Aswath Damodaran 2 THE OBJECTIVE IN CORPORATE FINANCE “If you don’t know where you are going‚ it does’nt maCer how you get there” First Principles 3 Aswath Damodaran 3 The Classical Viewpoint 4 ¨ ¨ ¨ ¨ Van Horne: "In this book‚ we assume that the objecKve of the firm
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UXEMBOURG S CHOOL OF F INANCE Corporate Finance Master in Economics and Finance 2nd Assignment - Stock valuation + Cost of capital Due on 10/3/2014 E XERCISE 1 Starr Co. just paid a dividend of $2.15 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year‚ indefinitely. If investors require a 12 percent return on the stock‚ what is the current price? What will the price be in three years? In 15 years? E XERCISE 2 You have found the following
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Corporate Finance Revision List Topic | Study Program | The Realm of Corporate Finance and Efficient Market Hypothesis | * Overview of finance’s main functions & its importance to organisations. * Importance of value creation as the primary objective of managers * Efficient Market Hypothesis (EMH) | Financial Statement Analysis | * Overview of calculating & interpreting accounting & financial ratios from corporate financial statements & understanding their significance in corporate
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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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Case 2-2: 1. With respect to the adjustments related to goodwill‚ answer the following: a. Why does the adjustment for goodwill amortization increase net income under Country A GAAP but decrease net income under Country B GAAP? The adjustment for goodwill amortization increases net income under Country A GAAP but decrease net income under Country B GAAP because of how SKD amortizes goodwill for a period of 20 years while for Country B goodwill is only amortized for a period of 5 years. This leads
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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 to 7%? (use duration) (10 points) 2. a. Your
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Corporate Finance Essay Most corporate financing decisions in practice reduce to a choice between debt and equity. The finance manager wishing to fund a new project‚ but reluctant to cut dividends or to make a rights issue‚ which leads to the decision of borrowing options. The issue with regards to shareholder objectives being met by the management in making financing decisions has come to become a major issue of recent times. This relates to understanding the concept of the agency problem. It deals
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2.1 Assuming that data mining techniques are to be used in the following cases‚ identify whether the task required is supervised or unsupervised learning. a. Supervised-Deciding whether to issue a loan to an applicant based on demographic and financial data (with reference to a database of similar data on prior customers). b. Unsupervised-In an online bookstore‚ making recommendations to customers concerning additional items to buy based on the buying patterns in prior transactions. c. Supervised-Identifying
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Assume today is June 1‚ 2009. Natasha Kingery is 30 years old and has a Bachelor of Science degree in computer science. She is currently employed as a Tier 2 field service representative for a telephony corporation located in Seattle‚ Washington‚ and earns‚ $38‚000 a year that she anticipates will grow at 3% per year. Natasha hopes to retire at age 65 and has just begun to think about the future. Natasha has $75‚000 that she recently inherited from her aunt. She invested this money in 10-year
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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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