Mini case p.45 a. Why is corporate finance important to all managers? Corporate finance is important because of the skills that mangers can obtain from it. Some of these skills are selecting the best corporate strategies and projects that add value to business. b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form. The organizational forms are proprietorships‚ partnerships‚ and corporations
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CH 1 Quiz 1. Suppose your firm invests $100‚000 in a project in Italy. At the time the exchange rate is $1.23= 1.00 Euros. One year later the exchange rate is the same‚ but the Italian government has expropriated your firm’s assets paying only 80‚000 Euros in compensation. This is an example of a. Political risk 2. Country A can produce 10 yards of textiles or 6 pounds of food per unit of input. Compute the opportunity cost of adding one additional unit of food instead of textiles. a. 1 yard
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Debt is Good for You (01/25/2001) Franco Modigliani and Merton Miller published their famous theory about the optimal balance on debt and equity of the corporate finance. In the Modigliani –Miller theory they stated that the value of the firm is independent of firm’s capital structure. As the portion of debt goes up‚ the firm will be riskier‚ and the expected return will increase. In an efficient market‚ the business risk does not vary with leverage. But later‚ Modigliani –Miller theory modified
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Financial Management 1. Happy Valley‚ Inc. stock is valued at $51.40 a share. The company pays a constant dividend of $3.80. What is the required return on this stock? Po = D/Rs $51.40 = $3.80/Rs Rs = 7.39% 2. The Francis Company is expected to pay a dividend of D1 = $1.25 per share at the end of the year‚ and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company’s beta is 1.15‚ the market risk premium is 5.50%
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Nareekan Wongwisetsiri Finance 317 Financial Statements Homework #1 1. Watson Oil recently reported (in millions) $8‚250 of sales‚ $5‚750 of operating costs other than depreciation‚ and $650 of depreciation. The company had $3‚200 of outstanding bonds that carry a 5% interest rate‚ and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate future sales and cash flows‚ the firm was required to make $1‚250 of capital expenditures on new fixed
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1. (TCO A) Use future or present value techniques to solve the following problems. (Note: You can use tables or a financial calculator. If you use a calculator‚ please provide the inputs you used to solve the problems.) (5 points each = total 20 points) a. Starting with $20‚000‚ how much will you have in 20 years if you can earn 5% on your money? b. If you inherited $100‚000 today and invested all of it in a security that paid an 8% rate of return‚ how much would you have in 15 years? c. If
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Finance Exam #1 1. True or false? A pure arbitrage takes advantage of price discrepancies by buying low and selling high in such a way as to place no wealth at risk. 2. SKR is the ISO code for the Swedish Currency‚ the krona. A Swedish band quotes SKR 8/USD Bid and SKR 9/USD Ask. These quotes are in: A. American terms B. Direct terms from a U.S perspective C. Direct terms from a Swedish perspective D. Indirect terms from a Swedish perspective 3. U.S. bank quotes $1.27/€ ask (€ is
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The first week of May‚ 2011‚ saw a broad commodities sell off‚ with commodity futures falling almost 7% and stocks linked to commodities down 5% from April 27‚ 2011 through May 5‚ 2011.1 Is this the end of the line for the bull market in commodities or just another stop along the way? Viewpoints caught up with Joe Wickwire‚ manager of Fidelity Global Commodity Stock Fund® (FFGCX | Get Prospectus Loading... )‚ for his thoughts on the recent sell off‚ and what it may mean for investors. What
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1.1) Belinda’s 2010-11 taxable income: Assessable Income Gross Salary $67‚500 Unfranked dividends $2‚300 Total Assessable Income $69‚800 Less Allowable deductions PAYG tax instalments deducted ($15‚500) Subscriptions ($130) Union fees ($600) Telephone expense ($280*30%) ($84) Total allowable deductions ($16‚314) Taxable Income $53‚486 Note: Stationery is considered to be expenditure of a private nature thus
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MKTG 489 – FINANCIAL EXERCISES (AY 2015) Due as an Excel (.xls) file via Titanium prior to class EXERCISE 1 Fred Flintstone has just become the product manager for Yabba Dabba Doo‚ a consumer packaged product with a retail price of $2.00. Retail margins on the product are 33%‚ while wholesalers take a 12% margin. Yabba and its direct competitors sell a total of 40 million units annually‚ and Yabba has 24% market share of this total. Variable manufacturing costs for Yabba are $0.09 per unit. Fixed
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