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FIN 571(NEW) Exciting Teaching / snaptutorial.com

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FIN 571(NEW) Exciting Teaching / snaptutorial.com

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  1. FIN 571 Apply Week 1 Assignment The Stock Market And The Economy For more classes visit www.snaptutorial.com Assignment Content Research how financial markets and institutions influence the US and global economies. Create an 8- to 12-slide presentation or 350- to 575-word summary to present your research. Choose 4 financial markets or institutions. Briefly explain what each specializes in (mortgages, stocks, government securities, etc.). Compare how each financial market you identified influences the US economy and global economy. Cite references to support your assignment. Format your citations according to APA guidelines. *********************************

  2. FIN 571 Apply Week 2 Signature Assignment Investor Presentation (Apple) For more classes visit www.snaptutorial.com FIN 571 Week 2 Apply Signature Assignment Investor Presentation Select a Fortune 500 company or another company you are familiar with. Consider pharmaceuticals, computer hardware, retail, or automotive industries for your selection. If you choose a company that is not in the Fortune 500, ensure that enough financial information and key performance indicator results are available to complete the assignment. Imagine your manager has asked you to help with a presentation on the company’s financial performance at the company’s annual meeting. Research financial information and key performance indicators for the company. Create a 10- to 16-slide presentation for investors to assess the company’s financial growth and sustainability.

  3. Identify key performance indicators for the company you selected, including the following o The company and its ticker symbol o Cash flow from operations o Price-to-earnings ratio o Stock dividends and the yield, if any o Earnings per share ratio o Revenue estimates for the next 12 months o Revenue from the previous 3 years o Statement of cash flows and identify net cash from operating, investing, and financing activities over the past 3 years o Average trade volume. o Current stock price, 52-week high, and 1-year estimated stock price o Analysts’ recommendations for the stock (buy,sell, hold) o Market cap for the company Relate the stock price to price-to-earnings ratio.

  4. Explain the market capitalization and what it means to the investor. Evaluate trends in stock price, dividend payout, and total stockholders’ equity. Relate recent events or market conditions to the trends you identified. Determine, based on your analysis, whether you think the organization is going to meet its financial goals, the outlook for growth and sustainability, and explain why you recommend this stock for purchase. Cite references to support your assignment. Format your citations according to APA guidelines. Submit your assignment. ********************************* FIN 571 Apply Week 2 Signature Assignment Investor Presentation (Pfizer)

  5. For more classes visit www.snaptutorial.com FIN 571 Week 2 Apply Signature Assignment Investor Presentation Select a Fortune 500 company or another company you are familiar with. Consider pharmaceuticals, computer hardware, retail, or automotive industries for your selection. If you choose a company that is not in the Fortune 500, ensure that enough financial information and key performance indicator results are available to complete the assignment. Imagine your manager has asked you to help with a presentation on the company’s financial performance at the company’s annual meeting. Research financial information and key performance indicators for the company. Create a 10- to 16-slide presentation for investors to assess the company’s financial growth and sustainability.

  6. Identify key performance indicators for the company you selected, including the following o The company and its ticker symbol o Cash flow from operations o Price-to-earnings ratio o Stock dividends and the yield, if any o Earnings per share ratio o Revenue estimates for the next 12 months o Revenue from the previous 3 years o Statement of cash flows and identify net cash from operating, investing, and financing activities over the past 3 years o Average trade volume. o Current stock price, 52-week high, and 1-year estimated stock price o Analysts’ recommendations for the stock (buy,sell, hold) o Market cap for the company Relate the stock price to price-to-earnings ratio.

  7. Explain the market capitalization and what it means to the investor. Evaluate trends in stock price, dividend payout, and total stockholders’ equity. Relate recent events or market conditions to the trends you identified. Determine, based on your analysis, whether you think the organization is going to meet its financial goals, the outlook for growth and sustainability, and explain why you recommend this stock for purchase. Cite references to support your assignment. Format your citations according to APA guidelines. Submit your assignment. ********************************* FIN 571 Apply Week 4 Signature Assignment Shareholder Analysis (Apple)

  8. For more classes visit www.snaptutorial.com FIN 571 Week 4 - Apply Signature Assignment Shareholder Analysis Continue your work with the company you selected in Week 2. Research your company’s financial reports for 2017. Complete a 2- to 3-page FAQ/Shareholder Analysis. Evaluate economic conditions that influence company performance. Consider political, environmental, currency (money), global economics, and government influences on economic conditions. Compare market conditions with the company’s performance for 2017. Conclude how the market conditions that year influenced the company’s performance, such as interest rates, Federal Reserve Bank monetary policy changes, or other market conditions relevant to the company you selected.

  9. Analyze year-over-year performance from 2016 and 2017. Consider key metrics or ratios such as trailing PE ratio, forward PE ratio, price to book, return on assets, and return on equity in your conclusions. Cite references to support your assignment. Format your citations according to APA guidelines. Submit your assignment. ********************************* FIN 571 Apply Week 4 Signature Assignment Shareholder Analysis (walmart) For more classes visit www.snaptutorial.com FIN 571 Week 4 - Apply Signature Assignment Shareholder Analysis Continue your work with the company you selected in Week 2.

