Mini Case: Google Christina Santino FIN 516:Advanced Managerial Finance July 21‚ 2013 What is the name of the company? What is the industry sector? Google Inc. is a multi-billion dollar company in the informational technology (IT) industry. Google Inc. is one of the leading computer search engines in the world and is continuing to grow as the front runner in their industry. What are the operating risks of the company? Within business‚ there will always be operational risks to
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PROBLEM SET 5: INTEREST RATES‚ AMORTIZING LOANS‚ BOND VALUATION‚ STOCK VALUATION 1. A typical credit card agreement quotes an interest rate of 18 percent APR. Monthly payments are required. What is the actual interest rate you pay on such a credit card? 2. After carefully going over your budget‚ you have determined you can afford to pay €632 per month toward a new sports car. You call up your local bank and find out that the going rate is 1 percent per month for 48 months. How much you can borrow
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a. Should Caledonia focus on cash flows or accounting profits in making its capital-budgeting decisions? Should the company be interested in incremental cash flows‚ incremental profits‚ total free cash flows‚ or total profits? Caledonia should focus on cash flows‚ not accounting profits. Free cash flows are able to be reinvested‚ whereas accounting profits are shown when they are earned‚ not when the cash is actually received. The company should be interested in incremental after-tax cash flows
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Chapter 17 Assessment 1. progressive movement- Efforts to make govt. more responsive to the people‚ restore economic opportunities‚ and correct injustices. 2. muckraker- One of the magazine journalists who exposed the corrupt side of business and public life 3. suffrage- The right to vote 4. Susan B. Anthony- Co-founder of the national woman suffrage association in 1869. 5. Theodore Roosevelt- 26th president of the US. His term lasted from 1901-1909. Known for the “square deal” politics
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1. Tom believes the company should use the extra cash to pay a special one-time dividend. How will this proposal affect the stock price? How will it affect the value of the company? Electronic Timing‚ Inc. (ETI) needs to be careful on how it dispenses the extra cash as a dividend. Issuing the extra cash as a dividend would mean that the shareholders collectively will probably drop by the same amount because of the transfer of wealth from the company to the shareholders individually. Hence‚ the
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Final Exam Practice Problems 1. Firm ABC’s only outstanding debt is $100‚000 worth of coupon bond (market value). Its yield to maturity is 8%. Given that its tax rate is 40%‚ what is its effective cost of debt? Effective cost of debt = cost of debt * (1-tax rate) =8%*(1-40%)=4.8% 2. Firm ABC has a stock currently traded at $20. The next year’s dividend will be $0.20. The dividend growth rate is forecasted to be 6% forever. Risk-free rate is 3%‚ and market risk premium is 4%. Assume that Constant
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24. We can use the debt-equity ratio to calculate the weights of equity and debt. The debt of the company has a weight for long-term debt and a weight for accounts payable. We can use the weight given for accounts payable to calculate the weight of accounts payable and the weight of long-term debt. The weight of each will be: Accounts payable weight = .15/1.15 = .13 Long-term debt weight = 1/1.15 = .87 Since the accounts payable has the same cost as the overall WACC‚ we can write the equation for
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Applications of option pricing in corporate finance Option pricing is used in four major areas of corporate finance: • Real Options Suppose a company has a 1-year proprietary license to develop a software application for use in a new generation of wireless cellular telephones. Hiring programmers and marketing consultants to complete the project will cost $30 million. The good news is that if consumers love the new cell phones‚ there will be a tremendous demand for the software. The bad news
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Mira Susa‚ Jennifer Welsh Mr. Jordan AP Language and Composition 19 November 2009 “Chapter 17” Chapter 17‚ “The Pastor and His Parishioner‚” of The Scarlet Letter‚ starts off with Dimmesdale returning from his journey through the dark forest‚ upon which Hester waits faithfully for him out of the public eye‚ and more importantly‚ Chillingworth. The scene is gloomy; it is noon‚ however‚ the sun is shaded by a clouded sky and the thick foliage of the forest‚ transforming it into a gray
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exercise price. In this case‚ option B’s premium price is lower. The trade off is between a lower exercise price‚ higher premium price‚ option A‚ that better hedges against the yen if it were to appreciate in value (exercising the option) and a higher exercise price‚ lower priced premium that reduces cost if the hedge does not appreciate in value (the option is not exercised). 2.Should Blades allow its yen position to be unhedged? Describe the tradeoff. The case stated that “the futures
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