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# The Discounted Cash Flows Model

### Arbitrage and Value of Money Problem

Please see the attachment. Suppose your firm receives a \$5 million order on the last day of the year. You fill the order with \$2million worth of inventory. Customer picks up entire order the same day and pays \$1million upfront in cash; you also issue a bill for the customer to pay the remaining balance of \$4million within 30 da

### Roles of a Finance Department

(1) What role does a finance department play in valuing business opportunities (both internal such as projects and external such as acquisitions)? (2) How might a division manager form a good working relationship with and utilize the talents of the CFO, treasurer and controller for this assignment to include in-text citations an

### Research an equation/formula that you use, rely on, or hear about in your everyday world (i.e., weather forecast, stock market predictions)...

Research an equation/formula that you use, rely on, or hear about in your everyday world (i.e., weather forecast, stock market predictions). Describe common uses of the formula or equation that you are exposed to. Are these always right? Why or why not?

### Monetary Return

You invest \$100 (at time 0) and expect to receive \$115 in cash in one year. Your required return is 9 percent. a) Calculate the value of your investment at time 0 using discounted cash flow techniques. b) Calculate the value of your investment using residual earnings techniques c) Suppose that your accountant demanded that

### Toyota Capital Valuation: Justifying Current Market

Justify the current market price of the organization's equity, if any, using various capital valuation models. Show calculations that support your findings, including those involving rates of return Organization is Toyota and here is the link. http://www.toyota.co.jp/en/ir/library/annual/pdf/2009/index.html.

### Interest Rate to Fund a College Education in 18 Years

1) You expect your newly born child to attend college in 18 years. You have \$12,000 to set aside for that purpose. You also expect that the total cost of college education to be \$100,000 by that time. Calculate the interest rate at which you have to invest today to achieve your goal. SHOW CALCULATIONS AND WHAT NUMBERS GO IN

### 20 multi choice: Pricing methods, objectives, relevant range, markup percent, market

The pricing objective of maximizing profits: 1 has not been affected by other, more socially focused concerns. 2 is to be implemented under any and all circumstances. 3 has not always been considered the underlying objective of any pricing policy. 4 must be considered when determining the price

### New York Times potential acquisition target for Google: What are the issues?

The New York Times potential acquisition target for Google, new possible investment item, what problems are you going to have in estimating the cash flow that might be emanating from the initial investment and problems in getting it funded? Issues might be: ? Risk ? Cost ? Politics (getting it through committees) ? Publ

### Present Value, Amortization with Equal Principal Payments,

Your company will generate \$65,000 in cash flow each year for the next 10 years from a new information database. The computer system needed to set up the database costs \$307,000. (Round your answer to 2 decimal places. Omit the "\$" sign in your response.) 1) If you can borrow the money to buy the computer system at 8.25 perce

### Which one of the following statements about the discounted payback method is true?

Which one of the following statements about the discounted payback method is true? A) The discounted payback technique tends to favor longer term projects over shorter term projects B) The discounted payback period method completely ignores cash flows that occur after the initial investment has been recouped C) The discount

### Accounting: Finance Analysis

Recalculate the forecasts in Table 8-4 assuming that the NOPAT profit margin is held steady for the first five years of the forecast and then declines by 0.1 percentage points per year thereafter (keeping all the other assumptions unchanged). Show all calculations and provide an interpretation. (See attached Excel file for Ta

### Stock Valuation: Declining and Constant Growth Stock

PREFERRED STOCK VALUATION Fee Founders has perpetual preferred stock outstanding that sells for \$60 a share and pays a dividend of \$5 at the end of each year. What is the required rate of return? PREFERRED STOCK VALUATION Ezzell Corporation issued perpetual preferred stock with a 10% annual dividend. The stock currently y

### TCM Petroleum: Calculate free cash flow; estimate future FCF based on assumptions

Problem #1 TCM Petroleum is an integrated oil company headquartered in Fort Worth, Texas. The following are the information on its income statements for 2007 and 2008 (all dollar figures are in millions): 2007 Sales: \$12,200.00, cost of goods sold: 72% of sales, depreciation: \$850.00, additional CAPEX: \$900.00, addition

### Discount terms; price and YTM of bond; prepare financial statements, Nina's first year

1) A firm offers terms of 2/15, net 48. What effective annual interest rate does the firm earn when a customer does not take the discount? 2) What is the Current Price and Yield to Maturity of a 8% semi-annual coupon bond if it has a current yield of 9.3% and matures in 10 years? 3) Use the following list of accounts and

### What are three key inputs to the valuation model?

What are three key inputs to the valuation model? How would you determine the valuation of an asset? How would the intrinsic value differ from the market value? Explain your answer.