  10. Research your company’s financial reports for 2017. Complete a 2- to 3-page FAQ/Shareholder Analysis. Evaluate economic conditions that influence company performance. Consider political, environmental, currency (money), global economics, and government influences on economic conditions. Compare market conditions with the company’s performance for 2017. Conclude how the market conditions that year influenced the company’s performance, such as interest rates, Federal Reserve Bank monetary policy changes, or other market conditions relevant to the company you selected. Analyze year-over-year performance from 2016 and 2017. Consider key metrics or ratios such as trailing PE ratio, forward PE ratio, price to book, return on assets, and return on equity in your conclusions. Cite references to support your assignment.

  11. Format your citations according to APA guidelines. Submit your assignment. ********************************* FIN 571 Apply Week 6 Signature Assignment Financial Plan (Apple) For more classes visit www.snaptutorial.com FIN 571 Week 6 - Apply Signature Assignment Financial Plan Prepare a financial plan for the company you select for your business plan. This financial plan will be included in your final business plan in your capstone course. Describe the business, including the type of business. Create the business case.

  12. o Determine why funding is needed for the company. o Determine the sources of funding. Considerself-funding, borrowing, equity, venture capital, etc. o Evaluate the requirements of each funding source you determined appropriate. o Analyze the associated risks of each funding source. o Decide which sources are the best fit for your company based on the requirements of each. Justify your decision. o Estimate the cost of capital for both short-term and long-term funding sources. Research current estimated APRs for your selected sources of funding. Consider creating a table or chart to display this information. Create a profit-and-loss statement for a 3-year period. Project revenue, stating realistic assumptions, such as growth per year, in your projections. Estimate direct costs, including capital, marketing, labor, and supply costs. Cite references to support your assignment.

  13. Format your citations according to APA guidelines. Submit your assignment. ********************************* FIN 571 Apply Week 6 Signature Assignment Financial Plan (Walmart) For more classes visit www.snaptutorial.com FIN 571 Week 6 - Apply Signature Assignment Financial Plan Prepare a financial plan for the company you select for your business plan. This financial plan will be included in your final business plan in your capstone course. Describe the business, including the type of business.

  14. Create the business case. o Determine why funding is needed for the company. o Determine the sources of funding. Considerself-funding, borrowing, equity, venture capital, etc. o Evaluate the requirements of each funding source you determined appropriate. o Analyze the associated risks of each funding source. o Decide which sources are the best fit for your company based on the requirements of each. Justify your decision. o Estimate the cost of capital for both short-term and long-term funding sources. Research current estimated APRs for your selected sources of funding. Consider creating a table or chart to display this information. Create a profit-and-loss statement for a 3-year period. Project revenue, stating realistic assumptions, such as growth per year, in your projections. Estimate direct costs, including capital, marketing, labor, and supply costs. Cite references to support your assignment.

  15. Format your citations according to APA guidelines. Submit your assignment. ********************************* FIN 571 Entire Course (DQs, Assignment, Quiz, Practice Work) For more classes visit www.snaptutorial.com FIN 571 Apply Week 1 Assignment The Stock Market And The Economy FIN 571 Apply Week 2 Signature Assignment Investor Presentation (Apple) FIN 571 Apply Week 2 Signature Assignment Investor Presentation (Pfizer)

  16. FIN 571 Apply Week 4 Signature Assignment Shareholder Analysis (Apple) FIN 571 Apply Week 4 Signature Assignment Shareholder Analysis (walmart) FIN 571 Apply Week 6 Signature Assignment Financial Plan (Apple) FIN 571 Apply Week 6 Signature Assignment Financial Plan (Walmart) FIN 571 Week 1 Practice Quiz FIN 571 Week 2 Practice FIN 571 Week 2 Quiz FIN 571 Week 3 Chapter 5 Quiz FIN 571 Week 3 Chapter 9 Quiz

  17. FIN 571 Week 4 Practice FIN 571 Week 5 Practice Chapter 11 and 12 Question FIN 571 Week 5 Quiz FIN 571 Week 6 Practice Quiz FIN 571 Entire Course FIN 571 Week 1 Discussion Primary and Secondary Markets FIN 571 Week 2 Discussion ROE and EPS FIN 571 Week 3 Discussion Capital Budgeting Techniques FIN 571 Week 4 Discussion Financial Performance Evaluation FIN 571 Week 5 Discussion Systematic and Unsystematic Risk FIN 571 Week 6 Discussion Venture Capital FIN 571 Wk 5 Apply Wk 5 Quiz (with Excel File) FIN 571 Wk 3 Practice Wk 3 Practice Questions FIN 571 Wk 5 Practice Wk 5 Practice Questions FIN 571 Wk 3 Apply Wk 3 Quiz ********************************* FIN 571 Week 1 Discussion Primary and Secondary Markets

  18. For more classes visit www.snaptutorial.com You are a new economist for a major financial institution, and you’ve been invited to speak as a guest lecturer for a Freshman Finance course at the local university. Respond to the following in a minimum of 175 words: Share how you would describe the overall purpose and mechanics of both primary and secondary markets. How would you explain the way the performance of your company is influenced by the activity of the markets you described? After your initial post, choose a classmate’s approach that is different from the approach you’d take on the guest lecture. What additional information might you include in your lecture based on your classmate’s approach? Optional Discussion: Having experience as an executive management I often found myself in a conflict with operating managers, who might have been eager to fund product-market strategies. Especially in companies for which equity financing is unacceptable and in which operating management—

