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Finance Intermediate Essay

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Below is an essay on "Finance Intermediate" from Anti Essays, your source for research papers, essays, and term paper examples.

Name:_____________________ FIN311   Sample EXAM #2 and Answer
Instructions:
1. Write name on top of this page and next page.
2. This is a closed-book and closed-note exam.   Show all work for problems.

Formulas given at the exam:
(1). present value and future value of a lump sum:

(2). PV of Perpetuity =  
(3). PV of Ordinary Annuity   = =
(4). PV of Annuity   Due =
(5).       Capital Asset Pricing Model (CAPM):
E(Ri) = Rf + i[E(Rm) - Rf]
(6) Dupont model:
ROE = Profit Margin (PM)   Asset Utilization (AU)   Equity Multiplier (EM),
=
(7). common stock that pays dividend at a constant growth rate:
    r =
coupon bond: P0 = {Interest per period
Preferred stock: P0 =Div/r
(8)WACC =
(9)
IRR:
MIRR: PV of cost =
Profitability Index = PV of cash inflows / PV of cash outflows
EAC (Equivalent Annual Cash Flow) =
(10) Project After-tax Cash Flows = Operating cash flows – Increases in NWC – Net capital Spending,
where Operating cash flows = EBIT + Depreciation – Taxes  
=(Sales - Costs) × (1-Tc) + Depreciation × Tc

FIN311 Name:_____________
Prof. Lin Guo                                             Sample Exam #2

1. You know the following information about Ameritool Corporation.
  * Ameritool is 70% debt financed, and 30% equity financed.
  * Ameritool Corp's common stock will pay dividend $2.5 per share next year.   The dividend is expected to grow at 2% per year.   The common stock price is $30 per share.  
  * Ameritool’s bond sells for 102% of par (par value=$1000), and has 10 years to maturity. The bond is paying interest annually and has a coupon rate 8%. Ameritool’s tax rate is 40%.

  (a) Calculate the cost of equity and cost of debt for Ameritool Corp.

  (b) Calculate the weighted average cost of capital (WACC) for Ameritool Corp.

(c) Ameritool is considering a project which has the same risk as the firm's typical project, and the new project has IRR...

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Finance Intermediate. Anti Essays. Retrieved December 10, 2018, from the World Wide Web: http://snehaedu.com/free-essays/Finance-Intermediate-547635.html