FIN 515 NERD Education Planning--fin515nerd.com

FIN 515 Complete Project Financial Statement Analysis
(Nike)
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FIN 515 Week 2 Project Financial Statement Analysis (Nike)
FIN 515 Week 6 Project Calculating the Weighted Average Cost of
Capital (Nike)
FIN 515 Week 7 Project Capital Budgeting Analysis (Nike)
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FIN 515 Course Project 1 and 2
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This Tutorial contains
Week 3 Course Project (3 Sets)
Week 6 Course Project (2 Sets)
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FIN 515 Entire Course
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This tutorial doesnt contain Final Exam Guide
FIN 515 Week 1 DQ 1 Accounting Versus Finance

FIN 515 Week 1 DQ 2 Financial Analysis
FIN 515 Week 1 Quiz
FIN 515 Week 1 Quiz (New)
FIN 515 Week 1 Problem Set
FIN 515 Week 2 DQ 1 TVM Pass-a-Problem
FIN 515 Week 2 DQ 2 Assumptions of the TVM Model
FIN 515 Week 2 Quiz
FIN 515 Week 3 DQ 1 Examples of Capital Expenditure From Your
Industry
FIN 515 Week 3 DQ 2 Capital Budgeting Terms and Considerations
FIN 515 Week 3 Course Project 1 (3 Papers)
FIN 515 Week 3 Quiz
FIN 515 Week 4 DQ 1 Market Value of a Stock Versus DDM Value
FIN 515 Week 4 DQ 2 Differences in YTM of Real Life Bonds
FIN 515 Week 4 Midterm
FIN 515 Week 5 DQ 1 Calculating WACC for a Real Firm
FIN 515 Week 5 DQ 2 Finding Stock Values for Real Stocks Using
Beta and the SML
FIN 515 Week 5 problem Set
FIN 515 Week 5 Quiz

FIN 515 Week 6 DQ 1 Examples of Real Agency Problems and How
They Could Have Been Prevented
FIN 515 Week 6 DQ 2 The Role of Financial Managers in Ethical
Corporate Governance
FIN 515 Week 6 Course Project 2 (2 Different Projects)
FIN 515 Week 7 DQ 1 Industry Approaches to Working Capital
Financing
FIN 515 Week 7 DQ 2 Your Preference for Working Capital
Management Policy
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FIN 515 Final Exam (all 3 Sets)
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FIN 515 Final Exam Set 1
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1. (TCO A) In the United States, which of the following types of
organization has the greatest revenue in total? (Points : 5)
a. Sole proprietorship
b. C corporation
c. S corporation
d. Limited partnership
1.1) Which of the following is not a step in the WACC valuation
method?
A) Compute the value of the investment, including the tax benefit of
leverage, by discounting the free cash flow of the investment using
the WACC.
B) Compute the weighted average cost of capital.
C) Determine the free cash flow of the investment.
D) Adjust the WACC for the firm's current debt/equity ratio.
1. (TCO H) Zervos Inc. had the following data for 2008 (in millions).
The new CFO believes (a) that an improved inventory management
system could lower the average inventory by $4,000, (b) that
improvements in the credit department could reduce receivables by
$2,000, and (c) that the purchasing department could negotiate better
credit terms and thereby increase accounts payable by $2,000.
Furthermore, she thinks that these changes would not affect either
sales or the costs of goods sold. If these changes were made, by how
many days would the cash conversion cycle be lowered?

2. (TCO A) Sole proprietorships have all of the following advantages
except (Points : 5)
a. easy to set up.
b. single taxation of income.
c. limited liability.
d. ownership and control are not separated.
2. (TCO C) A firm buys on terms of 2/8, net 45 days, it does not take
discounts, and it actually pays after 58 days. What is the effective
annual percentage cost of its nonfree trade credit? (Use a 365-day
year.)
Question 2. 2. (TCO A) A sole proprietorship is owned by (Points : 5)
a. one person.
b. one or two people, but if there are two owners, they must be
married to each other.
c. up to 100 owners.
d. up to 64 owners.
3. (TCO B) Which of the following would cause the present value of
an annuity to decrease? (Points : 5)
a. Reducing the number of payments.
b. Increasing the number of payments.
c. Decreasing the interest rate.
d. Decreasing the liquidity of the payments.
3. Church Inc. is presently enjoying relatively high growth because of
a surge in the demand for its new product. Management expects
earnings and dividends to grow at a rate of 25% for the next 4 years,

after which competition will probably reduce the growth rate in
earnings and dividends to zero. The company’s last dividend, D0, was
$ 1.25, its beta is 1.20, the market risk premium is 5.50%, and the
risk-free rate is 3.00%. Which is the current price of the common
stock?
3. (TCO E) Your firm is planning to invest in a new power generation
system. Galt Industries is an all-equity firm that specializes in this
business. Suppose Galt’s equity beta is 0.75, the risk-free rate is 3%,
and the market risk premium is 6%. If your firm’s project is all equity
financed, then which is your estimate of your cost of capital closest
to?
4. (TCO B) In a TVM calculation, if incoming cash flows are
positive, outgoing cash flows must be (Points : 5)
a. positive.
b. negative.
c. either positive or negative. It really doesn’t matter.
d. stated in time units that are different from the time units in which
the interest rates are stated.
4. (TCO B)
You expect CCM Corporation to generate the following free cash
flows over the next 5 years.
Year
1
2
3
4

