FINC400 full course (American Public university)

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Week	Topic	Learning Objectives	Readings Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Assignment
1	The Goals and Functions of Financial Management   Review of Accounting   Financial Analysis	LO 1:  Identify the concepts of financial management and apply those concepts to various financial situations.   LO 2: Assess the role of accounting in finance and how it is applied to financial analysis.	Text Readings:  Block, Chapters 1-3   In Lessons: Homework Template Selected Practice Problems PPT Chapter 1-3	Forum Post your Introduction   Why are institutional investors important in today’s business world?   Submit main response by midnight EST, Day 3, and respond to at least two other students’ posts by midnight EST, Day 7.   Homework Problems Chapter 2: 2-11, 2-15, 2-25 Chapter 3: 3-21, 3-22, 3-28   Submit in homework template by midnight EST, Day 7.   Practice Quiz Get prepared for the Quiz.   Quiz 20 True/False and Multiple Choice Questions. Quiz is accessible only once for a period of 1.5-hours. Submit by midnight EST, Day 7.
Financial Forecasting   Operating and Financial Leverage	LO 1: Identify the concepts of financial management and apply those concepts to various financial situations.   LO 3: Examine business operations and evaluate financial forecasting, and operational and financial leverage.	Text Readings:  Block, Chapters 4-5  In Lessons:Homework TemplateSelected Practice Problems PPT Chapter 4-5	Forum If we divide users of ratios into short-term lenders, long-term lenders, and stockholders, in which ratios would each group be most interested, and for what reasons?   Submit main response by midnight EST, Day 3, and respond to at least two other students’ posts by midnight EST, Day 7. Homework Problems Chapter 4: 4-14, 4-17, 4-27 Chapter 5: 5-8, 5-11, 5-15  Submit in homework template by midnight EST, Day 7. Practice QuizGet prepared for the Quiz. Quiz 20 True/False and Multiple Choice Questions. Quiz is accessible only once for a period of 1.5-hours. Submit by midnight EST, Day 7.
Working Capital and the Financing Decision   Current Asset Management   Sources of Short-Term Financing	LO 1: Identify the concepts of financial management and apply those concepts to various financial situations.   LO 4: Evaluate the financing and current asset management of a firm.	Text Readings:  Block, Chapters 6-7-8  In Lessons:Homework TemplateSelected Practice Problems PPT Chapter 6-7-8	Forum Explain the significance of the following statements: A firm that uses short-term financing methods for a portion of permanent current assets is assuming more risk but expects higher returns than a firm with a normal financing plan.  Submit main response by midnight EST, Day 3, and respond to at least two other students’ posts by midnight EST, Day 7.  Homework Problems Chapter 6: 6-4, 6-8, 6-10 Chapter 7: 7-2, 7-7, 7-13 Chapter 8: 8-10, 8-14, 8-17  Submit in homework template by midnight EST, Day 7. Practice QuizGet prepared for the Quiz. Quiz 20 True/False and Multiple Choice Questions. Quiz is accessible only once for a period of 1.5-hours. Submit by midnight EST, Day 7.
The Time Value of Money   Valuations and Rates of Return   Cost of Capital	LO 1: Identify the concepts of financial management and apply those concepts to various financial situations.   LO 5: Differentiate the fundamentals of time value of money, valuations, and cost of capital.	Text Readings:  Block, Chapters 9-10-11  In Lessons:Homework TemplateSelected Practice Problems PPT Chapter 10-11	Forums Does inflation have anything to do with making a dollar today worth more than a dollar tomorrow?   Submit main response by midnight EST, Day 3, and respond to at least two other students’ posts by midnight EST, Day 7. Homework Problems Chapter 9: 9-17, 9-19, 9-27 Chapter 10: 10-6, 10-13, 10-24 Chapter 11: 11-7, 11-15, 11-19  Submit in homework template by midnight EST, Day 7. Practice QuizGet prepared for the Quiz. Quiz 20 True/False and Multiple Choice Questions. Quiz is accessible only once for a period of 1.5 hours. Submit by midnight EST, Day 7.
