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Corporate Finance Name ______________________________




Question;Corporate Finance Name;Answer each of the following in the space provided. Be sure to show your work.;1.;You have your savings invested in an FDIC insured;account (Account A) that pays a nominal rate of 3.00% with interest compounded;monthly. You are considering moving your;savings to another FDIC insured account (Account B) that offers a nominal rate;of 3.10%, but with interest compounded daily.;Determine which account you should use for your investment.;2.;Two years ago, Steven Industries issued 20-year, $1,000;Par Value bonds with 6% coupon rate with interest paid semiannually. At origination, the bonds had a five year;call provision with a $100 premium.;Boxer?s cost of debt for these bonds has fallen to 4%. What is the price of one of their bonds?;3.;Harris, Inc. has $5 billion in assets and its tax rate;is 40%. Its basic earning power ratio is;10%, and its return on assets is 5%.;What is Harris?s times-interest-earned ratio?;4.;Consider two mutually exclusive projects, C & H;with the following cash flows. The IRR;for project C is 14.05%, the IRR for project H is 15.97%, and both projects;would have the same NPV if the required rate of return was 22.62%. Determine the range of interest rates in;which you would choose project C, the range of interest rates in which you;would choose project H, and the range of interest rates for which you would;reject both project.;Time;0;1;2;3;CFC;($175);$85;$75;$70;CFH;($200);$70;$80;$125;5.;Masters Mining is considering the purchase of some new;equipment that will expand their business.;The revenues and expenditures associated with that expansion are listed;below (negative numbers in parentheses).;Find the Net Present Value of this expansion project and indicate;whether you advise Miller to adopt the project.;Time;0;1;2;3;Equipment;($1,200,000);Installation;($50,000);DNWC;($80,000);Sales;$1,370,000;$1,450,000;$1,554,000;- non-depreciable Costs;($900,000);($912,000);($944,000);- Depreciation & Amortization;($412,500);($562,500);($187,500);-Tax;($20,126);$8,576;($147,876);Salvage;$290,000;- Capital Gains Tax;($70,876);ReturnDNWC;$80,000;Cash Flow;WACC;12.00%;NPV;Adopt or Reject?;Formula;Sheet;V0;= Vt x 1/(1+r)t;VB;=S (INT/m) x;1/(1+rd/m)t +;M/(1+rd/m)nm;= Vt x PVIFr,t;Gordon;Model: P0 = D1/(rs-g);Generalized;DCF;SML: rs;= rRF +bs x (rM - rRF);V0;=S Vt;x 1/(1+r)t;EAR = (1 + rnom/m)m;- 1;Annuity;FCF = EBIT x (1-T) + Depreciation;V0;= AS1/(1+r)t;- Capital Expenditures;= A x PVIFAr,t;-D;Net Working Capital;EPS = (EBIT-I)*(1-T)/Shares Outstanding;IRR: S;CFt/(1+IRR)t = 0;mean;return,m =S;pi ri;Portfolio;beta,bport =S wibi;return;variances2 =S pi (ri-m)2;Inventory Turnover;Current Ratio;Sales;Current Assets;Average Inventory;Current Liabilities;Inventory;Conversion;DSO;Average Inventory;Receivables;Daily Sales;Annual Sales/365;Fixed Asset;Turnover;Payables Deferral;Period;Sales;Accounts Payable;Net fixed assets;Daily COGS;Debt to Assets;Total Asset;Turnover;Total Debt;Sales;Total Assets;Total Assets;EBITDA Coverage;TIE;EBITDA + Lease;payments;Earnings before;interest and taxes;Interest +;Principal payments + Lease Payments;Interest Charges;BEP;Profit Margin on;Sales;Earnings before;interest and taxes;Net income;avaliable to common stockholders;Total Assets;Sales;ROE;ROA;Net income;avaliable to common stockholders;Net income;avaliable to common stockholders;Common Equity;Total assets;P/E;WACC;= wd * rd*(1-T) + wps*rps+wc*(rs;or re);Price per share;Pps=;Div/rps;Earnings per share


Paper#48432 | Written in 18-Jul-2015

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