5
FCF ($ millions)
25
28
32
37
40
Following Year 5, you estimate that CCM’s free cash flows will grow
at 5% per year and that CCM’s weighted average cost of capital is
13%.
Which is the enterprise value of CCM Corporation closest to?
4. (TCO B)
You expect CCM Corporation to generate the following free cash
flows over the next 5 years.
Year 1 2 3 4 5
FCF ($ millions) 25 28 32 37 40
If CCM has $200 million of debt and 8 million shares of stock
outstanding, then which is the share price for CCM closest to?
Question 4. 4. (TCO B) Which of the following is an annuity due?
(Points : 5)
a. A typical car loan.
b. A typical mortgage.
c. A typical apartment rental agreement.
d. A credit card balance.

5. If you were a manager of a company, which of the three right side
components of the DuPont Identity would you want to increase and
which would you want to decrease, other things being equal? Give a
specific example for how to do that for each of the three. (Points : 20)
Question 5. 5. (TCO G) If net income, total assets, and book value of
equity stayed the same, what would be the effect on the DuPont
Identity of an increase in sales? (Points : 20)
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Question 1.1. (TCO A) Double taxation is a drawback for which of
the following types of business organization except?
Question 2.2. (TCO A) Sole proprietorships have all of the following
advantages except
Question 3.3. (TCO B) Which of the following would cause the
present value of an annuity to decrease?
Question 4.4. (TCO B) In a TVM calculation, if incoming cash flows
are positive, outgoing cash flows must be
Question 5.5. (TCO G) If net income, total assets, and book value of
equity stayed the same, what would be the effect on the DuPont
Identity of an increase in sales?
Question 6.6. (TCO D) A stock has just paid a dividend and will pay a
dividend of $3.00 in a year. The dividend will stay constant for the
rest of time. The return on equity for similar stocks is 14%. What is
P0?

Question 7.7. (TCO D) A stock has just declared an annual dividend
of $2.25 to be paid one year from today. The dividend is expected to
grow at a 7% annual rate. The return on equity for similar stocks is
12%. What is P0?
Question 8.8. (TCO D) A given bond has 5 years to maturity. It has a
face value of $1,000. It has a YTM of 6% and the coupons are paid
semiannually at a 10% annual rate. What does the bond currently sell
for?
The company has a cost of capital of 12%. Which should the
company do and why? You must use at least two capital budgeting
methods. Show your work.
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1. (TCO A) In the United States, which of the following types of
organization has the greatest revenue in total? (Points : 5)
Sole proprietorship
C corporation
S corporation
Limited partnership
Question 2.2. (TCO A) A sole proprietorship is owned by (Points : 5)
one person.
one or two people, but if there are two owners, they must be
married to each other.

up to 100 owners.
up to 64 owners.
Question 3.3. (TCO B) Which of the following would cause the
present value of an annuity to decrease? (Points : 5)
Reducing the number of payments.
Increasing the number of payments.
Decreasing the interest rate.
Decreasing the liquidity of the payments.
Question 4.4. (TCO B) In a TVM calculation, if incoming cash flows
are positive, outgoing cash flows must be (Points : 5)
positive.
negative.
either positive or negative. It really doesn’t matter.
stated in time units that are different from the time units in which
the interest rates are stated.
Question 14.14. (TCO F) A company has the opportunity to do any of
the projects for which the net cash flows per year are shown below.
Year A B C
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FIN 515 Midterm Exam All 3 Sets

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Question included in these Midterms could be found on this link
FIN 515 Midterm Exam Set 1 (New)
Link:http://www.fin515nerd.com/product-72-FIN-515-Midterm-
Exam-Set-1-(New)
Exam-Set-2-(New)
Link:http://www.fin515nerd.com/product-48-FIN-515-Week-4-
Midterm
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FIN 515 Midterm Exam All 3 Sets
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Question included in these Midterms could be found on this link
Exam-Set-1-(New)
Exam-Set-2-(New)