The Capital Budgeting Decision   Risk and Capital Budgeting	LO 1: Identify the concepts of financial management and apply those concepts to various financial situations.   LO 6: Identify the fundamentals of capital budgeting decisions and evaluate capital expenditures.	Text Readings:  Block, Chapters 12-13  In Lessons:Homework TemplateSelected Practice Problems PPT Chapter 12-13	Forum Discuss the concept of risk and how it might be measured.  Submit main response by midnight EST, Day 3, and respond to at least two other students’ posts by midnight EST, Day 7. Homework Problems Chapter 12: 12-10, 12-13, 12-21 Chapter 13: 13-3, 13-10, 13-15  Submit in homework template by midnight EST, Day 7. Practice QuizGet prepared for the Quiz. Quiz 20 True/False and Multiple Choice Questions. Quiz is accessible only once for a period of 1.5-hours. Submit by midnight EST, Day 7.
Capital Markets   Investment Banking: Public and Private Placement	LO 1: Identify the concepts of financial management and apply those concepts to various financial situations.   LO 7: Describe the role of capital markets and investment banking and  examine the security legislations that protect investors.	Text Readings:  Block, Chapters 14-15  In Lessons:Homework TemplateSelected Practice Problems PPT Chapter 14-15	Forum The efficient market hypothesis is interpreted in a weak form, a semi-strong form, and a strong form. How can we differentiate its various forms?  Submit main response by midnight EST, Day 3, and respond to at least two other students’ posts by midnight EST, Day 7. Homework Problems Chapter 15: 15-5, 15-10, 15-14  Submit in homework template by midnight EST, Day 7.  Writing Assignment In 600-750 words APA 6th ed. format, respond to the following question: Distinguish between internal and external sources of funds. Do corporations rely more on external or internal funds as sources of financing?   See Week 6 Writing Assignments for details. Follow Writing Guidelines Rubrics.  Submit by midnight EST, Day 7.
Long-Term Debt and Lease Financing   Common and Preferred Stock Financing	LO 1: Identify the concepts of financial management and apply those concepts to various financial situations.   LO 8: Analyze the methods of raising capital through long-term debt or equity financing.	Text Readings:  Block, Chapters 16-17  In Lessons:Homework TemplateSelected Practice Problems PPT Chapter 16-17	Forum Discuss the relationship between bond prices and interest rates. What impact do changing interest rates have on the price of long-term bonds versus short-term bonds?  Submit main response by midnight EST, Day 3, and respond to at least two other students’ posts by midnight EST, Day 7. Homework Problems Chapter 16: 16-5, 16-7, 16-11 Chapter 17: 17-7, 17-13, 17-16  Submit in homework template by midnight EST, Day 7. Practice QuizGet prepared for the Quiz. Quiz 20 True/False and Multiple Choice Questions. Quiz is accessible only once for a period of 1.5-hours. Submit by midnight EST, Day 7.
Final Week	LO 1-8	All Chapters Assigned	Forum How will this course benefit your personal and/or professional development? What did you find most beneficial about the course?   (This is a non-graded discussion)  Quiz 25 Questions from all chapters assigned. The quiz is accessible only once, for a period of 2-hours. Submit by midnight EST, Day 7.

