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FIN 571 (Corporate Finance) Entire Course

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<strong>FIN</strong> <strong>571</strong> (<strong>Corporate</strong> <strong>Finance</strong>)<br />

<strong>Entire</strong> <strong>Course</strong><br />

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<strong>FIN</strong> <strong>571</strong> (<strong>Corporate</strong> <strong>Finance</strong>) <strong>Entire</strong> <strong>Course</strong><br />

<strong>FIN</strong> <strong>571</strong> Week 1 Individual Assignment Business Structures<br />

<strong>FIN</strong> <strong>571</strong> Week 1 Individual Assignment WileyPlus Quiz<br />

<strong>FIN</strong> <strong>571</strong> Wileyplus Week 1 Practice Quiz<br />

Which of the following business organizational forms is easiest to raise capital?<br />

b) partnership<br />

Which organizational form best enables the owners of the firm to monitor the actions of other owners of<br />

the same firm?<br />

public corporation<br />

sole proprietorship<br />

private corporation<br />

Which of the following factors or activities can be controlled by the management of the firm?


Stock market conditions.<br />

Capital budgeting.<br />

The level of economic activity.<br />

The level of interest rates.<br />

The legal system and market forces impose substantial costs on individuals and institutions that engage<br />

in unethical behavior. Which of the following would not be an example of the above?<br />

Financial losses.<br />

Agency conflicts.<br />

Legal fines.<br />

Jail time.<br />

The most common reason that corporate firms use the futures and options markets is<br />

to hedge risk.<br />

to take risk.<br />

to make deposits.<br />

Galan Associates prepared its financial statement for 2008 based on the information given here. The<br />

company had cash worth $1,234, inventory worth $13,480, and accounts receivables of $7,789. The<br />

company’s net fixed assets are $42,331, and other assets are $1,822. It had accounts payables of<br />

$9,558, notes payables of $2,756, common stock of $22,000, and retained earnings of $14,008. How<br />

much long-term debt does the firm have?


$54,342<br />

$12,314<br />

$18,334<br />

Tre-Bien Bakeries generated net income of $233,412 this year. At year end, the company had accounts<br />

receivables of $47,199, inventory of $63,781, and cash of $21,461. It also had accounts payables of<br />

$51,369, short-term notes payables of $11,417, and accrued taxes of $6,145. The net working capital of<br />

the firm is<br />

$63,510<br />

none of these<br />

Which of the following best represents cash flows to investors?<br />

Earnings before interest and taxes times 1 minus the firm’s tax rate.<br />

Net income, minus dividends paid to preferred stockholders.<br />

Cash flow from operating activity, minus cash flow invested in net working capital, minus cash f<br />

Cash flow from operating activity, plus cash flow generated from net working capital.<br />

<strong>FIN</strong> <strong>571</strong> Week 2 <strong>Course</strong> Material<br />

<strong>FIN</strong> <strong>571</strong> Week 2 Individual Assignment Business Structure Advice


<strong>FIN</strong> <strong>571</strong> Week 2 Individual Assignment WileyPlus Quiz<br />

(1) Which one of the following statements about trend analysis is NOT correct?<br />

(2) Coverage ratios: Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800. Its<br />

depreciation for the year is $1,434,500. What is its cash coverage ratio?<br />

(3) Multiples analysis: Turner Corp. has debt of $230 million and generated a net income of $121 million<br />

in the last fiscal year. In attempting to determine the total value of the firm, an investor identified a similar<br />

firm in Jacobs, Inc., an all-equity firm. This firm had 150 million shares outstanding, a share price of<br />

$14.25, and net income of $182 million. What is the total value of Turner Corp.? Round to the nearest<br />

million dollars.<br />

(4) Coverage ratios, like times interest earned and cash coverage ratio, allow<br />

(5) Peer group analysis can be performed by<br />

(6) Efficiency ratio: If Viera, Inc., has an accounts receivable turnover of 3.9 times and net sales of<br />

$3,436,812, what is its level of receivables?<br />

<strong>FIN</strong> <strong>571</strong> Week 3 <strong>Course</strong> Material<br />

<strong>FIN</strong> <strong>571</strong> Week 3 Individual Assignment Interpreting Financial Results (Home Depot)<br />