Link:http://www.fin515nerd.com/product-48-FIN-515-Week-4-
Midterm
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Question 1. 1. (TCO G) If Company A and Company B are in the
same industry and use the same production method, and Company
A’s asset turnover is higher than that of Company B, then all else
equal we can conclude (Points : 10)
Question 2. 2. (TCO G) If Moon Corporation has an increase in sales,
which of the following would result in no change in its EBIT margin?
(Points : 10)
Question 3. 3. (TCO B) If today you put $10,000 into an account
paying 10% annually, how much will there be in the account after 5
years? Show your work. (Points : 20)
Question 4. 4. (TCO B) You take out a 5 year car loan for $20,000.
The loan has a 5% annual interest rate. The payments are made
monthly. What are the monthly payments? Show your work. (Points :
20)
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Accounting Versus Finance (graded)
Much of the analysis done by financial managers is based on numbers
that are different from what would seem to the corresponding
numbers presented in the financial statements. This difference is not
due to any kind of cooking the books or other attempts to mislead
anyone. One example is the use of market value rather than historical
cost in the valuation of assets. What are some other examples of the
differences between financial management and financial accounting?
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Financial Analysis (graded)
In this discussion, we will be working with the variety of financial
analysis tools available to us. Let's start with the DuPont Identity
introduced in Chapter 2 of the text. For your initial post, locate the
financial statements for two firms in one industry. Calculate all four
terms of the DuPont Identity and present the results but do not
analyze the results. For an additional post, analyze the results that
another student has posted. If you were the appropriate financial
manager of one of the firms that you analyzed, what would be your
observations and recommendations?
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FIN 515 Week 1 Homework Problem

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Week 1
Mini Case
Assume that you recently graduated and have just reported to work as
an investment advisor at the brokerage firm of Balik and Kiefer Inc.
One of the firm’s clients is Michelle DellaTorre, a professional tennis
player who has just come to the United States from Chile. DellaTorre
is a highly ranked tennis player who would like to start a company to
produce and market apparel she designs. She also expects to invest
substantial amounts of money through Balik and Kiefer. DellaTorre is
very bright, and she would like to understand in general terms what
will happen to her money. Your boss has developed the following set
of questions you must answer to explain the U.S. financial system to
DellaTorre.Find the after-tax rates of return on all three securities.
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Chapter 1
The Corporation
1-1. What is the most important difference between a corporation
and all other organizational forms?
1-2. What does the phrase limited liability mean in a corporate
context?
1-3. Which organizational forms give their owners limited
liability?

1-4. What are the main advantages and disadvantages of
organizing a firm as a corporation?
1-5. Explain the difference between an S corporation and a C
corporation.
1-6. You are a shareholder in a C corporation. The corporation
earns $2 per share before taxes. Once it has paid taxes it will
distribute the rest of its earnings to you as a dividend. The corporate
tax rate is 40% and the personal tax rate on (both dividend and non-
dividend) income is 30%. How much is left for you after all taxes are
paid?
1-7. Repeat Problem 6 assuming the corporation is an S
corporation.
Chapter 2
Introduction to Financial Statement Analysis
2-8. In early 2009, General Electric (GE) had a book value of
equity of $105 billion, 10.5 billion shares outstanding, and a market
price of $10.80 per share. GE also had cash of $48 billion, and total
debt of $524 billion. Three years later, in early 2012, GE had a book
value of equity of $116 billion, 10.6 billion shares outstanding with a
market price of $17 per share, cash of $84 billion, and total debt of
$410 billion. Over this period, what was the change in GE’s:
a. Revenues
b. Earnings
c. Receivables
d. Inventory
e. Cash
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FIN 515 Week 1 Quiz (New)
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Question 1.
(TCO G) The lecture says that some ratios typically are better when
they are higher and some of the ratios are better when they are lower.
Pick a ratio for which a lower number typically would be preferred
and describe a situation, in which a higher number for that ratio would
be preferred, OR pick a ratio for which a higher number typically
would be preferred and describe a situation in which a lower number
for that ratio would be preferred.
Question 2.
(TCO G) As of December 31, 20XX, David Corp's accounts payable
were $4,000,000. Its accounts receivable were $2,200,000, and its
sales for 20XX were $32,000,000. What was its days sales
outstanding?
Question 3.
(TCO G) As of December 31, 2015, Michael Corp's current assets
were $2,000,000. Its current liabilities were $2,000,000.Its sales for
2015 were $50,000,000.As of December 31, 2016, Michael Corp's
current assets were $3,000,000.Its current liabilities were $3,000,000.
Its sales for 2016 were $65,000,000.Management has asked you to
comment on these numbers.
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FIN 515 Week 1 Quiz

