1. (Bond valuation) Michael Motors’ bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1000 par value and the coupon interest rate is 8 percent. The bonds have a yield to maturity of 9 percent. What is the current market price of these bonds?

Cash flow = 8% of 1,000 = 80 YTM or interest rate
n = 10 i = 9(%) PMT = 80 FV = 1000 PV = solve
PV=935.82

2. (Valuation a preferred stock) Susie’s Pet Supplies issued preferred stock with a state dividend of 10 percent at par. Preferred stock of this type currently yields 8 percent an the par value is $100. Assume dividends are paid annually. a) What is the value of Susie’s preferred stock?

b) Suppose interest rate levels rise to the point where the preferred stock now yields 12 percent. What would be the value of Susie’s preferred stock?
3. (Constant growth model) You are considering an investment in the common stock of Arizona Jake’s Corporation. The stock is expected to pay a dividend of $2 a share at the end of the year (D1 = $2.00) The stock has a beta equal to 0.9. The risk free rate is 5.6 percent and the market premium is 6 percent. The stock’s dividend is expected to grow at some constant rate g. The stock currently sells for $25 a share. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of three years? (That is, what is P3?)

4. (Bond valuation) Eagle Ventures has a bond issue outstanding with an annual coupon rate of 7 percent and 4 years remaining until maturity. The par value of the bond is $1,000. (a) Determine the current value of the bond if present market conditions justify a 14 percent required rate of return. Assume the bond pays interest annually. (b) Using the information above, what should be the current value if the bond had a semi-annual coupon instead of an annual coupon? (c) Assume an annual coupon but 20 years remaining to maturity. What is the current value under these...

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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...

...determine rE suggests that RV’s equity risk is the same as that of the industry. The variation in business risk between RV and its industry competitors thus stems from the introduction of debt into the capital structure.
Year Forecast
1 2 3 4 5 6
Sales 22000 23210 24487 25344 26231 26755
Variable cost 13200 13926 14692 15206 15738 16053
Fixed cost 2000 2060 2122 2185 2251 2319
Dep'n 1000 1100 1200 1300 1400 1500
Operating income 5800 6124 6473 6652 6841...

...seven-to-eight-page double-spaced paper answering and demonstrating with calculations and financial data the following questions.
1. What is the name of the company? What is the industry sector?
Starbucks Corporation is in the Food and Beverage industry
2. What are the operating risks of the company?
Economic conditions in the US and certain international markets could adversely affect Starbucks’ business and financial results. – as a retailer Starbucks is dependent upon the...

...The Open Polytechnic of New Zealand
Trimester 1, 2012
71303 CorporateFinance Final Examination
Time allowed
Three hours, plus 10 minutes to read this paper.
Instructions
1. 2. 3. 4. Answer all questions. Read each question carefully. Start each question on a new page. Show all of your workings.
Mark allocation
Question Part A Part B 1. 2. 3. 4. 5. Cost of capital Risk and return Investment timing real option Capital...

...1. Which one of the following is a means by which shareholders can 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...

...(Round your answers to 2 decimal places. (e.g., 32.16))
Current ratio
2011
1.64
times
2012
1.75
times
b. Calculate the quick ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16))
Quick ratio
2011
0.55
times
2012
0.61
times
c. Calculate the cash ratio for each year. (Round your answers to 2 decimal places. (e.g., 32.16))
Cash ratio
2011
0.16
times
2012
0.17
times
d. Calculate the NWC to total assets ratio for each year....

...
“Case: Tianjin Plastics”
Vrije Universiteit Amsterdam
Course Advanced CorporateFinance
Students Fatin Azear
Jos Kusters
Maaike van der Steen
Case: Tianjin Plastics
This assignment considers the case of Tianjin Plastics. Pat Johnson, project finance analyst for Maple Energy (U.S.-based international power plant developer), has to make a recommendation regarding the financial viability of the Tianjin Plastics power plant project in China....

...IMBA -FIN 6425 – Quiz 1 CorporateFinance - Solution– Nimalendran
This is an individual quiz and you should submit the answers on-line by the scheduled date.
You are allowed to use any resources EXCEPT help from any other person. You are allowed to use EXCEL for the calculations.
1. Barkley Credit Union sets a low annual percentage rate (5%) for all its credit card customers instead of basing the interest rates on the customers’ credit scores....