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>Instructions Name: Save your work as ‘lastnamefirstinitial-FINC

40

0-2 Example: FinanceA-FINC400-2 FINC 400 Principles of Financial Management Week 2 Homework Problems Complete the following problems:

Problem

4-14

Problem

5-

8

Problem

4-17

Problem

5-11

Problem

4-27

Problem

5-

15

Master 11/

20

11-kT

4-14

– Refer to problems at the end of the chapter for details and instructions:

3,000

$2

:

Beginning Inventory

Production

Total Ending Inventory
Quantity (Units)
Total

Problem 4-14
					Use template to complete the problem:
Bradley Corporation
COST FOR JULY, 201X		Units Sold	1	3,000
Material		$2	Price per Unit	$16
Labor	$4		Beginning	Inventory
Overhead	Units Produced	12,000
$8	Cost July-Dec.	$11
		Solution:
	Sales	Value of	Ending Inventory
Cost of goods sold:
Old Inventory:	FIFO			Total
	Quantity (Units)	Total Inventory available for sale
Cost per Unit	Cost of goods sold
New Inventory:
Cost per unit
Total Cost of Goods Sold:
Gross Profit

4-17

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

,000

%

,000

Solution:

September October November December
Credit Sales

Problem 4-17
Victoria’s Apparel
	Credit Sales
	September		$50	Sales Collected in month of sales	20%
Fourth Quarter	Sales Collected the following month	70%
	October	$	40,000	Sales never collected			10
	November	$	35
	December		$	60,000
20% collected
70% collected
Total Collected

4-27

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

Sales

,000,000

2

15

20

2

10% Inventory

8

100

,000

40

10

15

35

85

Solution:

Problem 4-27
Owen’s Electronics
	100	Balance Sheet (in $ millions)
Profit Margin	7%	Cash	Accounts payable
Dividend Payout Ratio		40%	Accounts Receivable	Accrued wages
Sales- increase next year	23	Accrued taxes
Current Assets	45	Current Liabilities	25
1	10,000	Fixed Assets	Notes Payable
Common stock
Retained Earnings
Total liabilities &
Total assets		85	Stockholders’ equity
			Show your work!
Change in sales
Required New funds (RNF)

5-8

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

value

Depreciation

Show your work!

Problem 5-8
Air Purifier, Inc.
		Fixed Costs	$2,400,000
% of	Depreciation	15%
$360,000
Contribution Margin	$30.00
		Solution:
Cash Related Fixed Costs =
Cash Breakeven =

5-11

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

Solution: Show your work!

10,000

$50

= I

$60,000

40%

Harding Company

Fixed Costs

$150,000

Interest Expense

Problem 5-11
	Harding Company
Number of units = Q		a)			DOL =
Sales Price per Unit = P
Variable Costs per Unit = VC	$20
Fixed Costs = FC		$150,000		b)	DFL =
	Interest Expense
Taxes
c)	DCL =
Income Statement
For the Year Ended Dec. 31, 201X
Sales (10,000 tires @ $50 each)	$500,000	d)	BE =
Variable costs (10,000 tires @ $20)	($200,000)
($150,000)
EBIT
($60,000)
EBT	$90,000
Income Taxes @ 30%	($36,000)
EAT	$54,000

5-15

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

Units Sold

Fixed Costs

40,000

60,000

$50,000

Solution:
a) Show your work!
DOL =
b)

DOL =

Problem 5-15
U.S Steal Income Statement Data
Total VC	Total Costs	Total Revenue	Operating Income
$80,000		$50,000	$130,000	$160,000	$30,000
$120,000	$170,000	$240,000	$70,000
Q =
P =
VC =

Instructions< /

h2>

Name: Save your work as ‘lastnamefirstinitial-FINC400-3 E

x

ample: FinanceA-FINC400-3 FINC 400 Principles of Financial Management Week 3 Homework Problems Complete the following problems:

Problem

6-4

Problem

7-2

Problem

8-10

Problem

6-8

Problem

7-7

Problem

8-14

`

Problem

6-10

Problem

7-13

Problem

8-17

Master-11/2011 kT

6-4

– Refer to problems at the end of the chapter for details and instructions:

%

,000

Increase in Retained Earnings

Problem 6-4
								Use template to complete the problem:
	Solution:
Antivirus, Inc.
							$2,000,000	Sales
						12	Profit Margin
Net Income
Dividends @	2	5%
	Increase in Retained Earnings
$4		30	Increase in			Assets
External Funds Needed

6-8

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

rate

per year

– year 1

Solution:

Problem 6-8
Biochemical Corp.
Required 3 year financing	$500,000
			Interest	10.60%
# of years	3.00
	Short-term financing	7.25%
Short-term financing – year 2	11.90%
Short-term financing – year 3	8.15%
Cost of Three Year Fixed Cost Financing					Show your work!
Cost of Three Year Variable Short-term Financing
3 Year Total Interest Cost				=

6-10

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

Assets

$2,000,000

Short-term financing $2,000,000

Assets Expected Return on Assets

Low liquidity/high return $2,000,000

$2,000,000 12%

Anticipated return

Assets Expected Return on Assets
Low liquidity/high return $2,000,000 18%
Long-term financing $2,000,000 12%
Anticipated return

Problem 6-10
Hogan Surgical Instruments Company
			a)	Most Aggressive
		Expected Return on Assets
		Low liquidity/high return		18%
	10%
		Anticipated return
			b)	Most Conservative
	14%
	Long-term financing
			c)	Moderate approach
		d)

