"Corporate Finance" Essays and Research Papers

Corporate Finance

Corporate Finance Exam with Answers Posted on May 10, 2012 by Sam Corporate Finance, Chapters 8, 9 & 10. Exam Questions: 1. A project’s opportunity cost of capital is: A. The forgone return from investing in the project. 2. Which of the following statements is correct for a project with a positive NPV? A. The IRR must be greater than 1. 3. What is the NPV of a project that costs $100,000 and returns $50,000 annually for 3 years if the opportunity cost of capital is 14%? C. $16,085 ...

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Advanced Corporate Finance

Advanced Corporate Finance I SS 2012 Problem Set 1 Valuing Cash Flows Problem Set 1 Valuing Cash Flows Exercise 1 (Ex. 11.2 - 11.6 GT): Assume that Marriott’s restaurant division has the following joint distribution with the market return: Market Scenario Bad Good Great .25 .50 .25 Probability Market Return (%) -15 5 25 YR 1. Cash Flow Forecast $40 million $50 million $60 million Assume also that the CAPM holds. 11.2 Compute the expected year 1 restaurant cash flow for Marriott. 11.3 Find...

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Corporate Finance Notes

Study notes By Zhipeng Yan Corporate Finance Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe Chapter 1 Introduction to Corporate Finance ..................................................................... 2 Chapter 2 Accounting Statements and Cash Flow.............................................................. 3 Chapter 3 Financial Markets and NPV: First Principles of Finance................................... 6 Chapter 4 Net Present Value.......................................

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corporate finance

CORPORATE FINANCE The word Corporate Finance can be defined in terms that may vary considerably across the world. Corporate Finance is one of the three areas of the discipline of finance and can be defined broadly as a field of finance dealing with acquisition and allocation of a corporation's funds or resources, with the goal of maximizing shareholder wealth i.e. stock value. This division of a company is basically concerned with the financial operation of the company from company’s point of view...

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Corporate Finance

Corporate finance: Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize corporate value while managing the firm's financial risks. Although it is in principle different from managerial finance which studies the financial decisions of all firms, rather than corporations alone, the main concepts in the study of corporate finance...

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ROLE AND PURPOSE This subject aims to introduce to students a range of basic concepts and ideas in modern finance. After completing this subject, participants should know the principles involved in making investment and financing decisions, understand functions of financial markets and financial managers, and possess basic knowledge of option pricing and financial planning. This foundation course prepares students for more in‐depth studies at a later stage. LEARNING OUTCOMES Upon completion of the...

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Applied Corporate Finance - Final Questions

Solutions to 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 depreciation Working Capital Level...

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Corporate Finance: Sample Test Problems

costs each year. The machine will have a useful life of 10 years. For tax purposes, straight-line depreciation will be used with an estimated salvage value of $300,000 (which will be the market value at that time). The discount rate is 12% and the corporate tax rate is 32%. What is the NPV of this proposal? 11.3 After examining a potential project’s NPV analysis, the manager advises that the initial fixed capital outlay be increased by $480,000. The initial fixed capital outlay is fully depreciated...

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five years, and after five years will be sold at an estimated 20 million Euros. The company estimates that the EBITDA from the sale of purple trousers will be 12 million Euros per year for the coming 5 years. The company’s earnings are subject to a corporate tax rate of 40%. If the firm’s equity cost of capital is 9.6% what is the NPV of this project? (a) 0.48 million Euros (b) 0.72million Euros (c) 0.26 million Euros (d) 0.92 million Euros Instead of selling the machines after five years, the company...

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 South East University Assignment Managerial finance (5133) Semester: Spring 2013 Problem-1 Warf Computers, Inc., was founded 15 years ago by Nick Warf, a computer programmer. The small initial investment to start the company was made by Nick and his friends. Over the years, this same group has supplied the limited additional investment needed by the company in the form of both equity and short-and long-term debt. Recently the company has developed a virtual keyboard (VK). The VK uses sophisticated...

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Corporate Finance

operating earnings of the firm. The capitalization is to be made at a rate appropriate to the risk class of the firm. Growth Plans, are involved in capital structural theories in which a certain amount will be allocated for the growth plans. A finance manager should draw a plan according for the dividend policy. For Example: The firm has $10 million as equity capital and $6 million as debt capital and the firm made a profit (after tax) of $2 million, and the fund allocated to the growth plan was...