  19. concerned primarily with production, sales, and marketing—is the dominant force, causing a great pressure to leverage the company with an even greater percentage of debt. As the CFO what would you do? Is such leveraging worth fighting over? ********************************* FIN 571 Week 1 Practice Quiz For more classes visit www.snaptutorial.com Pollution Busters Inc. is considering a purchase of 10 additional carbon sequesters for $115,000 apiece. The sequesters last for only 1 year before becoming saturated. Then the carbon is sold to the government. A: Suppose the government guarantees the price of carbon. At this price, the payoff after 1 year is $136,850 for sure. How would you determine the opportunity cost of capital for this investment? b-1. Suppose instead that the sequestered carbon has to be sold on the London Carbon Exchange. Carbon prices have been extremely volatile, but Pollution Busters’ CFO learns that average rates of return from investments on that exchange have been about 24%. She thinks this is a reasonable forecast for the future. What is the opportunity cost of capital in this case? b-2. If the expected return on the investment is still 19%, but instead depends on the price of carbon (so that it is no longer risk-free), then is the purchase of additional sequesters an attractive investment for the firm?

  20. Which of the following are investment decisions, and which are financing decisions? Which of the following are real assets, and which are financial? Choose the type of company in each case that best fits the description. Which of the following statements always apply to corporations? Which of the following are correct descriptions of large corporations? Is limited liability always an advantage for a corporation and its shareholders? Which of the following statements more accurately describes the treasurer than the controller? We claim that the goal of the firm is to maximize current market value. Could the following actions be consistent with that goal? Read the following passage and choose the appropriate terms to complete the sentences. Here is a simplified balance sheet for Locust Farming: Locust has 661 million shares outstanding with a market price of $99 a share. Calculate the company’s market value added. (Enter your answers in millions.) Calculate the market-to-book ratio. (Round your answer to 2 decimal places.) How much value as the company created for its shareholders as a percent of shareholders’ equity, that is, the net capital contributed to the

  21. firm by its shareholders? (Enter your answer as a percentage rounded to the nearest whole number.) Here are simplified financial statements for Watervan Corporation: The company’s cost of capital is 8.5% Calculate Watervan’s economic value added (EVA). (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Economic value added = After-tax interest + Net income – (Cost of capital × Total capitalization)Economic value added = (1 – 0.32) × $21 + 62.41 – (8.5% × [$265 + 130]) = $39.07 What is the company’s return on capital? (Use start-of-year rather than average capital.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) What is its return on equity? (Use start-of-year rather than average equity.) (Enter your answer as a percent rounded to 2 decimal places.) Is the company creating value for its shareholders? Home Depot entered fiscal 2017 with a total capitalization of $21,886 million. In 2017, debt investors received interest income of $871 million. Net income to shareholders was $8,636 million. (Assume a tax rate of 21%.) Calculate the economic value added assuming its cost of capital is 10%. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Here are simplified financial statements for Phone Corporation in a recent year: Calculate the following financial ratios for Phone Corporation: (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.) *********************************

  22. FIN 571 Week 2 Discussion ROE and EPS For more classes visit www.snaptutorial.com Post a total of 3 substantive responses over 2 separate days for full participation. This includes your initial post and 2 replies to other students or your faculty member. Due Thursday You are a research analyst for a publicly traded company, and you’ve been assigned to give a presentation on how a company uses performance metrics in corporate valuation. Respond to the following in a minimum of 175 words: Think about how you would present return on equity (ROE) and earnings per share (EPS) to a group of investors or senior management. Explain the use of ROE and EPS in evaluating the value of a company. Include how to calculate ROE and EPS. Why is understanding ROE and EPS important to a company’s value?

  23. Share an example of a company whose ROE and EPS you calculated. What do these results say about the company? Due Monday Reply to at least 2 of your classmates or your faculty member. Be constructive and professional. ********************************* FIN 571 Week 2 Practice For more classes visit www.snaptutorial.com 1)Spock Enterprises has a market value of $100 million in debt outstanding. They also have a market value of equity of $400 million. Spock's total market value is ______ million. 2.Another name for the WACC is the ___________. 3.The weighted average cost of capital is the expected rate of return investors would demand on a portfolio of: 4.Vandalay Industries has $30 million of debt and $70 million of equity outstanding. The market cost of debt is 8% and the cost of equity is 14%. The firm has a 35% corporate tax rate. What is Vandalay's WACC? 5.The market value of a firm is equal to: 6.Order the following three components of the firm's capital structure from riskiest to least risky.

  24. 7.Which of the following statements regarding the company cost of capital are true? 8.The company cost of capital is calculated as a weighted average of the firm's _______ and _______. 9.True or false: it is acceptable to use book values of debt and equity to calculate the weights of debt and equity for the company cost of capital calculation. 10. A project requires a $1 million initial investment and has an expected after-tax cash flow of $2.4 million per year in perpetuity. The weighted-average cost of capital (WACC) is 13%. What is the net present value (NPV) of the project? 11. SkiFree Incorporated has $20 million of debt and $80 million of equity outstanding. The market cost of debt is 6% and the cost of equity is 12%. The firm has a 35% corporate tax rate. What is SkiFree's WACC? 12. Vandalay Industries has $30 million of debt, $10 million of preferred stock and $60 million of common stock outstanding. The market cost of debt is 8%, the cost of preferred is 9% and the cost of common equity is 14%. The firm has a 35% corporate tax rate. What is Vandalay's WACC? 13. When a project's cash flows are discounted at the WACC and the NPV is exactly zero, then those cash flows are _________ to give debtholders and shareholders the returns they require. 14. A project requires a $12 million initial investment and has expected after-tax cash flows of $2 million in perpetuity. The weighted-average cost of capital is 15%. What is the project's net present value (NPV)? 15. There are two costs of debt finance, the _______ cost and the _______ cost. 16. Increasing the amount debt makes debt ______ risky and equity _____ risky. 17. The WACC is the appropriate discount rate for use with ______ projects but should be adjusted ______ for higher risk ones 18. The WACC is the appropriate discount rate for use with ______ projects but should be adjusted ______ for lower risk ones.