7-2

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

$2,000,000 a)

Interest rate

b) Freed-up Funds =

=

c)

Problem 7-2
Neon Light Company of Kansas City						Solution:
Daily collections
Days speed up	1.50	Additional collections =
Daily disbursements	$1,000,000
Days slow down	0.50
	9%
Delayed disbursements =
	Freed-up Funds =
	Interest Rate
Interest on Freed-up Funds =

7-7

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

30

Solution:

/ Days in year =

/ =

x

=

x =

Problem 7-7
Eco-Friendly Products
Credit Sales	$900,000
Avg. Collection Period
		Days in year			360
Annual credit sales	Credit sales a day
Avg. daily credit sales	Avg. Coll. Period	Avg. Acc. Receivable

7-13

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

Solution: Show your work!
a)

b)

c)

d)

Problem 7-13
Fisk Corp.
Expected Sales	75,000
Ordering Cost	$8
Carrying Cost	$1.20
EOQ =
Orders =
Avg. Inventory =
# of orders x ordering cost =
Avg. Inventory x carrying cost =
Total Cost =

8-10

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

Interest Rate 9%

30

Solution: Show your work!

Problem 8-10
Talmud Book Company
Amount Borrowed	$16,000
Days loan outstanding
	Days in year (360 or 365)
Dollar cost of loan =

8-14

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

Solution: Show your work!

compensating balance =

Interest

20%

Days in year (360 or 365)

360

12

12

Problem 8-14
Dade Company
	Principal	$300,000	1)	Effective rate of interest with	20%
$27,000
	Compensating Balance
	Days Loan Outstanding
	Annual # Payments	2)	Effective rate for installment loan with compensating balance =
	Total # of Payments

8-17

– Refer to problems at the end of the chapter for details and instructions:

Use template to complete the problem:

Solution: Show your work!

Principal

a)

Interest 14%
Compensating Balance 10%
Days in year b)

Days Loan Outstanding 360

Annual # Payments 12
Total # of Payments 12 c)

5%

d)

Problem 8-17
Information
$5,000,000	Simple interest with 10% compensation balance =
Discounted interest =
An installment loan with 12 payments =
Compensating Balance (d)
Discounted interest with 5% compensating balance =

Instructions

Name: Save file as ‘lastnamefirstinitial-FINC400-4 E

x

ample: Finance

A

-FINC400-4 FINC 400 Principles of Financial Management Week 4 Homework Problems Complete the following problems:

Problem

9-

1

7

Problem

10-6

Problem

11

-7

Problem

9-19

Problem

10-1

3

Problem

11-1

5

Problem

9-27

Problem

10-24

Problem

11-19

Master 11/

20

11-kT

9-17

– Refer to problems at the end of the chapter for details and instructions:

i

20

IFA

A x

A

=

Problem 9-17
								Use the template to complete the problem :
Western Sweepstakes
Discount Rate						=		12%
			Periods = n
	Annuity	50,000
			PV
						Solution:
				PVIF	PVA

9-19

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Periods = n 5 PV x

IF

= FV

Discount Rate = i

%

Periods = n 3 PV x FVIF = FV
Present Value of Investment

FVIF

Problem 9-19
Bruce Sutter
		Discount Rate = i		20%
		FV
	Present Value of Investment	–	2,000
		FVIF
	15

9-27

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Discount Rate = i

Periods = n 11
Annuity 2,000
Solution: A x FVIFA =

Problem 9-27
Information
		8%
	FVIFA
FVA

10-6

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

A *

Present Value of Interest Payments =

to Maturity = i

FV * PVIF

Present Value of Principal Payment at Maturity =
PVIFA

PVIF

Par Value $1,000

Interest 11%

Time to Maturity=n 15 Present Value of Interest Payments =

Yield to Maturity = i 14%

Annuity = A Present Value of Principal Payment at Maturity =
PVIFA Total Present Value or Price of the Bond =
PVIF

Par Value $1,000

Interest 11% Present Value of Interest Payments = A * PVIFA

Time to Maturity=n 1 Present Value of Interest Payments =

Yield to Maturity = i 14% Present Value of Principal Payment at Maturity = FV * PVIF
Annuity = A Present Value of Principal Payment at Maturity =
PVIFA Total Present Value or Price of the Bond =
PVIF

