BUSN 379 DeVry Entire Course
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<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> <strong>Entire</strong> <strong>Course</strong><br />
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<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> <strong>Entire</strong> <strong>Course</strong><br />
<strong>BUSN</strong><strong>379</strong><br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> <strong>Entire</strong> <strong>Course</strong><br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> All Week Discussions<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 1 Discussion 1<br />
What are some of the most important financial management decisions? Can you provide some real-life examples?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 1 Discussion 2<br />
Do you believe that the firm’s social responsibilities conflict with the ultimate goal of shareholder’s wealth maximization?<br />
Consider issues such as the protection of the environment and the creation of jobs.<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 2 Discussion 1<br />
Why does money have a time value? Can you provide at least one real-life scenario in which you can apply the concept<br />
of time value of money?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 2 Discussion 2<br />
What is the difference between the annual percentage rate (APR) and the effective annual rate (EAR)? Which rate do<br />
you believe is more relevant for financial decisions and why?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 3 Discussion 1<br />
What are some of the most important risks associated with bonds?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 3 Discussion 2<br />
Are there any instances in which companies should not pay dividends? How do dividends impact the value of a share<br />
of stock?
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 4 Discussion 1<br />
Discuss the pros and cons of net present value.<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 4 Discussion 2<br />
Are there situations where a manger would prefer to use IRR? Why?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 5 Discussion 1<br />
What is the difference between systematic and nonsystematic risk? What are some examples of each?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 5 Discussion 2<br />
What are some statistical measures of risk and what type of risk do they measure?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 6 Discussion 1<br />
How can you explain the concept of cost of capital? Do you believe that a firm should use the same cost of capital for<br />
all of its projects? Why or why not?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 6 Discussion 2<br />
What is the impact of financial leverage on wealth creation? What is the relationship between financial leverage and<br />
risk?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 7 Discussion 1<br />
How are the operating and cash cycles of the firm different? Why are they important?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 7 Discussion 2<br />
What strategies can a firm use to optimize its cash cycle?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 2 Case Study<br />
Case I is due at the end of this week. Prepare a memo in Word, which answers the questions in the Chapter 2 Case,<br />
Cash Flows and Financial Statements at Sunset Boards, Inc., on page 51 of the textbook. Use Excel to solve any<br />
financial calculations. You will be graded on correct financial analysis, proper use of technology, business-like<br />
presentation of technology, and business-like presentation.<br />
Week 2 Case Study I.<br />
A. Prepare the following (You may put this in Word or submit an Excel):(60/60)<br />
1. An income statement for 2013 and 2014.<br />
2. A balance sheet for 2013 and 2014.<br />
3. Operating cash flow for 2013 and 2014.Hint: find the capital spending and change in net working<br />
capital. Ending net fixed assets – Beginning net fixed assets + Depreciation = Net capital spending.<br />
Ending NWC – Beginning NWC = Change in NWC. Operating cash flow – Net capital spending –<br />
Change in NWC = Cash flow from assets.<br />
4. Cash flow from assets for 2014
5. Cash flow to creditors for 2014<br />
6. Cash flow to stockholders for 2014<br />
A. How would you describe Sunset Boards’ cash flows for 2014?(15/15)<br />
Describe each of: positive earnings, cash flow from operations, net working capital, new fixed assets, total to all<br />
stakeholders, total to all bondholders, total to all stockholders. Take this from your work in A.<br />
A. What do you think about Tad’s expansion plans?(15/15)<br />
Hint, address these questions: Is the expansion plan risky? What is the cash flow? What is the capital spending? How<br />
much does the company have to raise from creditors? Can they afford to expand?<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 4 Case Study<br />
Case II is due at the end of this week. For this assignment, prepare a memo in Word, which answers the questions in<br />