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Question 1
(TCO G) Which do you think provides a more valid measure of how a
company is doing, comparison of current results with historical results
or comparison of current results with the current results of another
company?
Question 2
(TCO G) Barnes Corp’s total assets at the end of last year were
$415,000,000 and its net income after taxes was $17,750,000.What
was its return on total assets?
Question 3
(TCO G) Between December 31, 2016 and December 31, 2017, ROE
at Bobcat Industries decreased even though sales increased. Using the
DuPont Identity, explain what else could have happened to cause this.
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FIN 515 Week 1-7 DQs
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Industry

FIN 515 Week 3 DQ 2 Capital Budgeting Terms and Considerations
FIN 515 Week 4 DQ 1 Market Value of a Stock Versus DDM Value
FIN 515 Week 4 DQ 2 Differences in YTM of Real Life Bonds
FIN 515 Week 5 DQ 2 Finding Stock Values for Real Stocks Using
Beta and the SML
FIN 515 Week 6 DQ 1 Examples of Real Agency Problems and How
They Could Have Been Prevented
FIN 515 Week 6 DQ 2 The Role of Financial Managers in Ethical
Corporate Governance
FIN 515 Week 7 DQ 1 Industry Approaches to Working Capital
Financing
Management Policy
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TVM Pass-a-Problem (graded)
• This week, the lecture provided some examples of TVM
problem scenarios. For your first post, provide a story problem that
can be solved using one or more of the TVM calculations.
• Your second post can be a description of how the problem
posed by another student can be solved. Your professor may provide
an example.

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Assumptions of the TVM Model (graded)
What are some of the assumptions behind the TVM calculations?
How do these assumptions limit our application of these calculations?
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FIN 515 Week 2 Homework Problems
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(3-1)
Days Sales Outstanding
Greene Sisters has a DSO of 20 days. The company’s average daily
sales are $20,000. What is the level of its accounts receivable?
Assume there are 365 days in a year.
(3-2)
Debt Ratio
Vigo Vacations has an equity multiplier of 2.5. The company’s assets
are financed with some combination of long-term debt and common
equity. What is the company’s debtratio?

(3-3)
Market/Book Ratio
billion in total assets. Its balance sheet shows $1 billion in current
liabilities, $3 billion in long-term debt, and $6 billion in common
equity. It has 800 million shares of common stock outstanding. What
is Winston’s market/book ratio?
easy to work the problem with Excel, using procedures described in
theChapter 4 Tool Kit.)
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3.Calculate the future value of $2000 in
a. five years at an interest rate of 5% per year;
b. ten years at an interest rate of 5% per year; and
c. five years at an interest rate of 10% per year.
d. Why is the amount of interest earned in part (a) less than half the
amount of interest earned in part (b)?
4.What is the present value of $10,000 received
a. twelve years from today when the interest rate is 4% per year;
b. twenty years from today when the interest rate is 8% per year; and
c. six years from today when the interest rate is 2% per year?
5.Your brother has offered to give you either $5,000 today or $10,000
in 10 years. If the interest rate is 7% per year, which option is
preferable?
6.Consider the following alternatives.

i. $100 received in 1 year
ii. $200 received in 5 years
iii. $300 received in 10 years
a. Rank the alternatives from most valuable to least valuable if the
interest rate is 10% per year.
b. What is your ranking if the interest rate is only 5% per year?
c. What is your ranking if the interest rate is 20% per year?
The interest rate is 5%. How long must she live after the day she
retired to come out ahead (that is, to get more in value than what she
paid in)?Top of Form
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As the new financial manager of your company, the CEO has asked
your team to provide a brief analysis of the company’s performance to
present at the upcoming board of directors meeting. The CEO has
asked that you assess the company’s performance against your
company’s industry. Thus, to do this, you will need to use ratio
analysis or other techniques to determine areas in which the company
is doing well, as well as areas that management should look at.
Here are the steps for the project:
1. Select your teammate. Each team should be made up of two
members.
2. Determine which company you will analyze for the project.
Your selection may be subject to your professor’s approval. The
company that you select will likely be used for all four team projects.

As such, be sure that the company has debt on its balance sheet, as
this will be a requirement for future projects.
3. Go to the website for your company and download the 10-K
report for the most recent year.
f. Using Webex or Voicethread, prepare an oral presentation that
presents your PowerPoint presentation. Each team member must
participate in this presentation.
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FIN 515 Week 2 Quiz
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FIN 515 Week 2 Quiz
Question 1
(TCO B) You are a trust fund baby. Your trust fund is currently worth
$1,234,000. The problem is the terms of the trust don’t allow you to
receive any of the money until you are 27. You are now 21. The fund
is earning 7.7% per year. How much will the fund be worth when you
are 27 and too old to enjoy it?
Ignore taxes. Show your work. If you use Excel, show the formula
with the parameters, and the answer. If you use a formula, provide the
standard formula, the formula with terms substituted, and the answer.
If you use a calculator, show the inputs and the answer.
Question 2
(TCO B) You have a student loan of $75,000. The interest rate is
8.6% per year. You have been out of school for 6 months and are