  25. 19. The ______ cost of debt is the increase in the required return on common equity as the amount of debt borrowed increases. 20. If a firm uses its book value of debt instead of its market value of debt to calculate its WACC, then its WACC will likely be: 21. If the corporate tax rate is zero, then increasing the proportion of debt in a firm's capital structure causes the WACC to _______. 22. On a large and healthy firm, the use of yield to maturity as the cost of debt when calculating WACC is appropriate because 23. The WACC is the return the company needs to earn after tax in order to satisfy 24. True or false: the market value and book value of debt are often very similar, so many financial managers use book value in WACC calculations. 25. If the corporate tax rate is not zero, increasing the proportion of debt in the capital structure causes the WACC to _______. 26. The ________ is usually accepted as a firm's cost of debt capital for WACC calculations. 27. The firm's cost of equity is usually calculated using the _______ equation. 28. Preferred stock is valued like a perpetuity. The price of a preferred stock is therefore equal to: 29. To determine the equity value of an entire business, discount the firm's _____ using the ______ as the discount rate, then subtract the value of the firm's _____. 30. Potter National Bank has a beta of 1.8. The risk-free rate is currently quoted at 1.5% and the expected market risk premium is 7.5%. What is Potter's cost of equity? 31. Martin Co. has issued preferred stock with an annual dividend of $6.00. The current market price per share of this preferred stock is $47.00. What is the expected return on the Martin preferred stock? 32. What is one necessary condition to use WACC to value an entire business? 33. Providers of venture capital are:

  26. 34. The two rules of success in venture capital management are __________, and ___________. 35. An equity issue that makes a privately owned firm public is called a(n): 36. An investment bank that works with a company to plan and arrange its IPO is called a(n) ________. 37. Underwriters are compensated for the risk of issuing an IPO in the form of a(n) _________. 38. An investment bank that underwrites a security issue by buying the securities for less than the offering price and accepting the risk that the securities won't sell is using the ______ method. 39. Equity investment in high-risk, high-tech start-up private companies is called: 40. Wealthy individuals who personally provide equity investment to start-up firms are called ________. 41. The firm commitment method requires the investment bank to take on the risk of unsold securities and act as a(n) ______. 42. Statistically, the number of firms that provide venture capitalists with the large payoff they require is approximately _______. 43. The main motivation for a firm to undertake an IPO is that _________. 44. The difference between the public offer price and the price paid by the underwriter is known as the underwriter's Spread.The first public equity issue made by a firm is called a(n) ___. 45. The group of underwriters that is assembled to sell a very large issue of stock is referred to as a ________. 46. The type of underwriting used for risky issues of stock that may not sell out completely is called _________ underwriting. 47. The three roles usually played by underwriters for their client companies are _______, ________ and ________. 48. Firms looking to raise funds will file registration statements with the:

  27. 49. The most common method used in the U.S. to determine demand for and price of a stock in an IPO is called the ________ method 50. In firm commitment underwriting, the underwriters receive payment in the form of a _______ representing the difference between the price they pay the firm for the shares, and the price they charge investors for them. 51. In the U.S., underwriting of securities issues is dominated by ________. 52. An underwriter unwilling to take on the risk of firm commitment underwriting may issue an IPO on a _________ basis. 53. A document required by the SEC for new public issues that contains the issuing firm's financial information, financial history, and details of the existing business is known as the ___. 54. True or false: the advantage of the bookbuilding method is that it allows underwriters to reward investors whose bids are most helpful in setting the issue price. 55. Which of the following are three of the banks that dominate the underwriting industry in the United States? 56. True or false: flotation costs are higher for issuing equity than for issuing debt. 57. The type of underwriting used for risky issues of stock that may not sell out completely is called _________ underwriting. 58. Stock prices decline at the announcement of a new issue because investors believe that managers are signaling that the stock price is currently __________. 59. Any additional issue of stock by a company that is already publicly traded is called a __________. 60. A private placement allows a firm to sell securities to: 61. Which of the following statements best describes shelf registration? 62. The issue costs are higher for equity than for debt securities for which of the following reasons?

  28. 63. When a company sells an entire issue of securities to a small group of institutional investors like life insurance companies, pension funds, etc., it is called a(an): 64. Shelf registration is more often used for the: 65. True or false: flotation costs are higher for issuing equity than for issuing debt. 66. ********************************* 67. FIN 571 Week 2 Quiz For more classes visit www.snaptutorial.com What is a firm's weighted-average cost of capital for a firm that is financed 45% by debt? The debt has a 10% required return and the equity has a 17% required return. The tax rate is 21%. The company cost of capital is the return that is expected on a portfolio of the company's: Plasti-tech Inc. is financed 60% with equity and 40% with debt. Currently, its debt has a pretax interest rate of 12%. Plasti-tech's common stock trades at $15.00 per share and its most recent dividend was $1.00. Future dividends are expected grow by 4%. If the tax rate is 21%, what is Plasti-tech's WACC?

