公司財(cái)務(wù)管理練習(xí)題

1、Question 1 The following cash flows streams need to be analyzed End of year 1 2 3 4 5 W $100 $200 $200 $300 $300 X 600 - - - - Y - - - - 1200 Z 200 - 500 - 300 a. Calculate the future value of each stream at the end of year 5 with a compound annual interest rate of 10%(equation 4.3 on P89) b. Comput

2、e the present value of each stream if the discount rate is 14% (equation 4.4 on the same page)Question 2 Muffin Megabucks is considering two different savings plans. The first plan would have her deposit $500 every six months, and she would receive interest at a 7% percent annual rate, compounded se

3、miannually. Under the second plan she would deposit $1000 every year with a rate of interest of 7.5% percent, compounded annually. The initial deposit with Plan 1 would be made six months from now and, with plan2, one year hence. a. What is the future value of the first plan at the end of 10 years?

4、b. What is the future value of the second plan at the end of 10 years? c. What plan should Muffin use, assuming that her only concern is with the value of her savings at the end of 10years? d. Would your answer change if the rate of interest on the second plan were 7 percent?Question 3 On a contract

5、 you have a choice of receiving $25000 six years from now or $500000 twelve years from now. at which compound annual interest rate should your be indifferent between the two contracts?Question 4 Emerson Cammack wishes to purchase an annuity contract that will pay him $7000 a year for the rest of his

6、 life. The Philo life insurance Company figures that his life expectancy is 20 years, based on its actuary tables. The company imputes a compound annual interest rate at 6 percent in its annuity contracts. a. How much will Cammack have to pay for the annuity? b. How much would he have to pay if inte

7、rest?Question 5 You borrow $10000 at 14%compound annual interest for four years. The loan is repayable in four equal annual installments payable at the end of each year. a. What is the annual payment that will completely amortize the loan over four years? b. Of each equal payment, what is the amount

8、 of interest? The amount of loan principal? (Hint: in early years, the payment is composed largely of interest, whereas at the end it is mainly principal) Question 6 Your late Uncle Verns entitles you to receive $1000 at the end of every other year for the next two decades. The first cash flow is tw

9、o years from now. at a 10% compound annual interest rate, what is the present value of this unusual cash-flow pattern? (try to solve this problem in as few steps as you can.)Question 7 Xu Lin recently obtained a 10-year, $50000 loan. The loan carries an 8% compound annual interest rate and calls for

10、 annual installment payments of $7451.47 at the end of each of the next 10 years. a. How much (in dollars) of the first years payment is principal? b. How much total interest will be paid over the life of the loan?Question 1 Fast and loose company has outstanding an 8%, four-year, $1000-par-value bo

11、nd on which interest is paid annually. a. if the market required rate of return is 15%, what is the market value of the bond? If the coupon rate were 15% percent instead of 8%, what would be the market value? If the required rate of return dropped to 8%, what would happen to the market price of the

12、bond?Question 2 James Consol Company currently pays a dividend of $1.6 per share on its common stock. The company expects to increase the dividend at a 20% annual rate for the first four years and at a 13% rate for the next four years, and then grow the dividend at a 7%rate thereafter. This phased-g

13、rowth pattern is in keeping with the expected life cycle of earnings. Your require a 16% percent return to invest in this stock. What value should you place on a share of this stock?Question 3 A $1000-face-value bond has a current market price of $935, an 8% coupon rate, and 10years remaining until

14、maturity. Interest payments are made semiannually. Before you do any calculations, decide whether the yield to maturity is above or below the coupon rate. Why? a. What is the implied market-determined semiannual discount rate (ie, semiannual yield to maturity) on this bond? b. Using your answer to P

15、art (a), what is the bonds () (nominal annual) yield to maturity?() (effective annual) yield to maturity?Question 4 A zero-coupon, $1000-par-value bond is currently selling for $312 and matures in exactly 10 years. a. What is the implied market-determined semiannual discount rate on this bond? b. Us