If you use a calculator, show the inputs and the answer.
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FIN 515 Week 3 Course Project 1 (3 Papers)
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This Tutorial contains 3 Different Course Projects
First Course Project
The purpose of this project is to help you develop skills not only in
performing the calculations behind financial analysis but interpreting
the numbers as well.
You are to pick a company. You should pick one either from the
industry in which you are currently working or an industry in which
you are interested. You could also pick a division of a company. It is
imperative to use that sufficient data about your company and that it
is available. One way to do this is to pick a publicly held company. If
you pick a privately held company or a division of a company, make
sure that the data necessary to do a significant financial analysis is
available.
If you use data that is not publicly available, be sure to talk to your
manager and to make absolutely sure that revealing that data is not a
problem.
You will also need to find a standard against which to compare your
findings. This could be a different company in the same industry. This
could also be the same company at a different time. Additionally,
average or benchmark numbers are available for several industries.
•The purpose of your analysis is internal evaluation. Refrain from
using stock market valuation ratios.
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FIN 515 Week 3 DQ 1 Examples of Capital Expenditure
From Your Industry
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Industry (graded)
Describe a potential capital expenditure project from the industry in
which you now work or an industry in which you are interested. What
is the project? Describe and provide an approximate value of the
initial cash flow. Describe and provide an approximate value of the
annual cash flows. Provide an estimation of the life of the project, as
well as the exit costs.
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FIN 515 Week 3 DQ 2 Capital Budgeting Terms and
Considerations
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Capital Budgeting Terms and Considerations
Our textbook and lecture discuss some considerations that should be
taken into account when doing capital budgeting. How will these
considerations affect the project you described in the other topic?
Incremental earnings, interest expenses, taxes, opportunity costs,
externalities, sunk costs, cannibalization or erosion, depreciation, and
salvage value; as well as others.
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5-1
Bond Valuation with Annual payments
Jackson Corporation’s bonds have 12 years remaining to maturity.
Interest is paid annually, the bonds have a $1,000 par value, and the
coupon interest rate is 8%. The bonds have a yield to maturity of 9%.
What is the current market price of these bonds?
5-2
Yield to Maturity for Annual payments
Wilson Wonders’s bonds have 12 years remaining to maturity.
Interest is paid annually, the bonds have a $1,000 par value, and the
coupon interest rate is 10%. The bonds sell at a price of $850. What is
their yield to maturity?
5-6
Maturity Risk Premium
The real risk-free rate is 3%, and inflation is expected to be 3% for the
next 2 years. A 2-year Treasury security yields 6.3%. What is the
maturity risk premium for the 2-year security?
falls to 13%. The slope of the SML does not remain constant. How
would these changes affect ri?
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Week 3 Problem Set
1.
Your brother wants to borrow $10,000 from you. He has offered to
pay you back $12,000 in a year. If the cost of capital of this
investment opportunity is 10%, what is its NPV? Should you
undertake the investment opportunity? Calculate the IRR and use it to
determine the maximum deviation allowable in the cost of capital
estimate to leave the decision unchanged.
8.
You are considering an investment in a clothes distributor. The
company needs $100,000 today and expects to repay you $120,000 in
a year from now. What is the IRR of this investment opportunity?
Given the riskiness of the investment opportunity, your cost of capital
is 20%. What does the IRR rule say about whether you should invest?
19.
You are a real estate agent thinking of placing a sign advertising your
services at a local bus stop. The sign will cost $5,000 and will be
posted for one year. You expect that it will generate additional
revenue of $500 per month. What is the payback period?
If the company pays tax at a rate of 35% and the opportunity cost of
capital is 15%, what is the net present value of the decision to produce
the chains in-house instead of purchasing them from the supplier?
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Continuing with your Week 2 Project, now your CEO after reviewing
your earlier Week 2 PowerPoint submission has asked your team to
complete an additional benchmark analysis task, before the upcoming
Board Meeting. For this part of the project your team needs to do an
analysis of the market and operational characteristics of your
company and its financial profile. For this project, your team will
need to select four companies that are direct competitors of your
company. This sample selection should be based on revenue,
profitability, market capitalization, market segment and product
characteristics.
This project is an additional benchmark data analytics project. The
objective of this part of the project will be to do a comparative
financial analysis of your company with the averages of the sample of
four companies that will form your comparative group.
The project deliverables will be another PowerPoint presentation to
the CEO explaining the financial performance of your company
compared to the sample of four comparable companies. The analysis
should include the following deliverables:
1. An explanation of the logic of the selection of the four comparable
group companies. Why were these companies selected?
2.Your team’s data extraction strategy, process and methodology.
3. A financial comparison of your company to the average of the
comparator group on the following financial factors.
Each team member must participate in this presentation.
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FIN 515 Week 3 Quiz

