be subject to the multiple IRR problem‚ while the MIRR method can be. One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption. The higher the WACC‚ the shorter the discounted payback period. The MIRR method assumes that cash flows are reinvested at the crossover rate. | 3. (TCO D) The Ackert Company’s last dividend was $1.55. The dividend growth rate is expected to be constant at
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return on stock A? E(RA) – 5 +0.7(8.5)=10.95% 6. Suppose Garageband.com has a 28 percent cost of equity capital and a 10% before tax cost of debt capital. The firm’s debt-to-equity ratio is 1.0. The tax rate is 30 percent. What is the firm’s WACC? WACC = .5(10(1-.3)+.5(28)=17.5% 7. Suppose that we have identified three important systematic risk factors given by exports‚ inflation and industrial production. In the beginning of the year‚ growth in these three factors is estimated at -1%‚ 2.5% and
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Chapter 4: The Valuation of Long-Term Securities 1. What is the market value of a $1‚000 face-value bond with a 10 percent coupon rate when the market’s rate of return is 9 percent? Answer: More than its face value. 2. If an investor may have to sell a bond prior to maturity and interest rates have risen since the bond was purchased‚ the investor is exposed to __________. Answer: interest rate risk 3. Beta Budget Brooms will pay a big $2 dividend next year on its common stock
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STUDIES AND APPLIED STATISTICS Second Semester 2013 Mid-Semester Examination FINM7044/8015 APPLIED VALUATION/STRATEGY AND STRUCTURE Study period : 10 Minutes duration Writing period : 90 Minutes duration Permitted materials: Non-programmable calculator Paper-based dictionary You must attempt to answer all questions. All questions to be completed in the script book provided. INSTRUCTIONS: 1. This exam paper comprises a total of 4 pages. Please ensure your paper has the correct number of pages
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supernormal growth period plus the present value of the terminal value. Using your financial calculator‚ enter the following inputs: CF0 = 0‚ CF1 = 1.50‚ CF2 = 1.77 + 31.29 = 33.06‚ I/YR = 10‚ and then solve for NPV = $28.69. 10-6 The firm’s free cash flow is expected to grow at a constant rate‚ hence we can apply a constant growth formula to determine the total value of the firm. Firm value = FCF1/(WACC – g) = $145‚000‚000/(0.12 – 0.06) = $2‚416‚666‚667. To find the value of an equity
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to do so Exam is 2 hours This is a closed book exam One page of personal notes allowed Please do not sit in adjacent seats Please write only in the space provided for each question You need a pocket calculator Good luck! 1 GRADE SHEET INSTRUCTOR USE ONLY Question 1: _____________ Question 2: _____________ Question 3: _____________ Question 4: _____________ Total number of points: _____________ 7 2 Problem 1 “The way I
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e TCH321 – CORPORATE FINANCE MOCK EXAM Time: 1 hour 30 minutes The exam lasts 1 hour and 30 minutes and consists of 5 questions. Approved calculators are permitted. You are not allowed to use Excel. This is a closed book exam. You are NOT permitted to access any other material in either written or electronic form. All numerical answers should be reported to TWO decimal places. To ensure the accuracy of your answer‚ you should perform all intermediate calculations to at least THREE decimal places
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Bond P is a premium bond with a 12 percent coupon. Bond D is a 6 percent coupon bond currently selling at a discount. Both bonds make annual payments‚ have a YTM of 9 percent‚ and have five years to maturity. The current yield for Bonds P and D is percent and percent‚ respectively. (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g.‚ 32.16)) | If interest rates remain unchanged‚ the expected capital gains yield over the next year for Bonds P and D is percent
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16:00 or after class or by appointments Course Materials Ross‚ Westerfield‚ Jordan and Roberts‚ h Fundamentals of Corporate Finance‚ 7tth Canadian Edition. Lecture Notes on Sakai Lecture Notes on Sakai Financial Calculator (recommended) Financial Calculator (recommended) Grading & Policy Two Case Studies (15%) Form a group of 2 – 3 students Midterm Test (35%) Comprehensive Final Exam (50%) Common Course Outline Common Problem Sets & Exams Common Exam Grading Scheme What
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61 Questions for Extra Credit Points. Due 12/16 (Wednesday) (Please show your work and provide your explanation) You need to show your work and explanations. Jotting down only the answers is not acceptable. If you do all 100 questions‚ you will get up to 3 extra points added to your final total score (after I determine your total score based on mid-terms‚ HWs‚ and the final). Chapter 5 1. You plan to analyze the value of a potential investment by calculating the sum of the present values
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