U NIVERSITY OF L UXEMBOURG ‚ L 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
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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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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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THE PRINCIPLES OF CORPORATE FINANCE CHAPTER 1: The time value of money We are going to link the present and the future by using the notion of interest rate that could be called discount rate‚ required rate of return or cost of capital. Finance is all about cash flows but more precisely about the exact date of the realization of the cash flow. I) PRESENT VALUE Example 1: What is the value today of $110 to be received in one year? - suppose the interest rate ‚ r =10%
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expected o decline. Curve can be humped meaning interest rates on medium-term maturities are higher than rates on both short and long term maturities -Expectations Theory: yields on long-term bonds reflect expected future interest rates Chapter 9 -Forecast financial requirements with FFS (forecasted financial statements) method or AFN (additional funds needed) method; for changing conditions FFS is more reliable -Determine AFN by estimating amount of new assets necessary to support forecasted
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Fundamental of Corporate Administration (FCA) Tutorial Answers T1 Tutorial 2 Q2. Highlight the functions and power carried by CCM. Functions 1. Act as an agent enforcing and collecting payment of prescribed fees under the laws administered. 2. Regulate matters in relation to the laws administrated 3. Encourage and promote proper conduct in corporate sector to established norms of good corporate governance 4. Enhance supply of corporate information under laws administrated
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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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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Because common shareholders are entitled to the profits that remain after all of a corporation ’s 1) _______ other obligations have been met‚ common shareholders are known as A) debt owners. B) temporary owners. C) owners of last resort. D) residual owners. 2) An individual who invested $100‚000 in average stocks early in the year 2000 would
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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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$475‚000. If it follows the residual dividend policy‚ what is its forecasted dividend payout ratio? (a) 40.61% (b) 42.75% (c) 45.00% (d) 47.37% (e) 49.74% Student Answer: Answer: d. 47.37% Dividends paid = $475‚000 - (40%)($625‚000) = $225‚000 Dividend payout ratio = $225‚000/$475‚000 = 47.37% Instructor Explanation: Answer is: d Chapter 17 Capital budget $625‚000 Equity ratio 40% Net income (NI) $475‚000 Dividends paid = NI - (Equity ratio)(Capital budget) $225‚000 Dividend payout ratio
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