  29. A project requires an investment of $10 million and offers an annual after-tax cash flow of $1,250,000 indefinitely. If the firm's WACC is 12.5% and the project is riskier than the firm’s average projects, should it be accepted? If a company's WACC is less than the required return on equity, then the firm: The weighted-average cost of capital for a firm with a 65/35 debt/equity split, 8% pre-tax cost of debt, 15% cost of equity, and a 21% tax rate is: Increasing debt financing will do all of the following except: What return on equity do investors expect for a firm with a $55 share price, an expected dividend of $4.60, a beta of 0.9, and a constant growth rate of 3.5%? XYZ Company issues common stock at a price of $25 a share. The firm expects to pay a dividend of $2.20 a share next year. If the dividend is expected to grow at 2.5% annually, what is XYZ's cost of common equity? How much will a firm need in cash flow before tax and interest to satisfy debtholders and equity holders if the tax rate is 21%, there is $10 million in common stock requiring a 12% return, and $6 million in bonds requiring an 8% return? Issue costs for equity are higher than those for debt for all of the following reasons except: What was the market price of a share of stock before a rights issue, if one share of new stock could be purchased at $100 for every four shares that were previously owned? The stock price after the successful rights issue was $200.

  30. Stock underwriters are: What direct expense is required to market stock if the issuer incurs $1 million in other expenses to sell 3 million shares at $40 each to an underwriter and the underwriter sells the shares at $43 each? One reason for an underwriters' syndication is to: If a new stock offering were overpriced and could be sold, then the: Bottom of Form An investor exercises the right to buy one additional share at $20 for every five shares held. How much should each share be worth after the rights issue if they previously sold for $50 each? A firm has just issued $250 million of equity which caused its stock price to drop by 3%. Calculate the loss in value of the firm's equity given that its market value of equity was $1 billion before the new issue. A rights issue offers the firm's shareholders one new share of stock at $40 for every three shares of stock they currently own. What should be the stock price after the rights issue if the stock sells for $80 per share before the issue? Companies offering smaller security issues may prefer to issue them through a: An investment offers to pay $100 a year forever starting at the end of year 6. If the interest rate is 8%, what is the investment’s value today? The present value of a perpetuity can be determined by: If the effective annual rate of interest is known to be 16.08% on a debt that has quarterly payments, what is the annual percentage rate?

  31. Suppose you take out a 30-year mortgage for $100,000 with annual payments. The interest rate on the mortgage is 8%. When you have paid off half the mortgage, so that the value of the remaining payments is reduced to $50,000, how many more payments need to be made? If the five-year discount factor is d, what is the present value of $1 received in five years’ time? A credit card account that charges interest at the rate of 1.25% per month would have an annually compounded rate of _____ and an APR of ____. One way to increase the NPV of a project is to decrease the: If a project costs $72,000 and returns $18,500 per year for 5 years, what is its IRR? A project's opportunity cost of capital is: The profitability index selects projects based on the: The modified internal rate of return can be used to correct for: You can continue to use your less efficient machine at a cost of $8,000 annually. Alternatively, you can purchase a more efficient machine for $12,000 plus $5,000 annual maintenance. If the new machine lasts 5 years and the cost of capital is 15%, you should: A project can have as many different internal rates of return as it has: Capital budgeting projects typically assume that all cash flows transpire at the end of the year. The reason for this is that:

  32. Assume your firm has an unused machine that originally cost $75,000, has a book value of $20,000, and a market value of $25,000. Ignoring taxes, what is the opportunity cost of using this machine? You are considering the introduction of a new product that will require an investment in new machinery. Which one of these will lower the net present value of that project? Which one of the following would not be expected to affect the decision of whether to undertake an investment? The recovery of an additional investment in working capital is likely to: A new inventory system will immediately reduce inventory levels by $100,000. If this reduction is permanent and the cost of capital is 13%, how does the net working capital change affect company value? When the real rate of interest is less than the nominal rate of interest, then: ********************************* FIN 571 Week 3 Chapter 5 Quiz For more classes visit www.snaptutorial.com A dollar invested today at 7.5 percent interest compounded annually will be worth _______ one year from now.

  33. Joseph signs a contract with a company that will pay him $25,000. Following the principles of the time value of money, Joseph would be best off if he received payment: Real-world investments often involve many payments received or paid over time. Managers refer to this as a ___________________. You put $100 in the bank now, $200 in the bank a year from now, and $300 in the bank in two years. How much money will you have available 3 years from now if you earn a 7.5% rate of interest? (Calculate the future value of this stream of cash flows. Refer to Example 5.6.) Today you deposit $1000 in an account paying 6% interest. At the end of years 1, 2 and 3 you will deposit $100 in that account. What is the present value of that stream of cash flows? A dollar invested today at 8.0 percent interest compounded annually will be worth _______ three years from now. The time value of money concept states that a dollar today is worth _______ a dollar tomorrow. True or false: The time value of money functions that are provided by your financial calculator are also available as functions in an Excel spreadsheet. Today you deposit $1000 in an account paying 6% interest. At the end of years 1, 2 and 3 you will deposit $100 in that account. How much will you have at the end of year 4? You will receive $100 in 1 year, $200 in 2 years and $300 in 3 years. If you can earn a 7.5% rate of interest, what is the present value of this stream of cash flows? (Please note that you receive nothing immediately - there is no initial payment). A dollar invested today at 7.5 percent interest compounded annually will be worth _______ one year from now. In Excel, cash inflows are recognized as ______ values and cash outflows are recognized as ______ values. Interest rates should be entered as ______. Which of the following is a perpetuity? You put $100 in the bank now, $200 in the bank a year from now, and $300 in the bank in two years. How much money will you have