<strong>FIN</strong> <strong>571</strong> Week 3 Individual Assignment Interpreting Financial Results (Home Depot XLX )<br />

<strong>FIN</strong> <strong>571</strong> Week 3 Individual Assignment WileyPlus Quiz<br />

(1) The operating cycle<br />

(2) You are provided the following working capital information for the Ridge Company:<br />

Ridge Company<br />

Account<br />

Inventory<br />

Accounts receivable<br />

Accounts payable<br />

Net sales<br />

Cost of goods sold<br />

Operating cycle: What is the operating cycle for Ridge Company?<br />

(3) Ticktock Clocks sells 10,000 alarm clocks each year. If the total cost of placing an order is $65 and it<br />

costs $85 per year to carry the alarm clock in inventory, use the EOQ formula to calculate the optimal<br />

order size.<br />

(4) M&M Proposition 1: Dynamo Corp. produces annual cash flows of $150 and is expected to exist<br />

forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells


you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You<br />

currently own 10 percent of the stock.<br />

How much are your cash flows today?<br />

(5) M&M Proposition 2: Melba’s Toast has a capital structure with 30% debt and 70% equity. Its pretax<br />

cost of debt is 6%, and its cost of equity is 10%. The firm’s marginal corporate income tax rate is 35%.<br />

What is the appropriate WACC?\<br />

(6) According to the text, the financial plan covers a period of<br />

(7) The financing plan of a firm will indicate<br />

(8) Payout and retention ratio: Tradewinds Corp. has revenues of $9,651,220, costs of $6,080,412,<br />

interest payment of $511,233, and a tax rate of 34 percent. It paid dividends of $1,384,125 to<br />

shareholders. Find the firm’s dividend payout ratio and retention ratio.\<br />

<strong>FIN</strong> <strong>571</strong> Week 4 <strong>Course</strong> Material<br />

<strong>FIN</strong> <strong>571</strong> Week 4 Individual Assignment Analyzing Pro Forma Statements<br />

<strong>FIN</strong> <strong>571</strong> Week 4 Individual Assignment Analyzing Pro Forma Statements<br />

<strong>FIN</strong> <strong>571</strong> Week 4 Individual Assignment WileyPlus Quiz<br />

(1) Present value: Tommie Harris is considering an investment that pays 6.5 percent annually. How<br />

much must he invest today such that he will have $25,000 in seven years? (Round to the nearest dollar.)<br />

(2) PV of multiple cash flows: Jack Stuart has loaned money to his brother at an interest rate of 5.75<br />

percent. He expects to receive $625, $650, $700, and $800 at the end of the next four years as complete<br />

repayment of the loan with interest. How much did he loan out to his brother? (Round to the nearest<br />

dollar.)<br />

(3) PV of multiple cash flows: Hassan Ali has made an investment that will pay him $11,455, $16,376,<br />

and $19,812 at the end of the next three years. His investment was to fetch him a return of 14 percent.<br />

What is the present value of these cash flows? (Round to the nearest dollar.)<br />

(4) PV of multiple cash flows: Pam Gregg is expecting cash flows of $50,000, $75,000, $125,000, and<br />

$250,000 from an inheritance over the next four years. If she can earn 11 percent on any investment that<br />

she makes, what is the present value of her inheritance? (Round to the nearest dollar.)<br />

(5) Present value of an annuity: Transit Insurance Company has made an investment in another<br />

company that will guarantee it a cash flow of $37,250 each year for the next five years. If the company<br />

uses a discount rate of 15 percent on its investments, what is the present value of this investment?<br />

(Round to the nearest dollar.)<br />

(6) Future value of an annuity: Carlos Menendez is planning to invest $3,500 every year for the next six<br />

years in an investment paying 12 percent annually. What will be the amount he will have at the end of the<br />

six years? (Round to the nearest dollar.)<br />

(7) Bond price: Briar Corp is issuing a 10-year bond with a coupon rate of 7 percent. The interest rate for<br />

similar bonds is currently 9 percent. Assuming annual payments, what is the present value of the bond?<br />

(Round to the nearest dollar.)<br />

(8) PV of dividends: Cortez, Inc., is expecting to pay out a dividend of $2.50 next year. After that it<br />

expects its dividend to grow at 7 percent for the next four years. What is the present value of dividends<br />

over the next five-year period if the required rate of return is 10 percent?<br />

