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 the WACC as: WACC = (1/1.8)(.14) + (0.8/1.8)[(.15/1.15)WACC + (1/1.15)(.08)(1 – .35)] Solving for WACC, we find: WACC = .0778 + .4444[(.15/1.15)WACC + .0452] WACC = .0778 + (.05797)WACC + .0201 (.9420)WACC = .0979 WACC = .1039, or 10.39%

We will use basically the same equation to calculate the weighted average flotation cost, except we will use the flotation cost for each form of financing. Doing so, we get: Flotation costs = (1/1.8)(.08) + (0.8/1.8)[(.15/1.15)(0) + (1/1.15)(.04)] = .0599, or 5.99% The total amount we need to raise to fund the new equipment will be: Amount raised cost = $50,000,000/(1 – .0599) Amount raised = $53,186,023 Since the cash flows go to perpetuity, we can calculate the present value using the equation for the PV of a perpetuity. The NPV is: NPV = –$53,186,023 + ($6,200,000/.1039) NPV = $6,488,212

...1. Refer to the following information:
Stock | E(r) | | Correlation Coefficients |
1 | 0.06 | 0.20 | 1 with 2: -0.10 |
2 | 0.08 | 0.10 | 1 with 3: +0.60 |
3 | 0.15 | 0.15 | 2 with 3: +0.05 |
A portfolio is formed as follows: sell short $1,000 of Stock 1; buy $1,500 of Stock 2; buy $1,500 of Stock 3. The investor uses $1,000 of his own equity, with the remaining amount borrowed at a risk-free interest rate of 4% (with continuous compounding).
(a) Assuming that there are...

...T he Sisyphean Corporation
The Sisyphean Corporation is considering investing in a new cane manufacturing
machine that has an estimated life of three years. The cost of the machine is
$30,000 and the machine will be depreciated straight line over its three-year life to a
residual value of $0.
The cane manufacturing machine will result in sales of 2,000 canes in year 1. Sales
are estimated to grow by 10% per year each year through year three. The price per
cane that Sisyphean will...

...
CorporateFinance Case Study:
Volkswagen
Volkswagen (VW)
Volkswagen (VW) is a German automobile manufacturer which was originally founded in 1937. Now VW Group is one of world’s leading automobile manufacturers and the largest carmaker in Europe, with its recent headquarter in Wolfsburg. VW is one of the ten brands under VW Group. (Volkswagen Homepage, 2011)
2011 VW’s revenue is 159,337 million EUR; net income is 15,409 million EUR,...

...1. Calculate TRUST’s company after-tax WACC. The risk-free rate was 4.21%, the market risk premium was 6% and the company tax rate was 30%. The WACC should be rounded to four decimal places.
After-tax WACC = rD (1-Tc) D/V + rE E/V
rE = rf + βequity(rm – rf)
rE = 0.0421 + 0.81(0.06)
rE = 0.0907
E = number of outstanding shares x current share price
E = 60 million x $3.43
E = $205.8 million
D = $44 million bank loans + $1.2 million short-term hire purchase commitments
D =...

... Lesson 2. N/A
9. Describe two examples of debt investments. (1-2 sentences. 1.0 points)
US Treasuries (Government debt - what the government sells to pay for it's operations - one of the most secure and low-return investments in the world).
Corporate bonds (debt issues by companies to pay for usually new things the company wants to do - build a factory, expand stores, etc.) these are not as safe, and pay a rate of return based on the risk you are taking. They get basically a...

...
3210AFE
ADVANCE CORPORATEFINANCE
Financial Analysis Report
New Hope Coal Corporation
(4780 words)
STUDENT NAME: Member 1: S2704148 zhiqi Liu
Member 2: S2682143 Sai Tie
Member 3: S2730145 Lingfeng Zhan
Member 4: S2594576 Xindan Chen
Member 5: S2700906 Yinghui Huang
TABLES
Executive summary............................................................................................3...

...Practice Problems
by Kyung Hwan Shim University of New South Wales Australian School of Business School of Banking & Finance for FINS 3625 S1 2010 May 23, 2010
∗
These notes are preliminary and under development. They are made available for FINS 3625 S1 2010 students only and may not be distributed or used without the author’s written consent.
∗
1
Solution for Question 1
Summary Table of Cash Flows t=0 I II CF from Machinery ignoring...

...did it take Bayside to sell its
inventory?
A. 126.1 days
B. 127.9 days
C. 153.8 days
D. 176.5 days
E. 178.9 days
Inventory turnover for 2008 = $4,060 $1,990 = 2.04; Days' sales in
inventory = 365 2.04 = 178.9 days
TEST MODEL : CHAPTER 3 CORPORATEFINANCE
Page 1
2. What is the debt-equity ratio for 2008?
A. 22.5%
B. 26.2%
C. 35.5%
D. 45.1%
E. 47.7%
Debt-equity ratio for 2008 = ($1,170 + $500) ($3,500 + $1,200) = .355
= 35.5%
3. What is the times interest...