IMBA -FIN 6425 – Quiz 1 Corporate Finance - Solution– Nimalendran This is an individual quiz and you should submit the answers on-line by the scheduled date. You are allowed to use any resources EXCEPT help from any other person. You are allowed to use EXCEL for the calculations. 1. Barkley Credit Union sets a low annual percentage rate (5%) for all its credit card customers instead of basing the interest rates on the customers’ credit scores. Consequently Barkley is exposed to ______________
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The Objective in Corporate Finance “If you don’t know where you are going‚ it does not matter how you get there” Aswath Damodaran Stern School of Business Aswath Damodaran 2 First Principles Invest in projects that yield a return greater than the minimum acceptable hurdle rate. • The hurdle rate should be higher for riskier projects and reflect the financing mix used - owners’ funds (equity) or borrowed money (debt) • Returns on projects should be measured based on cash flows
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sure you have 10 pages in your copy of the exam and answer each question in the space provided. You may consult one page of notes and a calculator. I understand that the honor code applies: I will not lie‚ cheat‚ or steal to gain an academic advantage‚ or tolerate those who do. _______________________________________ (Signature) _______________________________________ (Printed Name) _______ (Block) Each of the 11 questions on the exam is worth 10 points. You get 2 points for following
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Globali | Test | Final Exam | Started | 9/14/12 7:22 PM | Submitted | 9/14/12 8:45 PM | Status | Completed | Score | 260 out of 300 points | Time Elapsed | 1 hour‚ 22 minutes out of 2 hours. | Instructions | This final exam consist of 30 multiple choice questions and covers the material in chapters 8 through 17. There are three questions from each chapter and the questions are in chapter order. Be sure you are in the correct Chapter when you take the exam. | * Question
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FINAL EXAM PBHE525 Complete the final exam offline during the final exam week. Once you have complete the exam‚ input your exam into the final exam shell in the exam folder on the course webpage. Good luck 1. 2. 3. 4. 5. 6. 7. 8. US Census statistics show that college graduates make more than $254‚000 more in their lifetime than non-college graduates. If you were to question the validity of this observation‚ what would be your basis for doing so? A. Definition of a college graduate
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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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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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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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∑(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‚ g is growth rate * P/E = 1/(r-g) * High P-E multiple means the firm has good growth opportunities (high
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