(9) PV of dividends: Givens, Inc., is a fast growing technology company that paid a $1.25 dividend last<br />

week. The company’s expected growth rates over the next four years are as follows: 25 percent, 30<br />

percent, 35 percent, and 30 percent. The company then expects to settle down to a constant-growth rate


of 8 percent annually. If the required rate of return is 12 percent, what is the present value of the<br />

dividends over the fast growth phase?<br />

<strong>FIN</strong> <strong>571</strong> Week 5 <strong>Course</strong> Material<br />

<strong>FIN</strong> <strong>571</strong> Week 5 Individual Assignment Wiley Plus – (5.17,5.21,6.19,6.27,7.16,8.24,9.15)<br />

<strong>FIN</strong> <strong>571</strong> Week 5 Learning Team Assignment Learning Team Reflection<br />

<strong>FIN</strong> <strong>571</strong> Week 5 Individual Assignment WileyPlus Quiz<br />

(1) Genaro needs to capture a return of 40 percent for his one-year investment in a property. He believes<br />

that he can sell the property at the end of the year for $150,000 and that the property will provide him with<br />

rental income of $25,000. What is the maximum amount that Genaro should be willing to pay for the<br />

property?<br />

(2) The process of identifying the bundle of projects that creates the greatest total value and allocating the<br />

available capital to the projects is known as<br />

(3) Capital rationing. You are considering a project that has an initial cost of $1,200,000. If you take the<br />

project, it will produce net cash flows of $300,000 per year for the next six years. If the appropriate<br />

discount rate for the project is 10 percent, what is the profitability index of the project?<br />

(4) What might cause a firm to face capital rationing?<br />

(5) How firms estimate their cost of capital: The WACC for a firm is 19.75 percent. You know that the<br />

firm is financed with $75 million of equity and $25 million of debt. The cost of debt capital is 7 percent.<br />

What is the cost of equity for the firm?<br />

(6) The cost of debt: Bellamee, Inc., has semiannual bonds outstanding with five years to maturity and<br />

are priced at $920.87. If the bonds have a coupon rate of 7 percent, then what is the YTM for the bonds?<br />

(7) The cost of debt: Beckham Corporation has semiannual bonds outstanding with 13 years to maturity<br />

and are currently priced at $746.16. If the bonds have a coupon rate of 8.5 percent, then what is the aftertax<br />

cost of debt for Beckham if its marginal tax rate is 35%? Assume that your calculation is made as on<br />

Wall Street.<br />

(8) The cost of equity: RadicalVenOil, Inc., has a cost of equity capital equal to 22.8 percent. If the riskfree<br />

rate of return is 10 percent and the expected return on the market is 18 percent, then what is the<br />

firm’s beta if the firm’s marginal tax rate is 35 percent?<br />

(9) Which type of project do financial managers typically use the highest cost of capital when evaluating?<br />

<strong>FIN</strong> <strong>571</strong> Week 6 <strong>Course</strong> Material<br />

<strong>FIN</strong> <strong>571</strong> Week 6 Individual Assignment Managing Growth Simulation<br />

<strong>FIN</strong> <strong>571</strong> Week 6 Individual Assignment Wiley Plus – (10.14,11.20,11.24,12.24,13.11)<br />

<strong>FIN</strong> <strong>571</strong> Week 6 Individual Assignment Wiley Plus – 10.14 (Briarcrest)<br />

<strong>FIN</strong> <strong>571</strong> Week 6 Individual Assignment Wiley Plus 11.20 (Archer Daniels Midland)<br />

<strong>FIN</strong> <strong>571</strong> Week 6 Individual Assignment Wiley Plus 11.24 (Bell Mountain Vineyards)


<strong>FIN</strong> <strong>571</strong> Week 6 Individual Assignment – Wiley Plus 12.24 (Chip’s Home Brew Whiskey)<br />

<strong>FIN</strong> <strong>571</strong> Week 6 Individual Assignment Wiley Plus – 13.11 (Capital Co.)<br />

<strong>FIN</strong> <strong>571</strong> Week 6 Learning Team Assignment Learning Team Reflection

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