Midterm Preparation 3/2017 Dr. Sarina.

Slides:

Advertisements

Similar presentations

1 Chapter 10 Long-Term Liabilities Bonds Payable and other long-term debt are issued by a company to generate cash flow. Bonds Payable represent a promise.

Advertisements

Understanding Interest Rates »... Wasn’t it Ben Franklin who said that???? A fool and his Money are soon Partying!!!! 1 Copyright © 2014 Diane Scott Docking.

Chapter 5 – MBA5041 Bond and Stock Valuations Value Bonds Bond Concepts Present Value of Common Stocks Estimates of Parameters in the Dividend-Discount.

FI Corporate Finance Zinat Alam 1 FI3300 Corporation Finance – Chapter 9 Bond and Stock Valuation.

Cost of Capital Problems

Valuation and Rates of Return (Chapter 10)

Method 3: Pricing of Coupon Bond Pricing of coupon bond without knowing the yield to maturity.

McGraw-Hill/Irwin 14-1 © The McGraw-Hill Companies, Inc., 2005 Long-Term Liabilities Chapter 14.

1 © Copyrright Doug Hillman 2000 Long-term Liabilities.

Weighted Average Cost of Capital The market value of the firm is the present value of the cash flows generated by the firm’s assets: The cash flows generated.

Value of Bonds and Common Stocks

CHAPTER 9 The Cost of Capital

Weighted Average Cost of Capital

Discounted Cash Flow Valuation.  Be able to compute the future value of multiple cash flows  Be able to compute the present value of multiple cash flows.

Lecture 7: Measuring interest rate

John Joseph Thoppil Roll no:48.  The following applies to any financial asset : V = Current value of the asset C t = Expected future cash flow in period.

1 Calculating the Cost of Capital Three steps to calculate it: 1.Find the required rate of return on each kind of security the firm has issued 2.Find the.

Week 2 Seminar Principles of Corporate Finance Eighth Edition Chapter 2, 3, and 4 Adopted from slides by Matthew Will Copyright © 2006 by The McGraw-Hill.

Module 8 Reporting and Analyzing Nonowner Financing.

1 Valuing the Enterprise: Free Cash Flow Valuation Discount estimates of free cash flow that the firm will generate in the future. WACC: after-tax weighted.

Copyright © 2009 Pearson Prentice Hall. All rights reserved. Chapter 3 Stock and Bond Valuation: Annuities and Perpetuities.

NPV and the Time Value of Money

ACCT 201 ACCT 201 ACCT Reporting and Analyzing Long-Term Liabilities UAA – ACCT 201 Principles of Financial Accounting Dr. Fred Barbee Chapter 10.

Chapter 10 Accounting for Debt Transactions LOANS & BONDS.

Prepared by: C. Douglas Cloud Professor Emeritus of Accounting Pepperdine University Long-Term Liabilities: Bonds and Notes Chapter 12.

FINANCIAL ACCOUNTING A USER PERSPECTIVE Hoskin Fizzell Davidson Second Canadian Edition.

Accounting for Long Term Liabilities Ch 10 – Acc 1a.

Present Value Present value is the current value of a future sum.

©Cambridge Business Publishers, 2013 FINANCIAL STATEMENT ANALYSIS & VALUATION Third Edition Peter D. Mary LeaGregory A.Xiao-Jun EastonMcAnallySommersZhang.

Valuation and Rates of Return Chapter 10. Chapter 10 - Outline Valuation of Bonds Relationship Between Bond Prices and Yields Preferred Stock Valuation.

Principles of Bond and Stock Valuation Estimating value by discounting future cash flows.

Strategic Financial Management The Valuation of Long-Term Securities Khuram Raza ACMA, MS Finance Scholar.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.

Chapter 12 Long-Term Liabilities

Discounted cash flow; bond and stock valuation Chapter 4: problems 11, 19, 21, 25, 31, 35, 45, 51 Chapter 5: problems 4, 7, 9, 13, 16, 20, 22, 33.

8-1 Stocks and Their Valuation. 8-2 Cash Flows for Stockholders If you buy a share of stock, you can receive cash in two ways The company pays dividends.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved McGraw-Hill/Irwin Cost of Capital Cost of Capital - The return the firm’s.

Compound Interest Howard Godfrey, Ph.D., CPA Copyright © 2011, Dr. Howard Godfrey Edited August 3, 2011.

Stock Valuation. 2 Valuation The determination of what a stock is worth; the stock's intrinsic value If the price exceeds the valuation, buy the stock.