the Chapter 5 case, S & S Air's Mortgage, on page 165 of the textbook. Use Excel to do any financial calculations. You<br />
will be graded on correct financial analysis, proper use of technology, and business-like presentation.<br />
Good work effort with Week 4 Case Study II.<br />
1. Mortgage Payments(10/10)<br />
a. What are the monthly payments for a 30-year traditional mortgage?<br />
b. What are the monthly payments for a 20-year traditional mortgage?<br />
2. Amortization (15/15)<br />
a. Prepare an amortization table for the first six months of the traditional 30-year mortgage.<br />
Year<br />
/ Beginning Balance / Total Payment / Interest Paymt / Principal Paymt / Ending Balance<br />
1 / $35,000,000.00 / 212,098.17 / 177,916.67 / 34,181.51 / 34,965,818.49<br />
2 / 34,965,818.49 / 212,098.17 / 177,742.91 / 34,355.26 / 34,931,463.23<br />
3 / 34,931,463.23 / 212,098.17 / 177,568.27 / 34,529.90 / 34,896,933.32<br />
4 / 34,896,933.32 / 212,098.17 / 177,392.74 / 34,705.43 / 34,862,227.89<br />
5 / 34,862,227.89 / 212,098.17 / 177,216.33 / 34,881.85 / 34,827,346.04<br />
6 / 34,827,346.04 / 212,098.17 / 177,039.01 / 35,059.17 / 34,792,286.88<br />
a. How much of the first payment goes toward principal? Hint: just pull this number from your table.<br />
3. Smart Loan (25/25)<br />
a. How long would it take for S&S Air to pay off the smart loan assuming 30-year traditional mortgage payments?<br />
Hint: The payment for a loan repaid with equal payments is the annuity payment with the loan value as the PV<br />
of the annuity.<br />
Bi-weekly payoff =<br />
Bi-weekly payoff =
a. Why is this shorter than the time needed to pay off the traditional mortgage?<br />
The bi-weekly payments pay off the loan quicker for two reasons. First, one-half of the payment gets to the bank quicker<br />
each month, which reduces the interest that accrues each month. Second, the company is actually making 13 full<br />
payments each year (26 bi-weekly periods amounts to 13 monthly payments).<br />
a. How much interest would the company save?<br />
4. Assume S&S Air takes out a bullet loan under the terms described. What are the payments on the loan?(15/15)<br />
a. Monthly payments<br />
b. Bullet Payment<br />
5. What are the payments for the interest-only loan?(15/15)<br />
6. Which mortgage is the best for the company? Are there any potential risks in this action?(10/10)<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 6 Case Study<br />
Case III - Chapter 8 Case, Bullock Gold Mining, page 274 is due this week.<br />
See the Syllabus section "Due Dates for Assignments & Exams" for due date information.<br />
Week 6 Case Study III.<br />
1. Construct a spreadsheet to calculate the payback period, internal rate of return, modified internal rate of return, and<br />
net present value of the proposed mine. You must submit the spreadsheet. Repeat your answers below.(60/60)<br />
2. Based on your analysis, should the company open the mine?(30/30) Since<br />
3. Bonus Question (not graded): Most spreadsheets do not have a built-in formula to calculate the payback period.<br />
Write a VBA script that calculates the payback period for a project.<br />
Work written clearly and without errors of spelling or syntax. Points deducted: 0<br />
Late fee. Points deducted: 0<br />
Your work was distinguished. You answered the questions fully. Your writing was clear and free of errors.<br />
Total Points: 90<br />
Dr. Geoff<br />
Your answers for section 3 and 6 were incorrect.<br />
Your work was distinguished. You answered the questions fully. Your writing was clear and free of errors.<br />
You would have received fewer deductions if you had shown your work. Your writing was clear and free of errors. Your<br />
answers for section 3, 5, 6, 8 and 10 were incorrect.<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Complete Homework Package<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 1 Homework<br />
Please complete the following exercises from Chapter 2 of your textbook and post them in the Dropbox.<br />
Chapter 2: 8, 14, and 19<br />
Week 1Assignment. Chapter 2: 8, 14, and 19<br />
2.8<br />
What is the OCF?(5/5)
2.14<br />
a. What is the OCF?(20/20)<br />
b. What is the cash flow to creditors? (Show work):<br />
c. What is the cash flow to stockholders? (Show work):<br />
d. What is the addition to the NWC (the change in the NWC)? Find the cash flow from assets then use the cash flow<br />
from assets equation to find the change in NWC (Show work):<br />
2.19<br />
a. What is the Net Income?(15/15)<br />
b. What is the operating cash flow for the year? (Show work):<br />
c. Explanation of results.<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 2 Homework<br />
Please complete the following exercises from Chapters 4 and 5 of your textbook and post them in the Dropbox.<br />
Chapter 4: 8, 17, and 18<br />
Chapter 5: 1, 4, and 12<br />
Week 2Assignment.Chapter 4: 8, 17, and 18 and Chapter 5: 1, 4, and 12<br />
4.8<br />
What is the Rate of Return? (6/6)<br />
4.17<br />
What must you invest today? Find the PV of a lump sum.(6/6)<br />
4.18<br />
What is the FV. Find the FV of a lump sum.(6/6)<br />
a. First Scenario:<br />