### Sinclair Company equipment replacement: evaluate options using TVM calculations

See attached file.

### Finance: MPV, IRR, MIRR, Payback Period, Discounted Payback

Project K costs \$52,125, its expected net cash inflows are \$12,000 per year for 8 years, and its WACC is 12%. a) What's the project's NPV? b) What's the project's IRR? c) What's the project's MIRR? d) What's the project's payback? e) What's the project's discounted payback?

### Calculating a Present Value Problem

Please help answer the following problems. A. Find the present values of the following cash flow streams at 8% compounded annually. 0 1 2 3 4 5 ------------------------------------------------ Stream A \$0 \$100 \$400 \$400 \$400 \$300 Stream B \$0 \$300 \$400 \$400

### Effect of Debt Transactions

The three typical accounting events associated with borrowing money through a bond issue are: 1. Exchanging the bonds for cash on the day of issue. 2. Making cash payments for interest expense and recording amortization when applicable. 3. Repaying the principal at maturity. Required A. Assuming the bonds are issued a

### Calculate Free Cash Flows and Incremental Debt for Project

Anderson & Company plans to make a \$50 million investment, initially funded completely with debt. The free cash flows of the investment and Anderson & Company's incremental debt from the project are shown below (see the attachment).

### Financial Management: IBM Stock Analysis

NOTE: Please follow the instructions; I must use the specific instructions that I attached as well as "current market data." MS Word document has actual assignment. MS PowerPoint has specific instructions: note the updated figure I placed on slide #1 for 10 year treasury is current (9 sep 09) PDF has IBM's stock data you are

### Performing discounted cash flow analysis

When performing discounted cash flow analysis, what costs are disregarded? Why? What error(s) occur if these costs are included in the analysis? Please properly cite your references. Thanks.

### Revenue Recognition for Brooke Bennett Marina for slip rental for boats. Prepare journal entries for revenue.

1. Brooke Bennett Marina has 300 available slips that rent for \$900 per season. Payments must be made in full at the start of the boating season, April 1, 2008. Slips for the next season may be reserved if paid for by December 31, 2008. Under a new policy, if payment is made by December 31, 2008, a 5% discount is allowed. The bo

### JP Morgan Chase Stock

Provide a buy or sell recommendation and an estimated price target. Should include the following 5 sections: 1) Background of the company with a life cycle analysis 2) Analysis of Return on Equity 3) The company's future growth rate of earnings 4) Analysis of its required rate of return using the CAPM 5) Intrinsic v

### Wal-Mart: Cost of Equity, WACC, Unlevered Cost of Equity, & Beta

Estimate the cost of equity, WACC, and unlevered cost of equity for Wal-Mart, Incorporated (NYSE: WMT). Find the beta for Wal-Mart and: 1. Estimate Wal-Mart's cost of equity. 2. Estimate Wal-Mart's weighted-average cost of capital (WACC). 3. Estimate Wal-Mart's unlevered cost of equity.

### MBA finance: Compute the current price of Klein's stock given constant rate and ROE

The last dividend paid by Klien Company was \$1.00. Klein's growth rate is expected to be a constant 4%. Klein's required rate of return on equity( Ks) is 12%. What is the current price of Klein's common stock?.

### Finding the Current Price of XYZ's Common Stock

The last dividend paid by XYZ Company was \$1.00. XYZs growth rate is expected to be a constant 5%. XYZ's required rate of return on equity (ks) is 10%. What is the current price of XYZ's common stock?

### Interest Rate Swap for Fixed Payment Side

There is a 2 year swap contract (fix to float) signed on the swap rate of 5%; Interest will be exchanged every half year. Now suppose the swap contract start from now on and the current zero rates are in the table below. Calculate how much the swap value right now for the fixed payment side. Maturity(Yrs) Zero Rate(Continuo

### Investments: Expected return, volatility, beta and risk premium, PV of cash flow, hedge

1. Compute the expected return and volatility of return for a portfolio that has a portfolio share of 0.9 in the S&P 500 and 0.1 in an emerging market index. The S&P 500 has a volatility of return of 15 percent and an expected return of 12 percent. The emerging market has a return volatility of 30 percent and an expected return

### Present Value of Expected Future Savings

At the end of 2005, Uma Corporation was considering undertaking a major long-term project in an effort to remain competitive in its industry. The production and sales departments determined the potential annual cash flow savings that could accrue to he firm if it acts soon. Specifically, they estimate that a mixed stream of fu