BUSINESS MATHEMATICS & STATISTICS. LECTURE 6 Review Lecture 5 Discount Simple and compound interest Average due date, interest on drawings and calendar.

Concept of Valuation Valuation of Different Types of Securities Calculation Of expected Market Value.

11. 2 chapter 42 Why shall we know the valuation of long-term securities? Make investment decisions Determine the value of the firm.

Value of a Financial Asset Pr. Zoubida SAMLAL. Value Book value: value of an asset as shown on a firm’s balance sheet; historical cost. Liquidation value:

Q1: lets assume if you invest $1000 today, you will receive $3000 in exactly 8 years. The compound interest rate implicit in this situation. What is the.

Time Value of Money and Discounted Cash Flows. Compounding: Finding a future value for a current cash flow.

Finance Questions Assignment Student’s Name Course Title: Course Code: Professor Name: Date:

Interest Rates Chapter 4. Interest Rate Defines the amount of money a borrower promises to pay a lender. –Mortgage rates, deposit rates, prime borrowing.

BUS 401 Week 4 Quiz Check this A+ tutorial guideline at NEW/BUS-401-Week-4-Quiz 1.) Investors will make an investment.

Managerial Finance Session 4c

Saba Soliman al-Mohawis

Questions-DCF and NPV.

CHAPTER 2 VALUE: THE CENTRAL IDEA

Chapter 13 Learning Objectives

Investments and Fair Value Accounting

Cost of Capital Chapter 15 Reem Alnuaim.

Securities valuation (Chapter 5&7)

Time value of money 1. You are able to pay mortgage payments of $800 a month for thirty years. The interest rate is 24 percent, compounded monthly. What.

Chapter 11 The Cost of Capital.

Review for Midterm Dr.Sarina.

Final Review FIN3701.

Finance Review Byers.

Chapter 14 Cost of Capital

Questions-Cost of Capital

Bonds Payable and Investments in Bonds

Chapter 8 The Cost of Capital.

ობლიგაციებისა და აქციების შეფასება

Long-Term Liabilities: Bonds and Notes

14 Direct and Yield Capitalization

Presentation transcript:

Midterm Preparation 3/2017 Dr. Sarina

1. Assume you are to receive a 20-year annuity with annual payments of $500. The first payment will be received at the beginning of Year 1, and the last payment will be received at the beginning of Year 20. You will invest each payment in an account that pays 5 percent. What will be the value in your account at the end of Year 30?

2. Calculate the present value of a perpetuity stream of cash flows that pays $200 starting at the end of Year 3 and the cash flows will grow at a rate of 10% per year indefinitely assuming the discount rate is 12%.

3. Suppose Peter needs to give some advice to his friend regarding the housing loan. His friend has obtained the offers from the following three banks. Bank X: Interest rate is 18.00% per year compound quarterly Bank Y: Interest rate is 19.25% per year compound annually Bank Z: Interest rate is 17.80% per year compound monthly Which bank offered the lowest interest effectively?

4. A potential buyer finds a piece of property that she believes is a good investment. She will need $100,000 mortgage to obtain the property. The lender informs her that such a mortgage will have a 10% interest rate, payable annually, and will be amortized over 30 years. How much is an annual loan payment for this mortgage?

5. From prior question, how much is the ending loan balance after the buyer makes payment for 25 years.

6. Suppose Ministry of Finance had issued bond named, TLOAN52/13/10Y, to pay the public debt in the amount of 25,000 million baht on 29 May, 2009 with maturity date on 29 May, 2019. The bonds carry a 3.875% coupon rate and pay interest semiannually. Assume the par value is 1,000 baht and investor’s required rate of return is 2.5% per year. What is the intrinsic value of this bond in baht on 29 May 2017?

7. What is the yield to maturity of the bond if the price is 1,016 7. What is the yield to maturity of the bond if the price is 1,016.86 baht on 29 May 2017?

8. Emerson’s preferred stock is selling at $54 on the market and pays an annual dividend of $4.20 per share. a. If an investor's required rate of return is 9%, what is the value of the stock for that investor? b. Considering the investor's required rate of return, does this stock seem to be a desirable investment?

9.

a. Calculate and evaluate the firm’s asset management efficiency ratios for 2016.

b. At the end of year 2016, firm has 1,200 shares of common stock outstanding, selling for $20 each. What were the firm’s EPS, P/E and market to book ratio?