Chapter 4 Practice Problems Percentage Depreciation • Assume the spot rate of the British pound is $1.73. The expected spot rate one year from now is assumed to be $1.66. What percentage depreciation does this reflect? • ($1 66 – $1 73)/$1 73 = –4.05% ($1.66 $1.73)/$1.73 4 05% Expected depreciation of 4.05% percent Inflation Effects on Exchange Rates • Assume that the U.S. inflation rate becomes high relative to Canadian inflation. Other things being equal‚ how should this affect the
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replace company management? A. stock options B. promotion C. Sarbanes-Oxley Act D. agency play E. proxy fight 2. Decisions made by financial managers should primarily focus on increasing which one of the following? A. size of the firm B. growth rate of the firm C. gross profit per unit produced D. market value per share of outstanding stock E. total sales 3. Which one of the following is the financial statement that shows the accounting value of a firm’s equity as of a particular date? A
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The expected spot rate was decreased and depreciation of 4.05% percent. ii. The higher the inflation in United States will lead to a higher price of U.S. products. Therefore‚ U.S. consumers will buy more Canadian goods. The demand for Canadian dollars will appreciate and increase in U.S. because U.S. inflation rate become high. The supply of Canadian dollars for sale should decrease‚ because the values of Canadian
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bi-annually basis) = PV(1+r/m)n*m To find interest rate: FV = PV (1+r(?))n (FV and PV are given) APR (Annual Present Rate) = r * Total days in a year/given days In Excel: =RATE(n‚pmt‚PV) EAR (Effective Annual Rate) OR EAY (Effective Annual Yield): EAR/EAY = [1+r/m]m – 1 (m = no. of periods) In Excel: =EFFECT(r‚n) Continuous Compounding (to find FV) = Co * er*t Co = initial investment e = 2.718 (constant) r = APR (rate of interest) t = No. of years (periods) Continuous
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Investment in Assets and required returns · Cash flow determination · Non-DCF and DCF techniques Case: Investment analysis and Lockheed Tri Star Assignment Questions 1. Compute the payback‚ net present value (NPV)‚ and internal rate of return (IRR) for this machine. Should Rainbow purchase it? Assume that all cash flows (except the initial purchase) occur at the end of the year‚ and do not consider taxes. 2. For a $500 per year additional expenditure‚ Rainbow can get a "Good As New" service
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Minicase #17 Electronic Timing‚ Inc. Electronic Timing‚ Inc. (ETI)‚ is a small company founded 15 years ago by electronics engineers Tom Miller and Jessica Kerr. ETI manufactures integrated circuits to capitalize on the complex mixed-signal design technology and has recently entered the market for frequency timing generators‚ or silicon timing devices‚ which provide the timing signals or “clocks” necessary to synchronize electronic systems. Its clock products originally were used in PC video
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Ch: 4-Exchange rate movement in recent months AUD per USD BDT per USD Month Rate % change Rate % change Sep-13 0.9303 76.3765 Oct-13 0.9519 0.023218317 76.2753 -0.00132501 Nov-13 0.9324 -0.020485345 76.4057 0.001709597 source: foreign exchange rate‚(dec 2‚ 2013) The above currencies are showed in the indirect quotations reflects the average rates of exchange rate. The Bangladeshi taka and Australian dollar are here showed against the US dollar to measure the currency
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11 – 1 = -3.60%. So the one-year forward rate is $.60 x 1 + -.036= $.5784. You will need 10‚000‚000 x $.5784 = $5‚784‚000. Q-33 Answer; $100‚000 x 0.90 = 90‚000 90‚000/0.68 = C$132‚353 C$132‚353 x $.70 = $92‚647 Profit = $92‚647 - $100‚000 = -$7‚353 loss.. Questions from Chapter 8 Q-8 Answer ; Interest rate parity can be evaluated using data at any one point in time to determine the relationship between the interest rate differential of two countries and the forward
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Fundamentals of finance By the end of this reading‚ you will understand What the field of Financial is? How Financial Markets work? What different financial products are? What is Finance? Finance is the study of how and under what terms money are allocated between lenders and borrowers. The term finance may incorporate any of the following: o The study of money and other assets o The management and control of those assets o Profiling and managing project risks Finance is distinct from
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BBMF2093 CORPORATE FINANCE DEGREE IN BUSINESS STUDIES (Finance and Investment) ACADEMIC YEAR 2013/14 COURSEWORK Submitted by: Caleb Chan Yeung Zen 13WBR11358 Chin Yong Hao 13WBR11575 Chuah Zheng Hong 13WBR10041 Leong Wai Hong 13WBR11033 TUTOR: AP Dr. Wong Pik Har TUTORIAL GROUP: 2 RFI 4 TITLE: YTL Power Financing Analyst DATE OF SUBMISSION: 4th July 2014 Plagiarism Statement Read‚ complete and sign this statement to be submitted with your written work. We confirm that the submitted
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