CORPORATE FINANCE – CONCEPT QUESTIONS Class Notes - Introduction to Corporate Finance 1. Finance point of view: Corporation: a money processing machine? * Product markets: everything what corporates make (lead with customers‚ suppliers‚ labor) * Capital markets: generic term for the entities which supply cash to this money processing machine‚ and the processing machine uses the money to do things and then periodic sends money back to the capital market there are inflows from the
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Mini-Case 3 There are various advantages and disadvantages mutual funds offer compared to company stock for you retirement investing. Advantages: First‚ there is a lower cost; mutual funds are usually lower in expenses than company stock. Second‚ diversification‚ where diversification is used to reduce the portfolio risk. When you invest in multiple stocks from different companies there are more benefits from lower risk. Third they are convenient. Mutual funds are relatively easy to buy. Minimum
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Assignment 1 NPV: = -PF + FV /(1+r) PV = FV/(1+r) or PV = C1/1-r + C2/(1-r)2 + .. + CT/(1-r)T Rate of return: R=(Vf-Vi)/Vf Rate r compounded m times a year: FV = C(1+r/m)mt 10% semiannually = 10.25% annually‚ Hence 10.25 is said to be the Effective Annual Yield (EAY) 1+EAY = (1+r/m)mt Assignment 2 Perpetuity The value of D received each year‚ forever: PV = D/r Annuity The value of D received each year for T years: PV = (D/r)*[1 – 1/(1+r)T] Growing Perpetuity PV = D/(R-g) R: the
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be used as the required return when analyzing a potential acquisition of a retail outlet. C. is the return investors require on the total assets of the firm. D. remains constant when the debt-equity ratio changes. E. is unaffected by changes in corporate tax rates. 7. Which one of the following is the
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Rittenberg 8th edition: Q 2-45 (pages 66 and 67) 2-45 (Audit Committees and Auditor Independence‚ LO 4‚ 5‚ 6) The audit committee is required to evaluate the independence of both the internal and external audit functions. Required a. What factors would you suggest an audit committee look at in evaluating the external auditor’s independence? b. How can the audit committee influence the independence of the internal audit function? c. The audit committee must pre-approve all nonaudit services
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| Corporate Finance2 CreditsBU.231.620.62Thursday 6pm – 9pm‚ 10/18/2012--12/13/2012Fall2‚ 2012Columbia‚ Columbia Center‚ 218 | Instructor Shabnam Mousavi Contact Information Phone Number: (410)234-9450 E-mail Address: shabnam@jhu.edu Office Hours Monday/Thursday 10am-noon Required Text and Learning Materials (1) Berk‚ J. and P. DeMarzo. 2007. Corporate Finance. 2nd Edition. Pearson‚ Addison-Wesley with MyLab access. The ISBN is 0-13-295-040-5. (2) Lecture Notes. The lecture
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MINICASE REPORT PRAIRIE STORES What is the Rate of Return Percentage? In the mini-case‚ Mr. Breezeway indicated two kinds of percentage to determine the required return. One of them is the companies’ return on book equity (% 15) and the other one is the investment return percentage in the rural supermarket industry (% 11) which shows that investors in rural supermarket chains‚ with risks similar to Prairie Home Stores‚ expected to earn about % 11 percent on average. Since the companies’ rate
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ueInstructor’s Manual Contemporary Engineering Economics Fourth Edition Chan S. Park Auburn University Contemporary Engineering Economics‚ Fourth Edition‚ By Chan S. Park. ISBN 0-13-187628-7. © 2007 Pearson Education‚ Inc.‚ Upper Saddle River‚ NJ. All rights reserved. This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction‚ storage in a retrieval system‚ or transmission in any form or by means‚ electronic
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asset-backed financings or single-lessee leasing arrangements. 2.) Even though the investment risk is greater than 10% of the total assets for LeaseMed‚ you still have to demonstrate that the equity is sufficient to permit the legal entity to finance its own activities according to ASC 810-10-25-45a‚b‚c. LeaseMed does not meet qualification A because it is not able to issue investment grade debt and there is no evidence that it has invested into other similar entities (qualification B). So it
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over other types of firms. One of them is the unlimited liability.Answer | | | | | Selected Answer: | False | Correct Answer: | False | | | | | * Question 4 1 out of 1 points | | | Two important financing decisions for a corporate financial manager are debt policy decision and dividend policy decision. Debt policy asks what level of debt is best for the firm. The dividend policy asks what dividend payout ratio is best for the firm.Answer | | | | | Selected Answer: |
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