HFT 4464 Exam 3 Review

This Exam Covers the Following Topics Chapter 8:Cost of Capital Chapter 9:Capital Budgeting Chapter 10:Capital Budgeting Methods 30 Multiple Choice Questions Total 15 are vocabulary oriented

Chapter 8 Solve problems for Cost of Capital –Cost of Debt –After Tax Cost of Debt –Cost of Preferred Stock –Cost of Internal Equity –Cost of External Equity –Weighted Average Cost of Capital –See Worksheet Problem from Chapter 8

Chapter 9 Calculate Net Investment for a Project Calculate Net Cash Flows for a Project Similar to Chapter 9, Problem 10 a. & b. –Know difference in opportunity & sunk costs

Chapter 10 Capital Budgeting Problems for the Following Methods –Payback period –Discounted payback period –Net present value –Profitability index –Internal rate of return –Modified internal rate of return Refer to handout sample problem

Other Notes: You must provide your own Scantron –Brown form You must provide your own calculator Formula sheet will be provided Present & future value tables will be provided Scratch paper will be provided Questions?