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Finance 501 Corprate Finance

The Net Present Value, Mergers and Acquisitions Michael D. Black Trident University Module 5 CASE Finance 501: Strategic Corporate Finance Professor: Walter Witham June 15, 2012 Net Present Value, Mergers and Acquisitions Abstract Financial managers must understand the value of dollars invested today in order to make decisions as to what capital ventures are worth pursuing for business growth. The money a business is willing to invest in new equipment or expansion...

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Scope of Corporate Finance

The Scope Of Corporate Finance Professor Dr. Rainer Stachuletz Corporate Finance Berlin School of Economics Finance Career Opportunities Corporate Finance • Budgeting, financial forecasting, cash management, credit administration, investment analysis, fund procurement Commercial Banking Investment Banking Money Management 2 • Consumer banking • Corporate banking • High income potential • Very competitive industry • Opportunities in investment advisory firms, mutual fund companies...

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Corporate Finance Objectives

Corporate Finance Career Overview If you work in private enterprise, your company measures its success at the end of the year by comparing how much money it made to how much it spent. If it has made more than it has spent, it was a good year. If it has made less than it has spent, it was a bad year—or the company is in an investment phase. (In other words, like Amazon.com, it spent more than it made because the company and its investors believed it would realize a profit in the near future...

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Corporate Finance

CORPORATE FINANCE Master in Banking and Finance 2012 FINAL EXAM A. PROBLEMS (20 points each problem) 1. FAGE Manufacturing is currently an all-equity firm with 20 million shares outstanding and a stock price of $7.50 per share. Although investors currently expect FAGE to remain an all-equity firm, the company plans to announce that it will borrow $50 million and use the funds to repurchase shares. FAGE will pay interest only on this debt, and it has no further plans to increase or decrease...

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Corporate Finance Course Notes

understanding of Finance function of a corporation and build capacity to apply theory in real world situations. The course will present the ‘Big Picture’ of Corporate Finance so that students understand how things fit together. After successfully completing the course, students should be able to take optimal decisions in a corporate setting, when working as professionals in the field. COURSE OUTLINE Introduction to Corporate Finance: Financial Management; Corporate Finance; Corporate Finance vs. Financial...

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finance topics list

 Saturday, 5 May 2012 Major Research Topics in Finance A study based on the effects of interest rate KIBOR on share price A test of price earnings ratio to predict growth A comparative study between micro-finance banks, micro-finance institutions and rural support programs in creating self –employment in Pakistan Banking and currency crises causality from banks crises to currency crises Bankruptcy and corporate governance: the impact of board composition and structure  Capital structure...

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Finance de La Torre

De la Torre a) Why is corporate finance important to all managers? * It is important for the decisions taken in the company, investment decisions and financing decisions. * Every decision taken in the company has a financial impact. * Investment projects, how much to invest and what assets to invest. * To raise the necessary cash * To increase the shareholders’ stake in the firm. b) Describe the organizational forms a company might have as it evolves from a start-up...

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Case Study Finance

NOVA School of Business and Economics Corporate Finance, 2nd Semester 2012/2013 Case Study TOSCO is a company listed in the Portuguese Stock Exchange operating a supermarket chain established in Portugal for many years. The market for traditional food retailers is saturated, and there is no room for growth under the same business model. TOSCO’s  shareholders  have  been   pressuring the management to pursue new opportunities in order to increase the value of their shares. The management...

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Corporate Financial Management

assumptions, without any transparency, into a single number: the multiple. Many companies require over ten years of value-creating cash flows to justify their stock prices. Ideally, the explicit forecast period should capture at least one-third of corporate value with clear assumptions about projected financial performance. While the range of possible outcomes certainly widens with time, we have better analytical tools to deal with an ambiguous future than to place an uncertain multiple on a more certain...

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Accounting and Finance

BUACC5901 - Accounting & Finance A Comparative Financial Analysis for the Financial Years 2011 and 2010 of DIALOG GROUP BERHAD TABLE OF CONTENTS I. EXECUTIVE SUMMARY ......................................................................................2 II. INTRODUCTION ................................................... .............................................3 III. RATIOS CALCULATION...................................... .............................................4 IV. ANALYSIS OF...