  34. available 3 years from now if you earn a 7.5% rate of interest? (Calculate the future value of this stream of cash flows. Refer to Example 5.6.) $200 at the end of each year forever at 10% per year is worth how much today? Today you deposit $1000 in an account paying 6% interest. At the end of years 1, 2 and 3 you will deposit $100 in that account. What is the present value of that stream of cash flows? A fixed stream of cash flows that ends after a specified number of years is called a(n): A perpetuity is a constant stream of cash flows for a(n) ______ period of time. Find the future value of an annuity of $100 per year for 10 years at 10 percent per year. An ordinary annuity is a series of level payments that begin ____. A traditional (non-growing) annuity consists of a(n) ________ stream of cash flows for a fixed period of time. What is the present value of an annuity consisting of 20 end of year payments of $500 when the interest rate is 11 percent? Use your financial calculator. The interest rate on the financial calculator is expressed as a Which of the following is a proper definition for the effective annual interest rate? Thefuture value of an annuity that lasts n years is equal to A series of level payments that begins immediately for a specified period of time is called a(n): Inflation can be defined as What is the future value of a series of $2000 end of year deposits into an IRA account paying 5 percent interest, over a period of 35 years? Use your financial calculator. The effective annual interest rate is also known as the ______________. True or false: the nominal interest rate can be defined as an interest rate quoted today by a financial institution on a loan or investment, such as an APR or a periodic rate.

  35. Find the future value of an annuity of $100 per year for 10 years at 10 percent per year. An annuity due is a series of level payments that begin ____. Real cash flow must be discounted by the The best known price index used by economists who measure inflation is ________. To use your financial calculator to solve annuity problems, you use the _____ key for entry of the constant payment C. Which type of interest rate is generally quoted for loans and by banks and other financial institutions? Which of the following statements are true regarding the present value of a stream of cash payments? ********************************* FIN 571 Week 3 Chapter 9 Quiz For more classes visit www.snaptutorial.com To calculate net present value, you need to discount _________. The term incremental cash flow can best be defined as: An opportunity cost arises in a project whenever: A benefit or cash flow foregone as a result of an action is called:

  36. When calculating NPV, why are cash flows discounted instead of accounting profits? Incremental cash flow is equal to: Some examples of indirect effects that could affect incremental cash flows would be: Some examples of opportunity costs that should be included in project analysis are: To calculate net present value, you need to discount _________. The term incremental cash flow can best be defined as: Which of the following are commonly made mistakes that managers make in regard to working capital and forecasting project cash flows? Indirect effects on cash flows may be positive or negative. An opportunity cost arises in a project whenever: A benefit or cash flow foregone as a result of an action is called: When calculating NPV, why are cash flows discounted instead of accounting profits? Which of the following are true regarding the inclusion of working capital in project cash flows? Which of the following statements about nominal versus real cash flows are correct?

  37. By keeping costs such as interest and principal payments on debt out of project cash flows, you are following a fundamental principle of corporate finance known as the separation of investment and ___________ decisions. Cash flows from capital investments + operating cash flows + cash flows from changes in working capital = Which of the following are commonly made mistakes that managers make in regard to working capital and forecasting project cash flows? The difference between the nominal discount rate and the real discount rate is ________. The initial capital investment in a project requires a ______ cash flow. The salvage value from a project involves a ________ cash flow. The Tax Cuts and Jobs Act allows companies to take bonus depreciation sufficient to write off what percent of investment immediately? Which of the items below are the elements which must be included in the calculation of a project's total cash flow? Smith Industries plans to sell an asset at the end of a 5 year project for $250,000. The book value of the asset at that time will be $125,000. The marginal tax rate is 35 percent. How much tax will Smith pay on the sale, and what will be its net proceeds (cash inflow)? Which of the following are true regarding the inclusion of working capital in project cash flows? A project generates revenues of $5,000, costs of $3,000 and taxes of $700. What is the project's operating cash flow?

  38. The initial capital investment is a cash outflow at the start of the project that includes which of the following types of outflows: Which of the following will correct the effect of depreciation? At the end of a project, a firm's investment has a salvage value of $4 million. The firm will pay taxes of $.5 million on the sale of the equipment from the investment. What is the net cash flow to the firm? A project's operating cash flow can be calculated using which of the following equations: Which of the following formulas can be used to ensure that depreciation is not included in a project's operating cash flows? Financing costs like interest and principal payments on borrowed funds must be included in the incremental cash flows for the project. Which of the following statements about working capital is correct? A project generates revenues of $1.4 million, cash expenses of $1 million, and taxes of $100,000. What is the operating cash flow? Which of the following will correct the effect of depreciation? A project generates a net profit of $1.8 million and depreciation of $200,000. What is the project's operating cash flow? *********************************

  39. FIN 571 Week 3 Discussion Capital Budgeting Techniques For more classes visit www.snaptutorial.com Post a total of 3 substantive responses over 2 separate days for full participation. This includes your initial post and 2 replies to other students or your faculty member. Due Thursday You are a Finance Manager for a major utility company. Respond to the following in a minimum of 175 words: Think about some of the capital budgeting techniques you might use for some upcoming projects. Discuss at least 2 capital budgeting techniques and how your company can benefit from the use of these tools. Compare your approaches to other students’ responses. How were they similar or different? Why might you use the different approaches shared by your classmates?

