Corporate finance

University of Puget Sound School of Business and Leadership BUS 434 Advanced Corporate Finance Professor Alva Wright Butcher Tues-Thurs 11:00-12:20 McIntyre 107 Spring Semester 2012 Office: McIntyre 111 I Phone: 253-879-3349 FAX: 253-879-3156 Office Hours: T-Th: 1:00-1:50 Wed: 9:30-10:30 And by appointment Note that I am always willing to schedule additional office hours by appointment. I check email frequently, so that is also a good

Solutions to Chapter 10 Introduction to Risk, Return, and the Opportunity Cost of Capital capital gain + dividend ($44 − $40) + $2 = = 0.15 = 15.0% initial share price $40 1. Rate of return = Dividend yield = dividend/initial share price = $2/$40 = 0.05 = 5% Capital gains yield = capital gain/initial share price = $4/$40 = 0.10 = 10% 2. Dividend yield = $2/$40 = 0.05 = 5% The dividend yield is unaffected; it is based on the initial price, not the final price. Capital gain = $36 – $40

ABC’s capital expenditures and its financing 9 2.3. Comparison of ABC’s capital structure with similar companies 10 2.4. Characteristics of the company influencing the leverage policy 11 2.4.1. Tax advantage 11 2.4.2. Corporate tax rate 11

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

/MiddSuppose that in the coming year, you expect Exxon-Mobil stick to have a volatility of 42% and a beta of 0.9, and Merck 's stock to have a volatility of 24% and a beta of 1.1. The risk free interest rate is 4% and the markets expected return is 12%. The cost of capital for a project with the same beta as Merck 's stock is closest to: . | d. 12.8% | E[R] = Rf + Beta × Risk Premium = .04 + 1.1 × (.12 - .04) = .128 | Which stock has the highest total risk? | c. Exxon-Mobil since it has

You work in the corporate finance Click Link Below To Buy: http://hwaid.com/shop/corporate-finance/ You work in the corporate finance division of The Home Depot and your boss has asked you to review the firm’s capital structure. Specifically, your boss is considering changing the firm’s debt level.Your boss remembers something from his MBA program about capital structure being irrelevant, but isn’t quite sure what that means. You know that capital structure is irrelevant under the conditions

decision. Hence, at the end of the week, students that were able to grasp the concept introduced in week’s one through week five were able to apply important financial tools learned thus far to analyze projects and explain the link between corporate strategy and finance, these students were able to recap the relationships between economic rent, market prices, competitive advantages and the NPV analysis in relation to capital budgeting activities (Allen, Brealey, & Myers, 2013; “Overview & Objectives”

Corporate Finance: An Introduction (Welch) Chapter 1 Introduction 1.1 The Goal of Finance: Relative Valuation 1) Which of the following statements is true? A) In finance, it is important to determine an asset 's absolute value. B) The relative value of any asset is, at best, a lucky guess. C) The true value of an asset is unaffected by externalities such as interest rate levels, the state of the economy, etc. D) Valuation is not an exact science

+ + + 10-2 Beta (market) risk refers to the project’s effect on the corporate beta coefficient. Within-firm (corporate) risk refers to the project’s effect on the stability of the firm’s earnings. Stand-alone risk refers to the inherent riskiness of the project’s expected returns when viewed alone. Theoretically, beta (market) risk is the most

•Chapter 1 INTRODUCTION TO CORPORATE FINANCE GOAL Today, corporate finance managers must make decision in a much more coordinated manner and generally has direct responsibilities for a control process. Because there are financial implications in virtually all segments of business, she/he must have sufficient knowledge of finance to work these implications into the area. At the end of this chapter, you should be able to: •