in investing in a telecomm project that will cost $1‚000‚000 and will provide $600‚000 annually for the next 4 years. Given the project is an extension of their current operations‚ what is the net present value of the this project if the corporate tax rate is 35. D/E = 1.5‚ D/V = 1.5/2.5‚ E/V = 1/2.5‚ re = 28%‚ rd = 10% WACC = (1.5/2.5)*0.10*(1-0.35) + (1/2.5) *0.28 = 15.1% FV = 0‚ PMT = 600‚000‚ n =4‚ r = 15.1% → PV = 1‚709‚527.73 NPV = 1‚709‚527.73-1‚000‚000.00 = 709‚527.73 Take
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dollars) rnomial=real+I‚ Real rate - Rate adjusted for inflation(using constant dollars)‚ i.e. the return in today’s dollars. Balance sheet (a given point of time)and income statement: Firm’s two main financial constructs Income statement-operating performance of the firm over a given time period Cash flow statement- derived from income statement and changes in balance sheet FCF-Free Cash Flow- is cash available to distribute to stockholders and bondholders. Profits already have payments to debt holders
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Specification Point: Notes: The major features of science. Objectivity – objective knowledge should be free of opinion or bias and based purely on empirical evidence. Replicability – the ability to check and verify the information by repeating a study. Falsifiability – the ability to demonstrate that a theory is wrong. Validating new knowledge and the role of peer review. New knowledge is published in scientific journals which act as permanent records of research. It is checked by professionals
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Planktons: groups of tiny floating organisms that cannot swim against the current. *Taxonomy: size‚ function‚ autotrophs-producers‚ heterotrophs-consumers/decomposers‚ mixotrophs‚ complex‚ symbiotic/parasitic *Small to big: femtoplankton (viruses)‚ pico (bacteria)‚ nano (diatoms‚ dinoflagellates)‚ micro(sameasnano+protozoa)‚ meso(mostly zooplankton)‚ macroplankton *Grazing food chain: Phyto->zooplk->fish *Sinking flux: dead fall to deeper ocean POM: Particulate organic material DOM:
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Associated Press Style Quick Reference Guide ● To subscribe to The Associated Press Stylebook online‚ or to find out about purchasing hard copies of the book‚ start here. ● To find out about StyleGuard for Word‚ start here. ● For slide presentations of AP Style basics‚ go here. Style Rules Examples Academic degrees ● Use an apostrophe and spell out academic degrees She has a bachelor’s degree. ● Use abbreviations for degrees only when you need to include a list of credentials after a name;
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To what extent does a mature and cyclical product market drive corporate restructuring? Use an extended example to discuss whether restructuring transforms market and financial performance. An organization which is operating in a mature market means that the product does not have the scope to grow anymore. The product has reached its peak‚ with no prospects to increase‚ as the product is has become most popular in the market and no one else will be willing to buy it. A cyclical market is one which
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questions of corporate finance? a. Investment decision (capital budgeting): What long-term investment strategy should a firm adopt? b. Financing decision (capital structure): How much cash must be raised for the required investments? c. Short-term finance decision (working capital): How much short-term cash flow does company need to pay its bills. ( Describe capital structure. Capital structure is the mix of different securities used to finance a firm’s investments
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• List some problem areas in estimating the cost of capital. 1. LECTURE SUGGESTIONS Chapter 10 uses the rate of return concepts covered in previous chapters‚ along with the concept of the weighted average cost of capital (WACC)‚ to develop a corporate cost of capital for use in capital budgeting. We begin by describing the logic of the WACC‚ and why it should be used in capital budgeting. We next explain how to estimate the cost of each component of capital‚
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