  40. Due Monday Reply to at least 2 of your classmates or your faculty member. Be constructive and professional. ********************************* FIN 571 Week 4 Discussion Financial Performance Evaluation For more classes visit www.snaptutorial.com Post a total of 3 substantive responses over 2 separate days for full participation. This includes your initial post and 2 replies to other students or your faculty member. Due Thursday You are writing a book on how to evaluate performance evaluation for a company. Respond to the following in a minimum of 175 words:

  41. Think about some of the influences and measures of company performance that you read about this week. Explain the use of return on assets (ROA) and the price-to-earnings (PE) ratio in evaluating the performance of a company. Write about how to calculate ROA and PE ratio and how market conditions can affect these metrics. Share the ROA and PE ratio for a company you are familiar with. What do these metrics tell you about the financial health of the company? ********************************* FIN 571 Week 4 Practice For more classes visit www.snaptutorial.com How the firm raises the money required for its investments and operations is known as the A corporation is a legal entity that has the rights to do which of the following? Shareholders have limited liability which means that they can A disadvantage of a partnership is Intangible assets include which of the following?

  42. The chief financial officer is involved in The financing decision involves The purpose of the business and how it is to be managed, financed, and governed is set out in the Shareholders cannot be held personally responsible for the corporation's debt because the shareholders have When managers seek their own interests rather than the interests of the shareholders, the company is said to have: A business organization owned by two or more individuals is known as a To provide executives with an incentive to maximize the company's stock value, corporations should provide some compensation in the form of _____ stock. The chief financial officer oversees the work of all A firm with good corporate _______ will have few agency problems. The financial objective of the corporation's financial managers is to Good corporate governance includes which of the following? One of the commonly cited problems with having profit maximization as a corporate objective is that it fails to consider: Which of the following types of businesses is least likely to encounter agency problems due to the fact that the owner's personal wealth is tied to the value of the business?

  43. Unethical managers run the risk of damaging the company's Unethical managers run the risk of damaging the company's The laws, regulations, institutions, and corporate practices that protect investors is known as Financial analysts are not responsible for monitoring and controlling risk. Which of the following relies, in part, on well-designed management compensation packages? Treating customers and employees fairly can help maximize the value of the firm. To provide executives with an incentive to maximize the company's stock value, corporations should provide some compensation in the form of _____ stock. The worst stock market crash in history in which stock prices fell by almost 90% happened in the year The job of financial analysts may include which of the following? One of the commonly cited problems with having profit maximization as a corporate objective is that it fails to consider: Which of the following are the principal themes of the study of corporate finance? History came close to repeating the stock market crash of 1929 in the year

  44. ********************************* FIN 571 Week 5 Discussion Systematic and Unsystematic Risk For more classes visit www.snaptutorial.com Post a total of 3 substantive responses over 2 separate days for full participation. This includes your initial post and 2 replies to other students or your faculty member. Due Thursday You are the Chief Risk Officer for a company and you’ve been tasked with identifying the areas where your company is exposed to systematic and unsystematic risks. Respond to the following in a minimum of 175 words:

  45. Based on the information you learned this week, what approach would you take in explaining how systematic and unsystematic risks affect risk planning? Describe your approach. Name 3 or more systematic or unsystematic risks your company might face. Think of some implications if your company decides not to be proactive and plan for these risks. Due Monday Reply to at least 2 of your classmates or your faculty member. Be constructive and professional. ********************************* FIN 571 Week 5 Practice Chapter 11 and 12 Question For more classes visit www.snaptutorial.com If an investor purchases a security for $12.30, then sells it at a later date for $14.10, her capital gain would be ____________. An investor purchases a share of stock today for $27.50 and holds it for a year. During the year the stock pays $4.50 in dividends. The investor sells the stock at the end of the year for $29.25. What is her percentage return? (Record your answer as a percent rounded to one decimal place.)

  46. U.S. Treasury bills are nearly a risk-free investment because: If an investor purchases a security today for $9.00 and sells it tomorrow for $7.50, his capital gain will be _________. Which of the following expressions correctly calculates an investor's percentage return on a share of stock? Which of the following stock indexes includes the stocks of 500 major companies in proportion to the number of their shares that have been issued to investors? Which of the following statements is true regarding the risks undertaken by investors in U.S. Treasury bills? The extra annual return from investing in long versus short-term Treasury securities is known as: Which of the following statements are true regarding the risks undertaken by investors in common stock? The expected return on the stock market can be expressed as the sum of the _________ and a __________. The appropriate cost of capital to be used to discount risk-free projects is ________. Variance and standard deviation are measures of __________. Beating the performance of which of the indexes below is usually the definition of success for professional investors? The difference in returns between short-term and long-term Treasury securities is called the "bond time premium" To estimate the future risk of a stock investment, analysts will calculate the _________ and assume it is a reasonable estimate of future risk. If the expected return on Treasury bills for 2015 is 0.25 percent and the market risk premium for the U.S. is 7.50 percent, what is the expected return on the U.S. stock market for 2015? Diversification of a stock portfolio can be achieved by __________. The appropriate cost of capital to be used to discount average risk projects is _________. A major limitation of using standard deviation of historical stock returns to predict future investment risk is ________. Select all of the terms below that are related to the riskiness of an asset investment.