b. If you wait 10 years, the value of your deposit at your retirement will be:<br />
5.1<br />
Find the PV of each cash flow :( 6/6 )<br />
5.4<br />
Find the PV of an Annuity and a Perpetuity: (8/8)<br />
To find the PV of a perpetuity, we use the equation: PV = C / r<br />
5.12<br />
Find the EAR: (8/8)<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 3 Homework<br />
Chapter 6: 16<br />
Chapter 7: 11 and 12<br />
Week 3Assignment.Chapter 6: 16 and Chapter 7: 11 and 12
6.16.Find % Change of Bond Bill and Ted(24/24)<br />
a.If the YTM suddenly rises to 9 percent:(Show work):<br />
b.If the YTM suddenly falls to 5 percent:<br />
c.<br />
d. What does this problem tell you about the interest rate risk of longer-term bonds?<br />
7.11.With a return of 8 percent on this stock, how much should you pay? (4/4)<br />
7.12.Value a stock with two different required returns. Use the constant growth model.(12/12)<br />
a.Price @ required return of 12%:<br />
b.Price @ required return of 8%:<br />
c.What does a higher required return meanto the stock ?<br />
6.16d: All else the same, the longer the maturity of a bond, the greater is its price sensitivity to changes in interest rates.<br />
7.12c All else held constant, a higher required return means that the stock will sell for a lower price. Also, notice that<br />
the stock price is very sensitive to the required return. In this case, the required return fell by 1/3 but the stock price<br />
more than doubled.<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 4 Homework<br />
Please complete the following exercises from Chapter 8 of your textbook and post them in the Dropbox.<br />
Chapter 8: 3, 4, 5, and 6<br />
Chapter 7: 3, 4, 5, and 6<br />
8.3<br />
Which Project should be accepted A or B?(4/4)<br />
8.4<br />
Calculate AAR, the average net income divided by the average book value.(12/12)<br />
a.Average net income =<br />
b.Average book value =<br />
c.AAR =<br />
8.5<br />
Calculate IRR:(8/8)<br />
a.IRR =<br />
b.Should the project be accepted and why? .<br />
8.6<br />
Calculate NPV:the PV of the outflows minus by the PV of the inflows.(16/16)<br />
a.@ 9% required return.<br />
b.Should the project be accepted:<br />
c.@ 21% required return.<br />
d.Should the project be accepted:
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 5 Homework<br />
Please complete the following exercises from Chapter 11 of your textbook and post them in the Dropbox.<br />
Chapter 11: 4, 7, 17, and 29<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 6 Homework<br />
Please complete the following exercises from Chapters 12 and 13 of your textbook and post them in the Dropbox.<br />
Chapter 12: 3, 5, 6, and 15<br />
Chapter 13: 1<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Week 7 Homework<br />
Please complete the following exercises from Chapter 17 of your textbook and post them in the Dropbox.<br />
Chapter 17: 6, 7, and 14<br />
<strong>BUSN</strong> <strong>379</strong> <strong>DeVry</strong> Final Exam<br />
1. (TCO 4) Which of the following is true regarding the evaluation of projects?<br />
2. (TCO 4) Which of the following investment ranking methods does not consider the time value of money?<br />
3. (TCO 3 and 4) You can ensure that an investment is expected to create value for<br />
4. (TCO 3 and 4) What is the net present value of a project with the following cash flows, if the discount rate is 10<br />
percent?<br />
5. (TCO 4) Howard Company is considering a new project that will require an initial cash investment of $575,000.<br />
The project will produce no cash flows for the first three years. The projected cash flows for years 4 through 8 are<br />
$73,000, $112,000, $124,000, $136,000, and $145,000, respectively. How long will it take the firm to recover its initial<br />
investment in this project?<br />
6. (TCO 4) The postponement of a project until conditions are more favorable:<br />
7. (TCO 4) ___________, occurs when a firm cannot raise financing for a project under any circumstances.<br />
8. (TCO 4) ABC Cameras is considering an investment that will have a cost of $10,000 and the following cash flows:<br />
$6,000 in year 1, $4,000 in year 2 and $3,000 in year 3. Assume the cost of capital is 10%. Which of the following is<br />
true regarding this investment?<br />
9. (TCO 4) Assume Company X plans to invest $60,000 in industrial equipment. Using Tables 9.6 and 9.7 of your<br />
textbook (Page 277), which is the first year depreciation amount under MACRS?<br />
10. (TCO 1 and 4) Assume a corporation has earnings before depreciation, and taxes of $100,000, depreciation of<br />
$40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company?<br />
11. (TCO 8) Which of the following statements is true regarding systematic risk?<br />
12. (TCO 8) Which statement is true regarding risk?<br />
13. (TCO 8) The stock of Chocolate Galore is expected to produce the following returns, given the various states of<br />
the economy. What is the expected return on this stock?<br />
14. (TCO 8) You own a portfolio that consists of $8,000 in stock A, $4,600 in stock B, $13,000 in stock C, and $5,500<br />
in stock D. What is the portfolio weight of stock D?
