PV = C / (r – g) PV = $175‚000 / (.10 – .035) PV = $2‚692‚307.69 It is important to recognize that when dealing with annuities or perpetuities‚ the present value equation calculates the present value one period before the first payment. In this case‚ since the first payment is in two years‚ we have calculated the present value one year from now. To find the value today‚ we simply discount this value as a lump sum. Doing so‚ we find the value of
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Planning Multiple Choice Questions 1. One key reason a long-term financial plan is developed is because: A. the plan determines your financial policy. B. the plan determines your investment policy. C. there are direct connections between achievable corporate growth and the financial policy. D. there is unlimited growth possible in a well-developed financial plan. E. None of the above. 2. Projected future financial statements are called: A. plug statements. B. pro forma statements. C. reconciled statements
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| Corporate Finance2 CreditsBU.231.620.62Thursday 6pm – 9pm‚ 10/18/2012--12/13/2012Fall2‚ 2012Columbia‚ Columbia Center‚ 218 | Instructor Shabnam Mousavi Contact Information Phone Number: (410)234-9450 E-mail Address: shabnam@jhu.edu Office Hours Monday/Thursday 10am-noon Required Text and Learning Materials (1) Berk‚ J. and P. DeMarzo. 2007. Corporate Finance. 2nd Edition. Pearson‚ Addison-Wesley with MyLab access. The ISBN is 0-13-295-040-5. (2) Lecture Notes. The lecture
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Case Studies in Finance: Managing for Corporate Value Creation Fourth Edition July‚ 2002 Robert F. Bruner Distinguished Professor of Business Administration Darden Graduate School of Business Administration University of Virginia Post Office Box 6550 Charlottesville‚ Virginia 22906 Email: brunerr@virginia.edu Web site: http://faculty.darden.edu/brunerb/ ABSTRACT: This book presents 46 case studies in finance‚ targeted toward upper-level undergraduates and introductory and intermediate-level MBA
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List and briefly describe the three basic questions addressed by a financial manager. What should be the goal of the financial manager of a corporation? Why? What advantages does the corporate form of organization have over sole proprietorships or partnerships? If the corporate form of business organization has so many advantages over the sole proprietorship‚ why is it so common for small businesses to initially be formed as sole proprietorships? The three areas are: 1. Capital budgeting: The
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Sunny Beach Hotel Evaluation Report Regarding Various Scenarios for Adding a Karaoke Pub in the Sunny Beach Hotel . Dear Sir‚ I have considered the scenarios you suggested to be evaluated from economic point of view regarding the opportunity of accepting the offer of Planet Karaoke Pub to install one of its facilities inside the free space from 2nd floor of Sunny Beach Hotel or to extend the activities of our company with a Karaoke pub located on the beach area administrated by our
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CHAPTER 2 How to Calculate Present Values Answers to Problem Sets 1. If the discount factor is .507‚ then .507*1.126 = $1 2. 125/139 = .899 3. PV = 374/(1.09)9 = 172.20 4. PV = 432/1.15 + 137/(1.152) + 797/(1.153) = 376 + 104 + 524 = $1‚003 5. FV = 100*1.158 = $305.90 6. NPV = -1‚548 + 138/.09 = -14.67 (cost today plus the present value of the perpetuity) 7. PV = 4/(.14-.04) = $40 8. a. PV = 1/.10 = $10 b. Since the perpetuity
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T he Sisyphean Corporation The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years. The cost of the machine is $30‚000 and the machine will be depreciated straight line over its three-year life to a residual value of $0. The cane manufacturing machine will result in sales of 2‚000 canes in year 1. Sales are estimated to grow by 10% per year each year through year three. The price per cane that Sisyphean will charge
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Department of Finance‚ HKUST Spring 2013 Email: Xuewenliu@ust.hk Office hour: 13:30-14:30 Tuesday Assessment: Assignments (12%)‚ Midterm-exam (18%)‚ Projects and presentations (15%)‚ and Final exam (55%) Textbooks: 1. Corporate Finance‚ by J. Beck and P. DeMarzo‚ 2nd edition 2011‚ Pearson Education‚ Inc. Hereafter BD. 2. Financial Markets and Corporate Strategy‚ by M. Grinblatt and S. Titman‚ 2nd edition‚ 2002‚ Irwin McGraw Hill. Hereafter GT. I. Introduction to Corporate Finance 1. Corporations
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Both Ross and TJX are growing and remaining financially sound. As an off-price storefront retailer in a market where there is a growing e-commerce presence‚ that can be somewhat difficult. But fortunately‚ these two companies are striving and remain above majority of their competitors. Ross is a growing company that has only barely tapped into their market. With stores in only 36 states‚ there is still plenty of room to expand and reach more customers‚ without having to invest in creating any new
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