-Martin Industries just paid an annual dividend of $1.30 a share. The market price of the stock is $36.80 and the growth rate is 6.0 percent. What is the firm’s cost of equity? RE = [$1.30 × (1 + 0.060)] / $36.80 + 0.060 = 0.097446 = 9.74 percent (3) - The Bet-r-Bilt Company has a 5-year bond outstanding with a 4.30 percent coupon. Interest payments are paid semi-annually. The face amount of the bond is $1‚000. This bond is currently selling for 93 percent of its face value. What is the company’s
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Subject: Corporate Finance (3 credits) Reference book: 1. Essentials of managerial Finance: Harcourt College 2000 2. Fundamentals of financial management: Mc Graw Hill 2007 Chapter 01: An overview of Finance What is finance? Finance is concerned with decisions about money (cash flows) Finance decisions deal with how money is raised and used Everything else being equal: * More vale is preferred to less * The sooner cash is received the more value it has * Less risky
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1. For our course‚ "Finance" means the _____ and "Business Finance" means the _____. A. management of money invested in business assets expected to increase in market value or otherwise pay a fair return; management of money invested in assets expected to increase in market value or pay a fair return. B. study and application of Accounting principles as they pertain to any organization; study and application of Accounting principles as they pertain to a business. C. management of money invested
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a model of a fair game where knowledge of past events never helps predict the mean of the future winnings ) . The Efficient-Market Hypothesis was developed by Professor Eugene Fama 1965. It was widely accepted up until the 1990s‚ when behavioral finance economists ‚ who had been a fringe element‚ became mainstream . Empirical analyses have consistently found problems with the efficient-market hypothesis . Efficient Market Hypothesis : (EMH) is the theory behind efficient capital markets. An efficient
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Special Topics in Financial Accounting (ADM4348) University of Ottawa February 5th‚ 2015 Lease 1 – Security System Purchased by RFC by cash at a cost of $41‚347 on January 1‚ 20X1; Lease contract signed with Customer M on January 2‚ 20X1; Two year lease with payments of $11‚300 on January 2‚ 20X1 and January 2‚ 20X2; Lease is renewable for 1 year up to three times at a cost of $9‚300; At the end of the lease term‚ the security system reverts to RFC; If Customer M doesn’t renew‚ there is a $30‚000
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What questions should you answer when assessing your needs or goal in owning a home? A recent study shares seven questions that a first-time home buyer should consider as an answer when owning a home. 1. Is owning the roof over your head your No. 1 priority? "Your answer is going to be determined on the other things you’ve got going on in your life. Have you started saving for retirement‚ or are you planning to begin soon? Purchasing a home should coordinate closely with the rest of your priorities
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Problem set 2 16-1. Gladstone Corporation is about to launch a new product. Depending on the success of the new product‚ Gladstone may have one of four values next year: $150 million‚ $135 million‚ $95 million‚ and $80 million. These outcomes are all equally likely‚ and this risk is diversifiable. Gladstone will not make any payouts to investors during the year. Suppose the risk-free interest rate is 5% and assume perfect capital markets. a. What is the initial value of Gladstone’s equity
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LEASES Lessee: Operating lease or finance lease (substance over legal form). ASPE: ‘Capital’ Finance lease if meet one of the criteria (for both ASPE and IFRS): transfer of ownership/BPO‚ lease term major part of economic life (> 75%)‚ PV minimum lease payments (MLP) substantially all of FV (> 90%). If not‚ operating lease and record rent expense and disclose if committed more than one year. IFRS: additional criteria: leased asset specialized – only lessee can use without major modifications
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IFRS – Leases equipment from Lessor Inc. – 3 years – No purchase or renewal options & equipment reverts back to Lessor when lease expires – Remaining useful life = 4 years – Guaranteed Residual Value of $20K Accountants Analysis Relevant Questions 1. Was the junior accountant’s analysis correct? Why or why not? 2. Was the senior accountant’s analysis correct? Why or why not? 3. How would the answer differ under U.S. GAAP? IFRS Analysis • IAS 17 – Financing and Operating Leases • Finance Lease
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fleet expansion programme is one of the key concerns of all Indian Airlines. Before discussing on the phrase ‘Aircraft Leasing’‚ it is pertinent to note that an aircraft cannot be leased but can be bailed. Under Transfer of Property Act‚ 1882 a lease is defined under Section 107 but relates only to immoveable property but not to movable property. So the appropriate word to be used is ‘Bailment of an Aircraft’ defined under Section 148 of the Indian Contract Act‚ 1872. Generally in common parlance
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