16、ing your answer to Part (a), what is the bonds yield to maturity and yield to maturity?Question 5 Just today, Acme Rocket, Inc.s common stock paid a $1 annual dividend per share and had a closing price of $20. assume that the market expects this companys annual dividend to grow at a constant 6% rate

17、 forever. a. Determine the implied yield on this common stock. b. What is the expected dividend yield? c. What is the expected capital gains yield?Question 6 Peking Duct Tape company has outstanding a $1000-face-value bond with a 14%coupon rate and 3 years remaining until final maturity. Interest pa

18、yments are made semiannually. a. What value should you place on this bond if your nominal annual required rate of return is 12%, 14% and 16% respectively? b. Assume that we are faced with a bond similar to the one described above, except that it is a zero-coupon, pure discount bond. What value shoul

19、d you place on this bond if your nominal annual required rate of return is 12%, 14% and 16% respectively? (assume semiannual discounting)Dec. 6 2011Review 3Question 1 Jerome J. Jerome is considering investing in a security that has the following distribution of possible one-year return. Probability

20、of occurrence 0.1 0.2 0.4 0.2 0.1 Possible return -0.1 0.05 0.2 0.35 0.5 a. What are the expected return and standard deviation? b. Assume that the parameters that you just determined pertain to a normal probability distribution. What is the probability that return will be zero or less? Less than 10

21、%? More than 40%?Question 2 Sorbond Industry has a beta of 1.45. The risk-free rate is 8% and the expected return on the market portfolio is 13%. The company currently pays a dividend of $2 a share, and investors expect it to experience a growth in dividends of 10% per annum for many years to come.

22、a. What is the stocks required rate of return according to the CAPM? b. What is the stocks present market price per share, assuming this required return? c. What would happen to the required return and to market price per share if the beta were 0.8 (assume that all else stays the same)?Question 3 As

23、suming that the CAPM approach is appropriate, compute the required rate of return for each of the following stocks, given a risk-free rate of 0.07 and an expected return for the market portfolio of 0.13. Stock A B C D E Beta 1.5 1.0 0.6 2.0 1.3 What implications can you draw?Question 4 Currently, th

24、e risk-free rate is 10% and the expected return on the market portfolio is 15%, market analysts return expectations for four stocks are listed here, together with each stocks expected beta. Stock expected return expected beta 1.stillman zinc Co. 17.0% 1.3 2. Union paint company 14.5 0.8 3. National

25、automobile Company 15.5 1.1 4 Parker electronic, inc. 18 1.7 a. if the analysts expectation are correct, which stocks (if any) are overvalued? Which (if any) are undervalued? b. If the risk-free rate were suddenly to rise to 12% and the expected return on the market portfolio to 16%, which stocks (i

26、f any) would be overvalued? Which (if any) undervalued? (assume that the market analysts return and beta expectations for our four stocks stay the same)Question 5 Salt Lake City Services, Inc. provides maintenance services for commercial buildings. Currently, the beta on its common stock is 1.08. th

27、e risk-free rate is now 10%, and the expected return on the market portfolio is 15%. It is January 1, and the company is expected to pay a $2 per share dividend at the end of the year, and the dividend is expected to grow at a compound annual rate of 11% for many years to come. Based on the CAPM and

28、 other assumptions you might make, what dollar value would you place on one share of this common stock?Cost of capitalQuestion 1 Silicon Wafer Company currently pays a dividend of $1 per share and has a share price of $20. a. If this dividend was expected to grow at a 12% rate forever, what is the f

29、irms expected, or required, return on equity using a dividend discount model approach? b. Instead of the situation in Part (a), suppose that the dividend was expected to grow at a 20% rate for five years and at 10% year thereafter. Now what is the firms expected, or required, return on equity?Questi