  47. Diversification works best when portfolio stock returns are ______ correlated. The appropriate cost of capital to be used to discount risk-free projects is ________. Once you have added about ______ or more diversified stocks to your portfolio, you have removed about as much specific risk as you possibly can. Which of the following stock indexes tracks the performance of a portfolio consisting of 1 share each of 30 "blue chip" stocks? Individual projects which seem risky to a firm do not contribute much risk to the portfolio of a diversified investor. The standard deviation of returns is a useful measure of risk for individual assets in isolation, but is a misleading risk measure for assets in a portfolio due to the ________ effect caused by ________. Which of the following industries have less-than-average exposure to macro and market risk? For a well-diversified investor, the only type of risk that matters is _______. The most important measure of risk in a well-diversified portfolio is Investors holding well-diversified portoflios are most concerned with Which of the following is the relevant risk to investors of a single stock held in a diversified portfolio? The impact of macroeconomic news is tracked by the rate of return on a _____________ of all securities. The fitted line's _______ measures a stock's market risk. If the market portfolio return decreases by 2%, then each firm's stock return will ________ by about _______ percent. A firm can have high total risk but a low beta if its _______ is high. In principle the market portfolio should contain all assets in the world economy. In practice, financial analysts use _______ as a proxy for the market portfolio. If you invest 50 percent of your funds in a stock with beta=1.5, 30 percent in a stock with beta=0.9 and 20 percent in a stock with beta=0.3, your portfolio beta will be _______.

  48. Plot a firm's stock returns versus the market portfolio returns using data for a fixed period of time. The slope of the straight line fitted to those points is called: If the market portfolio return increases by 1%, then each firm's stock return will ________ by about ________ percent. The measure of market risk for a security is its _________. The average of the betas of the individual securities in a portfolio, weighted by the investment in each security, is called the: The total risk of a well-diversified portfolio of stocks can be calculated as the product of the ________ times the _________. A beta of 0 indicates that a security is _________ by what happens in the market. The total risk of a security investment consists of _______ plus _______. The total risk of a diversified portfolio of stocks is determined by the _________, since all ________ has been diversified away. The CAPM assumes that the stock market is composed of _______ investors. The CAPM assumes that the stock market is composed of _______ investors. If you construct an investment portfolio by investing 75% of your funds in the market portfolio (r = 14%) and 25% of your funds in Treasury bills (r = 3%), what is the expected return of your portfolio according to the CAPM? What is the CAPM formula? The CAPM predicts that the difference in return between stock A and stock B should be due only to the difference in the _______ of the two stocks. XYZ Industries is considering the following list of projects. For each, the project cost of capital and expected return are given. Which of these projects should the firm accept? The security market line describes the expected returns and risks from dividing a portfolio between _________ and _________. According to the CAPM, what is the expected return on a stock if its beta is equal to zero?

  49. Firms may use a ____________ to discount the cash flows of their average risk projects. The minimum acceptable expected rate of return for a project is called the ________________. Projects with high fixed costs will tend to have earnings that vary _______ with any change in revenues A sensible way for a manager to account for overoptimistic cash-flow forecasts is to adjust the discount rate. The opportunity cost of capital for investment in the firm as a whole is called the: The risk of undertaking a project can be described by its __________. Projects with high fixed costs will tend to have _______ betas than other projects. If cash-forecasts are prepared properly then which of the following are true? Suppose the risk-free rate is 5%, the market rate of return is 10%, and beta is 2. Find the expected rate of return using the CAPM. XYZ Industries is considering the following list of projects. For each, the project cost of capital and expected return are given. Which of these projects should the firm accept? If an investor purchases a security today for $9.00 and sells it tomorrow for $7.50, his capital gain will be _________. - An investor purchases a share of stock today for $27.50 and holds it for a year. During the year the stock pays $4.50 in dividends. The investor sells the stock at the end of the year for $29.25. What is her percentage return? (Record your answer as a percent rounded to one decimal place.) - Beating the performance of which of the indexes below is usually the definition of success for professional investors? - U.S. Treasury bills are nearly a risk-free investment because: - Rank the following in order of risk, from least risky to most risky. - If an investor purchases a security for $12.30, then sells it at a later date for $14.10, her capital gain would be ____________.

  50. - The extra annual return from investing in long versus short-term Treasury securities is known as: - Which of the following expressions correctly calculates an investor's percentage return on a share of stock? The Standard & Poor's Composite Index is also referred to as the "S&P 500" index. - Which of the following statements is true regarding the risks undertaken by investors in U.S. Treasury bills? - Which of the following statements are true regarding the risks undertaken by investors in common stock? The difference in returns between short-term and long-term Treasury securities is called the "bond time premium" - If the expected return on Treasury bills for 2015 is 0.25 percent and the market risk premium for the U.S. is 7.50 percent, what is the expected return on the U.S. stock market for 2015? - The appropriate cost of capital to be used to discount average risk projects is _________. - Which of the following stock indexes includes the stocks of 500 major companies in proportion to the number of their shares that have been issued to investors? - U.S. Treasury bills are nearly a risk-free investment because: - The expected return on the stock market can be expressed as the sum of the _________ and a __________. - The square root of variance is called standard ______ - The appropriate cost of capital to be used to discount risk-free projects is ________. - To estimate the future risk of a stock investment, analysts will calculate the _________ and assume it is a reasonable estimate of future risk. - Diversification of a stock portfolio can be achieved by __________. - Variance and standard deviation are measures of __________. - The standard deviation of returns is a useful measure of risk for individual assets in isolation, but is a misleading risk measure for assets in a portfolio due to the ________ effect caused by ________.

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