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Corporate Finance Essay

Corporate Finance Essay Most corporate financing decisions in practice reduce to a choice between debt and equity. The finance manager wishing to fund a new project, but reluctant to cut dividends or to make a rights issue, which leads to the decision of borrowing options. The issue with regards to shareholder objectives being met by the management in making financing decisions has come to become a major issue of recent times. This relates to understanding the concept of the agency problem. It deals...

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The Bible And Corporate Finance

 The Bible and Corporate Finance People rarely associate religion with the business world or the finance industry, nor do they think religion can guide the practice.  From a logical standpoint religion and a firm's operations do not correlate. From a societal view people see good religious peoples businesses fail while godless industries thrive.  The question usually asked is how does the Bible apply to business world?  The real question should be how could the Bible and God guide me in my profession...

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Finance Theory & Financial Strategy

Finance Theory & Financial Strategy By Stewart C Myers How do firms integrate strategic planning and financial analysis? It appears to be somewhat haphazard in many cases. Senior management sets a direction, vision and mission statement based upon who the firm is now and how it has evolved. Then sets the firm’s course based upon their ideas of who they are and who they may wish to become. The finance department that handles the financial planning and analysis may support the strategic initiative...

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Chapter 1 Finance 310

entity created under state laws, and it is separate and distinct from its owners and managers  This separation gives it three advantages 1. Unlimited life 2. Easy transferablitiy 3. Limited liability   Easy to make money Two disadvantages  Corporate earnings may be subject to double taxation  Setting up a corporation involves preparing a charter, writing a set of bylaws, and fulfilling the many required state and federal reports, which are more complex and time consuming than creating a proprietorship...

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Finance Exam 1 Study Guide

Principles of Finance Review Sheet—Exam 1 The exam will include multiple choice questions and problems. If you have worked and understand the end-of-chapter problems that were assigned, you should be able to work the problems on the exam. You should understand the topical areas given in the following list—the concept questions will be primarily based on these topics. • Overview of Managerial Finance o Why is it important to have some understanding of finance? ▪ Finance deals with...

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Coorate Finance

to maturity of 12.5 percent for the next five years. When the debt is refinanced in five years, they believe the new yield to maturity will be 8 percent. CPI currently has 167 million shares of stock outstanding that sell for $53 per share. The corporate tax rate is 40 percent. If Meg, Ben, and Brenton decide to undertake the LBO, what is the most they should offer per share?...

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Managerial Finance Case

TOKYO DISNEYLAND AND THE DISNEY SEA PARK: CORPORATE GOVERNANCE AND DIFFERENCES IN THE CAPITAL BUDGETING CONCEPTS AND METHODS BETWEEN AMERICAN AND JAPANESE COMPANIES. 1.What are the industry differences in US Corporate Governance and Japanese Corporate Governance? JAPANIES CORPORATE GOVERNANCE US CORPORATE GOVERNANCE Stakeholders of organiztions: Japanies system believs in the wealth maximization of stake holders, including managers, labour, suppliers, crediters etc American syatem always emphasized...

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Finance 3320 Final Exam Review

order to maximize firm value, management should invest in new assets when cash flows from the assets are discounted at the firm’s COST OF CAPITAL and result in positive NPV. The most expensive source of capital is usually NEW COMMON STOCK. Many corporate finance professionals favor the CAPM for determining the cost of equity. Why? The variables in the model that apply to public corporations are readily available from public sources. Which is true? A firm should utilize a weighted average cost of capital...

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Finance 3200 sheet 1

interested in investing in a telecomm project that will cost $1,000,000 and will provide $600,000 annually for the next 4 years. Given the project is an extension of their current operations, what is the net present value of the this project if the corporate tax rate is 35. D/E = 1.5, D/V = 1.5/2.5, E/V = 1/2.5, re = 28%, rd = 10% WACC = (1.5/2.5)*0.10*(1-0.35) + (1/2.5) *0.28 = 15.1% FV = 0, PMT = 600,000, n =4, r = 15.1% → PV = 1,709,527.73 NPV = 1,709,527.73-1,000,000.00 = 709,527.73 Take...