15. (TCO 8) You currently own a portfolio valued at $24,000 that has a beta of 1.1. You have another $8,000 to invest,<br />
and would like to invest it in a manner such that the risk of the new portfolio matches that of the overall market. What<br />
does the beta of the new security have to be?<br />
1. (TCO 8) If the financial markets are strong form efficient, then:<br />
2. (TCO 5) Royal Petroleum Co. can buy a piece of equipment that can be financed with debt at a cost of 9 percent<br />
(after-tax) and common equity at a cost of 16 percent. Assume debt and common equity each represent 50 percent of<br />
the firm’s capital structure. What is the weighted average cost of capital?<br />
3. (TCO 5, 6 and 7) An issue of common stock is expected to pay a dividend of $4.80 at the end of the year. Its<br />
growth rate is equal to eight percent. If the required rate of return is 13 percent, what is its current price?<br />
4. (TCO 5, 6 and 7) Which of the following is not true regarding the cost of debt?<br />
5. (TCO 5) Which of the following is not true regarding the cost of retained earnings?<br />
6. (TCO 4) A project has the following cash flows. What is the internal rate of return?<br />
7. (TCO 5, 6 and 7) Which one of the following is a correct statement regarding a firm’s weighted average cost of<br />
capital (WACC)?<br />
8. (TCO 5, 6 and 7) The six percent preferred stock of FKH Manufacturing is selling for $62 a share. What is the<br />
firm’s cost of preferred stock, if the tax rate is 34 percent and the par value per share is $100?<br />
9. (TCO 2) Which one of the following occurs if a firm files for Chapter 7 bankruptcy, but does not generally occur if<br />
the firm files for Chapter 11 bankruptcy?<br />
10. (TCO 5) Which of the following statements is false regarding the cost of capital?<br />
11. (TCO 2) Select any actions that do not affect the cash account.<br />
12. (TCO 2) Which of the following statements is true?<br />
13. (TCO 2) Which one of the following industries is most apt to have the shortest cash cycle?<br />
14. (TCO 2) Delphinia’s has the following estimated quarterly sales for next year. The accounts receivable period is<br />
30 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has<br />
30 days.<br />
15. (TCO 1) Why is maximization of the current value per share a more appropriate financial management goal than<br />
profit maximization?<br />
16. (TCO 1) Provide three examples of recent well-known unethical behavior cases. Explain the situation in one or<br />
two paragraphs. How do you believe that this behavior affected the firm’s value?<br />
17. (TCO 4) What are sunk costs? Provide at least two real-life examples of sunk costs for a project. Should sunk<br />
costs be included as incremental cash flows? Why or why not? Explain your rationale.<br />
18. (TCO 8) What is the difference between business risk and financial risk? If Company A has a higher business<br />
risk than Company B, should its cost of capital be higher? Why or why not? Explain your rationale.<br />
19. (TCO 2) What are some important factors to consider when conducting a credit evaluation and scoring?<br />
20. (TCO 6 and 7) Do you believe that it is appropriate for some industries to be more leveraged than others?<br />
Explain your rationale.