Business Consultancy International BBCi 2009 WS 2009/10 Final Examination Principles of Corporate Finance I Dr. Kinga Niemczak 14.12.2010 Name: ___________________________ Student No.: ______________________ 1. a. Calculate the value of a 4.65% five-year €1‚000 bond‚ if you know that the bond is rated AAA and the typical YTM for such bonds is 6.25%. (6 points) b. How will the value of this bond change (in %) if yield increases
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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 increase in D/E ratio) will lead to a) Higher
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GOODWAY (CORPORATE FINANCE) I. INTRODUCTION I.I. Company History Goodway Rubber Industries Sdn Bhd (“GWRI”) commenced its operation in Sabah in 1990. In 2003‚ Goodway Integrated Industries Berhad (“GIIB”) was established as an investment holding company of GWRI and all its subsidiaries. GIIB was listed on the Second Board of Bursa Malaysia Securities Berhad in 2004 and currently listed on the Main Board. The Company operations located at Nilai‚ Negeri Sembilan. Goodway has manufacturing
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International Corporate Finance 1. How are percentage changes in a currency’s value measured? Illustrate your answer numerically by assuming a change in the Thai baht’s value from a value of $0.022 to $0.026. Answer: Percent △ in foreign currency value = st-st-1 st-1 = $0.026-$0.022$0.022 ≈ 18.18% 2. What are the basic factors that determine the value of a currency? In equilibrium‚ what is the relationship between these factors? Answer: The basic factors that determine the value
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12)4 = 7‚626.21 12‚000/(1 +.12)3 = 8‚541.35 12‚000/(1 +.12)2 = 9‚566.33 12‚000/(1 +.12)1 = 10‚714.29 -52‚125 Add each NPV to get NPV = $7‚486.68 IRR in excel – CF0 = -52‚125‚ CF1-8= 12‚000‚ IRR = 16% (10-4) Profitability Index Refer to previous problem. What the project’s profitability index? PI = 1 + NPV/Investment Required = 1 + $7‚486.68/$52‚125 = PI = 1.14 (10-6) What is the project’s discounted payback period? Year 6 = $-2‚788.11‚ Year 7 = $+2‚640.08‚ so between year 6-7 2‚788.11/5‚428.19
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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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Overview of Relevant Formulas Corporate Finance (B40.2302) _________________________________________________________________________________________ 1. Present value of $1 to be received after t years at discount rate r: 2. Present value of annuity of $1 per year for t years at discount rate r: $1 (1 + r )t ⎡1 − (1 + r ) − t ⎤ ⎢ ⎥ × $1 r ⎣ ⎦ 1 ⎡ (1 + g )t ⎤ 3. Present value of growing annuity of $1 at rate g per year at discount rate r: ⎢1 − ⎥ × $1 r − g ⎣ (1 + r )t ⎦ $1 r 4. Present value
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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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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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* 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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