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Capital Budgeting Methods for Corporate Project Selection

Capital Budgeting Methods for Corporate Project Selection In a 2001 Graham and Harvey survey of 392 chief financial officers (CFOs) asked “how frequently they used different capital budgeting methods?” Approximately 75% of the CFOs replied that they use net present value (NPV) or Internal Rate of Return (IRR) always or almost always (Smart, Megginson & Gitman, 2004, pg. 251). Projects are viewed as capital investments in the corporate world, and as such, are evaluated closely for their possible...

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Finance Course Project

method is a better method to use, and not the coupon rate as the required return for debt. 2. Compute the cost of common equity using the CAPM model. For beta, use the average beta of three selected competitors. You may obtain the betas from Yahoo Finance. Assume the risk free rate to be 3% and the market risk premium to be 4%. Risk free Rate 3% Market risk premium, MRP 4% Competitors Beta As on October 6, 2010 Dendreon Corp .65 http://finance.yahoo.com/q/ks?s=RTN+Key+Statistics Douglas Emmet...

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Entrepreneurial Finance Course: Guidelines

09/05/2012 22th of May: ICampus: download case study + 6 questions (9am to 6pm end) Doyen A015 to A023 : we have the locals: tell him what we want (we have to book the locals) Entrepreneurial finance Different case studies cover the four parts (follow the IPO of Facebook) Project assessment: some toughts on business plan case studies: the knots and cachet tehnologies Introduction All these elements fits together. Business plan has to be written. Not a real predictor for success. People:...

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Corporate Finance Mid Semester Test

SCHOOL OF ECONOMICS, FINANCE & MARKETING CORPORATE FINANCE MID SEMESTER TEST FIRST SEMESTER 2008 – Part-time STUDENT DETAILS (Please Print Clearly) Family Name: ___________________________________________________________ First Name: _____________________________________________________________ Address: _______________________________________________________________ Tel. No: (BH) ___________________________________________________________ Student Number: _________________________________________________________ ...

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Finance Week 6

the bond. As a result, using the coupon rate could cause a large depreciation of funds. 2. Compute the cost of common equity using the CAPM model. For beta, use the average beta of three selected competitors. You may obtain the betas from Yahoo Finance. Assume the risk free rate to be 3% and the market risk premium to be 4%. Betas from Raytheon (0.75), Lockheed Martin (0.64), and Boeing (1.11) create an average of 0.8333. a. What is the cost of common equity? (5 pts) Cost of common equity...

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Corporate Finance Review

if it were the firm’s only asset -Corporate or within-firm risk reflects effect of project on firm’s risk, measured by project’s effect on firm’s earnings variability -Market or Beta risk reflects effects of project on stockholders’ risk, measured by project’s effect on firm’s beta coefficient -Risk-adjusted cost of capital is cost of capital appropriate for given project, given its risk. Greater the risk, higher the cost of capital Chapter 11 -Corporate assets: include operating, financial...

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To What Extent Does Restructuring Transform Corporate Market and Financial Performance?

To what extent does restructuring transform corporate market and financial performance? Discuss using an extended example. Restructuring is simply the reorganisation of a company’s structure to combat external or internal forces that hinder the maximisation of shareholder value. The term restructuring is quite broad an is an umbrella term for any action taken by a firm to maximise shareholders wealth (Wright et al) or a company’s reaction when it’s under pressure (Usui and Colignon, 1996). These...

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Corporate Finance Teachingplan, Cases and Exercises

introduction to the financial management of a corporation. The aim is to give you an overview of the major theories, tools and results in corporate finance. The primary goal of this module is to impart the knowledge to allow you to intelligently solve practical business problems. To achieve this goal, it is crucial that you have a sound understanding of finance theory. As such, the module will be theoretical in nature, often requiring rigorous quantitative analysis. The following is the outline...

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Describe Sources of Internal and External Finance for a Selected Business.

All businesses need money to function sufficiently. Where this money comes from is defined as sources of finance. There are two different types of sources of finance: internal (capital from inside the business) and external (capital from outside the business). New businesses starting up need money to spend in long-term assets such as premises and equipment. They also need cash to pay for materials, pay wages, and to pay the day-today- bills such as water and electricity. In-experienced entrepreneurs often...

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Corporate Finance Homework - Chapter 4

| 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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Corporate Finance

Subject: Corporate Finance (3 credits) Reference book: 1. Essentials of managerial Finance: Harcourt College 2000 2. Fundamentals of financial management: Mc Graw Hill 2007 Chapter 01: An overview of Finance What is finance? Finance is concerned with decisions about money (cash flows) Finance decisions deal with how money is raised and used Everything else being equal: * More vale is preferred to less * The sooner cash is received the more value it has * Less risky...