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Company A has a beta of 2.77. Company B has a beta of .73.
Company C has a beta of .90. The risk free rate is 6% and the market
risk premium is 4%. What is the expected return of investing in
Company B?
stock portfolio consists of only two stocks. You have $15,000 in
Company A and $25,000 in Company B. Company A has an actual
return of -8% and Company B has a return of 12%. What is the return
on your portfolio?
A company has a capital structure of 40% debt and 60% equity. The
YTM on the company’s bonds is 9%, and the company’s effective tax
rate is 40%. The CFO has estimated the company’s WACC to be
9.96%. What is the company’s cost of equity?
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FIN 515 Week 4 DQ 1 Market Value of a Stock Versus
DDM Value
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Market Value of a Stock Versus DDM Value (graded)
Select a stock in which you are interested. Calculate its per share
value using the DDM or another method discussed in Chapter 9. Then
find the current market value of a share of the stock. Compare that
two. Can you explain the similarity or difference?
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FIN 515 Week 4 DQ 2 Differences in YTM of Real Life
Bonds

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Differences in YTM of Real Life Bonds (graded)
Do some research, probably on the Web, and find some bonds with
differing yields to maturity (YTM). How do you explain the
difference? Both the lecture and the textbook discuss some factors
that may lead to this difference.
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6-5). Expected Return: Discrete Distribution
A stock’s return has the following distribution:
(6-1). Portfolio Beta
Your investment club has only two stocks in its portfolio. $20,000 is
invested in a stock with a beta of 0.7, and $35,000 is invested in a
stock with a beta of 1.3. What is the portfolio’s beta?
(6-2). Required Rate of Return
AA Corporation’s stock has a beta of 0.8. The risk-free rate is 4% and
the expected return on the market is 12%. What is the required rate of
return on AA’s stock?
(6-7). Required Rate of Return

Suppose rRF=5%rRF=5%, rM=10%rM=10%, and rA=12%rA=12%.
Calculate Stock A’s beta.
If Stock A’s beta were 2.0, then what would be A’s new required rate
of return?
premium is 5.5%, and the return on an average stock in the market
last year was 15%. What is the estimated cost of common equity
using the CAPM?
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Question 1.
Question :
(TCO G) The firm's asset turnover measures
Question 2.
Question :
(TCO G) If Moon Corporation has an increase in sales, which of the
following would result in no change in its EBIT margin?
Question 3.
Question :
(TCO B) You plan on retiring in 20 years. You currently have
$275,000 and think you will need $1,000,000 to retire. Assuming you
don’t deposit any additional money into the account, what annual
return will you need to earn to meet this goal?
Question 4.
Question :

You must use at least two capital budgeting methods. Show your
work.
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Bonds-1. Interest on a certain issue of bonds is paid annually with a
coupon rate of 8%. The bonds have a par value of $1,000. The yield
to maturity is 9%. What is the current market piece of these bonds?
The bonds will mature in 5 years.
Bonds-2. A certain bond has 12 years left to maturity. Interest is paid
annually at a coupon rate of 10%. The bonds are currently selling for
$850. What is their YTM?
Bonds-3. A certain bond pays a semiannual coupon rate at a 10%
annual rate. The bond has a par value of $1,000. There are eight years
to maturity. The yield to maturity is 9%. What is the current price of
the bond?
Bonds-4. A particular corporate bond has a par value of $1,000.
Coupon payments are $40 and are paid twice a year. Seven years are
left on the life of the bond.The YTM is 9%. What is the price of the
bond?
Bond-5. A given bond has 5 years to maturity. It has a face value of
$1,000. It has a YTM of 5% and the coupons are paid semiannually at
a 10% annual rate. What does the bond currently sell for?
The yield to maturity is 9%. What is the current price of the bond?
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Calculating WACC for a Real Firm (graded)
The Weighted Average Cost of Capital (WACC) for a firm can be
calculated or found through research. Select two firms in the same
industry. The industry may be that in which you currently work or it
may be an industry in which you are interested. Calculate or find the
WACC for the two firms. How do the WACCs compare? Are the
WACCs what you would expect? What causes the differences
between the two firms' WACCs?
==============================================
FIN 515 Week 5 DQ 2 Finding Stock Values for Real
Stocks Using Beta and the SML
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Finding Stock Values for Real Stocks Using Beta and the SML
(graded)
Our second discussion topic concerns the calculation of stock values
using the Capital Asset Pricing Model (CAPM). We will start with a
discussion of risk and work towards practical application of the
model. The textbook provides a list of betas for a selection of stocks.
Choose a few firms from that list and discuss whether the betas are
what you would expect. Be sure to explain why or why not.
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10-8)
NPVs, IRRs, and MIRRs for Independent Projects
Edelman Engineering is considering including two pieces of
equipment, a truck and an overhead pulley system, in this year’s
capital budget. The projects are independent. The cash outlay for the
truck is $17,100 and that for the pulley system is $22,430. The firm’s
cost of capital is 14%. After-tax cash flows, including depreciation,
are as follows:
airline for $5 million, and its tax rate is 40%. What is the equipment’s
after-tax net salvage value?
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FIN 515 Week 5 problem Set
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Chapter 10 (pages 345–348):
4.
You bought a stock one year ago for $50 per share and sold it today
for $55 per share. It paid a $1 per share dividend today.
a. What was your realized return?
b. How much of the return came from dividend yield and how
much came from capital gain?