30、on 2 Using the capital-asset pricing model, determine the required return on equity for the following situations: Situation Expected return Risk-free Beta on Market portfolio rate 1 15% 10% 1 2 18 14 0.7 3 15 8 1.2 4 17 11 0.8 5 16 10 1.9 What generalization can you make?Question 3 The Sprouts-N-Com

31、pany has two divisions: health and foods and specialty metals. Each division employs debt equal to 30% and preferred stock equal to 10 percent of its total requirements, with equity capital used for the remainder. The current borrowing rate is 15% percent, and the companys tax 40%. At present, prefe

32、rred stock can be sold yielding 13%. Sprouts-N-Steel wishes to establish a minimum return standard for each division based on the risk of that division. This standard then would serve as the transfer price of capital to the division. Question 3-1 The company has thought about using the capital-asset

33、 pricing model in this regard. It has identified two samples of companies, with model value betas of 0.9 for health foods and 1.3 for specialty metals (Assume that the sample companies had similar capital structure to that of sprouts-N-Steel.). The risk-free rate is currently 12% and the expected re

34、turn on the market portfolio 17%. Using the CAPM approach, what weighted average required returns on investment would you recommend for these two divisions?Question 4You are evaluating two independent projects as to their effect on the total risk and return of your corporation. The projects are expe

35、cted to result in the following: Expected value of net Standard deviation Present value of company Of net present value (in million) (in million)Existing projects only $6 $3Plus project 1 7.5 4.5Plus project 2 8.2 3.5Plus project 1and 2 9.7 4.8a.In which of the new projects (if any) would you invest

36、? Explain.b.What would you do if a CAPM approach to the problem suggested a different decision?Question 5 Zapata Enterprises is financed by two sources of funds: bonds and common stock. The cost of capital for funds provided by bonds is kj, and ke, is the cost of capital for equity funds. The capita

37、l structure consists of B dollars worth of bonds and S dollars worth of stock, where the amounts represent market values. Compute the overall weighted average of cost of capital, k0. Question 6 Assume that B (in problem) is $3m and S is $7m. The bonds have a 14% yield to maturity, and the stock is e

38、xpected to pay $500000 in dividends this year. The growth rate of dividends has been 11% and is expected to continue at the same rate. Find the cost of capital if the corporation tax rate on income is 40%.Question 7 K-Far Stores has launched an expansion program that should result in the saturation

39、of the Bay Area marketing region of California in 6 years. As a result, the company is predicting a growth in earnings of 12% for three years and 6% for the fourth through sixth years, after which it expects constant earnings forever. The company expects to increase its annual dividend per share, mo

40、st recently $2, in keeping with this growth pattern. Currently, the market price of the stock is $25 per share. Estimate the companys cost of equity capital.Question 3 On a contract you have a choice of receiving $25000 six years from now or $500000 twelve years from now. at which compound annual in

41、terest rate should your be indifferent between the two contracts?Question 3 On a contract you have a choice of receiving $25000 six years from now or $500000 twelve years from now. at which compound annual interest rate should your be indifferent between the two contracts?Question 6 Peking Duct Tape

42、 company has outstanding a $1000-face-value bond with a 14%coupon rate and 3 years remaining until final maturity. Interest payments are made semiannually. a. What value should you place on this bond if your nominal annual required rate of return is 12%, 14% and 16% respectively? b. Assume that we a

43、re faced with a bond similar to the one described above, except that it is a zero-coupon, pure discount bond. What value should you place on this bond if your nominal annual required rate of return is 12%, 14% and 16% respectively? (assume semiannual discounting)Question 2 Sorbond Industry has a bet

44、a of 1.45. The risk-free rate is 8% and the expected return on the market portfolio is 13%. The company currently pays a dividend of $2 a share, and investors expect it to experience a growth in dividends of 10% per annum for many years to come. a. What is the stocks required rate of return according to the CAPM? b. What is the stocks present market price per share, assuming this required return? c. What would happen to the required return and to market price per share if the beta were 0.8 (assume that all else stays the same)?Question 4 Currently, the risk-free rate is 10% and th