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Finance: Balance Sheet and Southwest Development Company

Management I TUTORIAL 1 (Week 2): Tutorial Questions Chapter 1: The Role of Managerial Finance Review Questions 1-3 Which legal form of business organization is most common? Which form is dominant in terms of business revenues? What is the goal of a firm and, therefore, of all managers and employees? Discuss how one measures achievement of this goal. What are the major differences between accounting and finance with respect to emphasis on cash flows and decision making? 1 -7 1-13 Problems...

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Summary: a Note on Valuing Companies in Corporate Restructuring

Summary: A note on Valuing Companies in Corporate Restructuring The article is a note that describes how to apply the Discounted Cash Flow method of Company Valuation in companies undergoing corporate restructuring. The concept is based on the change in shareholders wealth as a direct result of the change in the firm’s value- which depends on multiple factors including corporate restructuring. The note describes in details about the technical aspects of the DCF method. First it defines the DCF...

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Finance Review

Double taxation The same income getting taxed multiple times. Maximizing shareholder value Management principle that implies that the ultimate measure of a company’s success is the extent to which it enriches its shareholders. Initial Public Offering Stock Launch – stock in a company is sold to the general public for the first time Sole Proprietorship, Partnership, Corporation, LLC, Subchapter S Corp (Pros and Cons of each) Sole Proprietorship Pros Simplicity and ease of operation Cons ...

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Corporate Finance Chapter 1 Solution

Solutions to questions 1. Finance involves three main areas—corporate finance, financial institutions and markets, and investments—that are closely related and complementary. For example, in corporate finance the central issues are how to acquire and employ or invest funds. To acquire funds a financial manager must deal with financial institutions, so some knowledge of the operations of financial institutions and markets is essential. Similarly, corporate finance involves investments because decisions...

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50 Multiple Choice Business – Finance Questions

I need help answering 50 multiple choice Business – Finance Questions. 1. Which of the following is NOT a cash flow that should be included in the analysis of a project? a. Changes in net operating working capital. b. Shipping and installation costs. c. Cannibalization effects. d. Opportunity costs. e. Sunk costs that have been expensed for tax purposes. 2. When evaluating a new project, firms should include in the projected cash flows all of the following factors EXCEPT: ...

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Finance Analysis

Analysis of the financial data for Under Armour Inc. & Nike Inc. 1. Liquidity | Comparison between Nike & Under Armour | | 2010 | 2009 | Current Ratio | •Both companies have a ratio that is higher than the dangerous 1.0 current ratio.•The current Ratio of Under Armour is a bit higher than Nike`s which means that Under Armour is more efficient in terms of the operating cycle or in other words the ability to turn its products into cash. | •Both companies have a ratio that is higher...

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Corporate Bonds - Business Finance 101

Bond - is defined as a long-term debt of a firm or the government set forth in writing and made under seal. Kinds of Bond 1. Government Bonds - are those issued by the government to finance its activities. 2. Corporate Bonds - are those issued by private corporations to finance their long -term funding requirements. Bonds as Distinguished from Stocks 1. A bond is a debt instrument while stock is an instrument of ownership. 2. Bondholders have priority over stockholders when payments...

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Syllabus: Corporate Finance and Business Journal/newspaper Article

BUSI K4003 Corporate Finance Syllabus Summer 2012, (Summer Q) Instructor: Brendan Mallee bm2115@columbia.edu Class Time/Location: July 2nd – August 8th MW 6:10-9:30pm / Hamilton Hall 516 Course Description: This course examines important issues in corporate finance from the perspective of financial managers who are responsible for making significant investment and financing decisions. The course is designed to develop critical corporate finance skills including: financial statement...

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topics for term paper

Topics for summer project FINANCE 1. vendor performance 2. quality circle 3. TQM 4. ISO 9000 5. value engineering 6. centralize purchase 7. management audit 8. company analysis with ratio/fund flow 9. study of stock exchange 10. role of SEBI 11. joint venture 12. takeover 13. merger 14. marginal cost as management tool 15. product life cycle 16. media plan 17. test marketing 18. export pricing 19. role of small scale industries in developing nation 20. role of SIDBI 21. role...