20.
Consider two local banks. Bank A has 100 loans outstanding, each for
$1 million, that it expects will be repaid today. Each loan has a 5%
probability of default, in which case the bank is not repaid anything.
The chance of default is independent across all the loans. Bank B has
only one loan of $100 million outstanding, which it also expects will
be repaid today. It also has a 5% probability of not being repaid.
Explain the difference between the type of risk each bank faces.
Which bank faces less risk? Why?
If its corporate tax rate is 40%, what is your estimate of its WACC?
==============================================
FIN 515 Week 5 Quiz
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Question 1
(TCO C) Company A has a beta of 2.77. Company B has a beta of
.73. Company C has a beta of .90. The risk free rate is 6% and the
market risk premium is 4%. What is the expected return of investing
in Company B? Show your work.
Question 2.
(TCO C) Your stock portfolio consists of only two stocks. You have
$30,000 in Company A and $35,000 in Company B. Company A has
an actual return of -8% and Company B has a return of 12%. What is
the return on your portfolio? Show your work.
Question 3.
(TCO E) A company has a capital structure of 40% debt and 60%
equity. The YTM on the company’s bonds is 9%, and the company’s
effective tax rate is 40%. The CFO has estimated the company’s
WACC to be 9.96%. What is the company’s cost of equity? Show
your work.
==============================================

FIN 515 Week 6 Course Project 2 (2 Different Projects)
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This Tutorial contains 2 Different Course Projects
Second Project
The purpose of this project is for you to have some practice working
with financial concepts in the real world. This will involve integrating
some material from throughout the course. The project will also
involve the development of your own approach to doing the work.
The project does not provide a step-by-step procedure for you to
follow.
Your task is to determine the WACC for a given firm using what you
know about WACC as well as data you can find through research.
Your deliverable is to be a brief report in which you state your
determination of WACC, describe and justify how you determined the
number, and provide relevant information as to the sources of your
data.
Assumptions
As you recall, the formula for WACC is
rWACC = (E/E+D) rE + D/(E+D) rD (1-TC)
The formula for the required return on a given equity investment is
ri= rf + βi * (RMkt-rf)
RMkt-rf is the Market Risk Premium. For this project, you may
assume the Market Risk Premium is 4% unless you can develop a
better number.
rf is the risk free rate. The YTM on 10 year US Treasury securities is
a good approximation.
What were the limiting assumptions that you made, if any.
==============================================

FIN 515 Week 6 DQ 1 Examples of Real Agency Problems
and How They Could Have Been Prevented
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Examples of Real Agency Problems and How They Could Have Been
Prevented (graded)
Do some research and find some historical or current real life
examples of agency problems. Will the measures discussed in the text
help to prevent problems like your examples in the future? What else
would you advise? You may provide examples of agency problems
from your own experience. If you do that, be careful to provide
enough anonymity that you won't get in trouble.
==============================================
FIN 515 Week 6 DQ 2 The Role of Financial Managers in
Ethical Corporate Governance
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The Role of Financial Managers in Ethical Corporate Governance
(graded)
Does the financial manager have a greater responsibility or a lesser
responsibility for maintaining ethical corporate governance? Why or
why not? What is or will be your approach to ethical corporate
governance now or in the future?
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Week 6
12–1)
AFN Equation
Baxter Video Products’s sales are expected to increase by 20% from
$5 million in 2010 to $6 million in 2011. Its assets totaled $3 million
at the end of 2010. Baxter is already at full capacity, so its assets must
grow at the same rate as projected sales. At the end of 2010, current
liabilities were $1 million, consisting of $250,000 of accounts
payable, $500,000 of notes payable, and $250,000 of accruals. The
after tax profit margin is forecasted to be 5%, and the forecasted
payout ratio is 70%. Use the AFN equation to forecast Baxter’s
additional funds needed for the coming year.
(13-2)
Value of Operations of Constant Growth Firm
EMC Corporation has never paid a dividend. Its current free cash
flow of $400,000 is expected to grow at a constant rate of 5%. The
weighted average cost of capital is WACC = 12%. Calculate EMC’s
value of operations.What is its intrinsic MVA? (Hint: UseEquation
13-5.)
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Chapter 29 (pages 983-984):
1.What inherent characteristic of corporations creates the need for a
system of checks on manager behavior?
2. What are some examples of agency problems?
3.What are the advantages and disadvantages of the corporate
organizational structure?
1.What inherent characteristic of corporations creates the need for a
system of checks on manager behavior?
2.What are some examples of agency problems?
3.What are the advantages and disadvantages of the corporate
organizational structure?
Managing Agency Conflict
4.Suppose Goodyear Tire and Rubber Company is considering
divesting one of its manufacturing plants. The plant is expected to
generate free cash flows of $1.5 million per year, growing at a rate of
2.5% per year. Goodyear has an equity cost of capital of 8.5%, a debt
cost of capital of 7%, a marginal corporate tax rate of 35%, and a
debt-equity ratio of 2.6. If the plant has average risk and Goodyear
plans to maintain a constant debt-equity ratio, what after-tax amount
must it receive for the plant for the divestiture to be profitable?
What is the average cash gain or (loss) during a typical month for the
Chadmark Corporation?
==============================================
FIN 515 Week 6 Project Calculating the Weighted Average
Cost of Capital (Nike)

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Once again, your team is the key financial management team for your
company. The company’s CEO is now looking to expand its
operations by investing in new property, plant, and equipment. In
order to effectively evaluate the project’s effectiveness, you have
been asked to determine the firm’s weighted average cost of capital.
To determine the cost of capital, here is what you have been asked to
do.
1. Go to Yahoo Finance (http://finance.yahoo.com) and capture the
income statement information for the company you selected. (Be sure
that your company has debt on their balance sheet. This will be
required in your project.)
a. Enter your company’s name or ticker symbol. Your company’s
information should appear.
b. Click on the Financials tab, and select the income statement option.
Three years’ worth of income statements should appear. Copy and
paste this data into a spreadsheet.
overall validity of your results. Both members of the team must be
part of the narration in the presentation.
==============================================
FIN 515 Week 7 DQ 1 Industry Approaches to Working
Capital Financing
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Industry Approaches to Working Capital Financing (graded)
Do some research on two firms in your industry or an industry in
which you are interested. Can you get an idea of their working capital
management policies from publicly available information? How do

the two companies differ in their apparent working capital
management policies? Which policy do you think is better and why?
==============================================
Management Policy
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Your Preference for Working Capital Management Policy (graded)
Consider the company you work for or a company in which you are
interested. Also, do some research to find some current cost estimates
for various means of financing working capital. What would be your
recommendation to the company for financing its working capital
needs? If the information is publicly available, or if you have access
to it AND have permission to discuss it, how does your
recommendation compare what the firm is actually doing?
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Week 7
(16-1)
Cash Management

Williams & Sons last year reported sales of $10 million and an
inventory turnover ratio of 2. The company is now adopting a new
inventory system. If the new system is able to reduce the firm’s
inventory level and increase the firm’s inventory turnover ratio to 5
while maintaining the same level of sales, how much cash will be
freed up?
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Chapter 26 (page 903):
1. Answer the following questions:
a. What is the difference between a firm’s cash cycle and its operating
cycle?
2. How will a firm’s cash cycle be affected if a firm increases its
inventory, all else being equal?
2. How will a firm’s cash cycle be affected if a firm begins to take
the discounts offered by its suppliers, all else being equal?
4.The Greek Connection had sales of $32 million in 2012, and a cost
of goods sold of $20 million. A simplified balance sheet for the firm
appears below:
which months are the firm’s seasonal working capital needs the
greatest? When does it have surplus cash?
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FIN 515 Week 7 Project Capital Budgeting Analysis (Nike)

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Once again, your team is the key financial management team for your
company. The company’s CEO is now looking to expand its
operations by investing in new property, plant, and equipment. Your
team recently calculated the WACC for your company, which will
now be useful in evaluating the project’s effectiveness. You are now
asked to do some capital budgeting analysis that will determine
whether the company should invest in these new plant assets.
The parameters for this project are:
Your team will be using the same company for this project that you
used in the Week 6 project. The company is now looking to expand
its operations and wants you to do some analysis using key capital
budgeting tools to do this. The parameters for this project are as
follows.
The firm is looking to expand its operations by 10% of the firm’s net
property, plant, and equipment. (Calculate this amount by taking 10%
of the property, plant, and equipment figure that appears on the firm’s
balance sheet.)
Once again, you may embed your Excel spreadsheets into your
document. Be sure to follow APA standards for this project.
==============================================

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