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ALL ABOUT INVESTMENT BANKING 1. It's a ton of work, all the time. Let alone the office work, which becomes less important as a banker rises in seniority; just constantly being immersed in the world of finance is mentally and physically exhausting. Money never sleeps, so senior investment bankers rarely do either. 2. It's also reputation-conscious. Everything you say in public can harm your professional brand and deals you are working on, and give ammo to your enemies (and over the course of a successful...

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Guillermo Furniture Store Scenario

Furniture Store Scenario FIN/571 December 24, 201 Abstract Guillermo furniture store scenario examines the study of different alternatives available to Guillermo, which includes a sensitivity analysis. This will illustrate concepts found in Corporate Financial Management by Emery, Finnerty, & Stowe, and how it relates to the Guillermo’s Furniture Store Scenario (Emery, Finnerty, & Stowe, Chapter Accounting, Cash Flows, and Taxes, 2007). It is not uncommon for commercial businesses’ to...

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Introduction on Takeover:

Introduction on Takeover: Definition: A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares. Friendly takeovers: A "friendly takeover" is an acquisition which is approved by the management. Before a bidder makes an offer for another company, it usually first informs the company's board of directors. In an ideal world, if the board feels that accepting the offer...

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CAMERON UNIVERSITY LAWTON, OKLAHOMA DEPARTMENT OF BUSINESS Finance 5613 Fall 2002 Dr. Robert P. Yuyuenyongwatana COURSE OUTLINE Contact: Room 309, Department of Business Phone: 581-2213 E-Mail: roberty@cameron.edu Home Page: http://www.cameron.edu/~roberty Hours: M-Th 9 - 10:50 a.m., Th 6 - 6:30 p.m. Or by appointment Objective The course covers financial decision theories and applications, asset valuation, capital budgeting techniques, capital structure, leasing, working...

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Functional Areas in Business

promised. * Finance Finance is the study of how investors allocate their assets over time under conditions of certainty and uncertainty. A key point in finance, which affects decisions, is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow. Finance aims to price assets based on their risk level, and expected rate of return. Finance can be broken into three different sub categories: public finance, corporate finance and personal...

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NPV Project Management

In other words, it's profitable and worth the risk. b) If the value of NPV is less than 0, then the project isn't worth the risk and is a no-go. So NPV takes risk and reward into consideration, which is why we use it in the world of corporate finance and capital budgeting. **Example** In order for us to calculate NPV, let's use the following example. Suppose we'd like to make 10% profit on a 3 year project that will initially cost us $10,000. a) In the first year, we expect to...

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What Are the Pros and Cons of Hsbc’s “Managing for Growth” Strategy?

brands for customer experience and corporate social responsibility | Personal Financial Services | Drive growth in key markets and through appropriate channels; emerging markets are essential markets. | Consumer Finance | offer both a wider product range and penetrate new markets, such as the emerging country markets. | Commercial Banking | leverage HSBC’s international reach through effective relationship management and improved product offerings. | Corporate, Investment Banking, and Markets...

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Risk Analysis on Investment Decisions

Risk Analysis on Investment Decisions Investment techniques used in corporate finance when making decisions on projects usually focuses on cash flows of the firm (Ross, Westerfield, and Jaffe, 2004). Because of drastic changes in the business environment over the last decade, managers are requesting better, more accurate information, and improved techniques to meet company needs for making major decisions with data consisting of clear goals, a planned design, high ethics, revealed limitations...

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flow valuation model to answer the following questions. 
(1) What is its estimated value of operations?
 Operating Income = Revenue - Cost of Goods Sold (COGS), Labor, and day-to-day expenses= 24000000- (2) What is its estimated total corporate value? Total corporate value = Value of operations + marketable securities= + 
(3) What is its estimated intrinsic value of equity? Intrinsic value of equity = Total net worth of company/ Total number of equity shares. 
(4) What is its estimated intrinsic...

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concerned that the act could have worsened the distortion of corporate financing decisions by failing to address the unequal treatment of debt and equity finance. Two conflicting theories, the traditional theory of corporate finance and the Modigliani-Miller Theorem, make different predictions about the impact of this unequal treatment on debt utilization. The traditional theory states that the cost differential between debt and equity finance will be significant, whereas, the Modigliani-Miller Theorem...

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