Problem 10-6
Solution: Hartford Telephone Company
		a)				Par Value				$1,000
			Interest			11%
				Present Value of Interest Payments =			PVIFA
			Time to Maturity=n	30
				Yield			1	4%
				Present Value of Principal Payment at Maturity =
			Annuity = A
			Total Present Value or Price of the Bond =
		b)
		Present Value of Interest Payments = A * PVIFA
		Present Value of Principal Payment at Maturity = FV * PVIF
c)

10-13

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Par Value $1,000

Interest 12%

Time to Maturity=n 20

4%

Yield to Maturity = i

Annuity = A
PVIFA

3%

PVIF
Solution:

Real Rate of Return
Inflation Rate
Risk Premium

Total Return

Present Value of Interest Payments = A * PVIFA
Present Value of Interest Payments =
Present Value of Principal Payment at Maturity = FV * PVIF
Present Value of Principal Payment at Maturity =
Total Present Value or Price of the Bond =

Problem 10-13
Tom Cruise Lines, Inc.
	Real Rate of Return		3%
	Inflation Rate	5%
	Risk Premium
	Total Return
Inflation Rate in 5 years
Compute new required rate of return (yield to maturity)

10-24

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

8%

Solution:

a)

=

b) Price of Preferred Stock =

Problem 10-24
North Pole Cruise Lines
Annual Dividend	$8.00
Original Required Rate of Return
New Required Rate of Return	6%
Show your work!
ORIGINAL PRICE
	Price of Preferred Stock
CURRENT VALUE

11-7

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

issued last year at

8%

20%

Cost of debt this year

a)
Solution:
b)

Problem 11-7
Goodsmith Charitable Foundation
	Debt
Cost of debt last year		10%
	Cost of debt this year	higher than last year
12.0%
Corporate Tax Rate (b)	35.0%
If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on their cost last year and the 20 percent increase?
If the receipts of the foundation were found to be taxable by the IRS (at a rate of 35 percent because of involvement in political activities), what would the aftertax cost of debt be?

11-15

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Yield

Solution:

=Pp

Problem 11-15
Riley Coal Co.	Aftertax Cost of Debt
10.6%
Corporate Tax Rate = T		35%
Dividend = Dp	$4.40
Price of	Preferred Stock	$50	Aftertax	Cost of Preferred Stock
Floatation Cost = F	$2.00
Based on the facts above, is the treasurer correct?

11-19

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Debt 35%

Preferred Stock

Cost of Preferred Stock 10%

Solution:

Problem 11-19
United Business Forms
Capital Structure
Aftertax Cost of Debt	7%
15%
Common Equity	50%	Cost of Common Equity	13%
Cost (aftertax)	Weights	Weighted Cost
Debt (Kd)
Preferred Stock (Kp)
Common Equity (Ke)
Weighted Average Cost of Capital (Ka)

In

s

tructions

Name:

Save your work as ‘lastnamefirstinitial

–

FINC

4

00-

5 Example: FinanceA-FINC400-5 Week 5 Homework

P

roblems Complete the following problems:

Problem

1 2

-10 Problem

1

3

-3

Problem

12-13

Problem

13-10

Problem

12-21

Problem

13-15

Master 11/2011 kt

12-10

Problem 12-10

– Refer to problems at the end of the chapter for details and instructions:
Use the template to complete the problem : Solution: Show your work!

a

)

Payback Method

D

iaz Camera Company

Payback for A Year

s Project A $10,000 Project B

$10,000
Cost

of Capital 10% Payback for B Years Year Project A Project B
1

$

6

,000 $5,000 2

$4,000 $3,000 3 $3,000

$8,000 b)

N

PV

METHOD Project A Present

Project B Present
Year

Cash Flow PVIF @ 10% Value

Year Cash Flow PVIF @ 10% Value
1

1
2

2
3

3
Present Value

of

Inflows = Present Value of Inflows = Present Value of Outflows =

Present Value of Outflows =
Net Present Value

=

Net Present Value =
c) Should a firm normally have more confidence in answer a or answer b? Explain.

12-13

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Solution: Show your work!

Year

1

2

3

Year Cash Flow

Present Value

1
2
3

Year Cash Flow

Present Value

1
2

3

PV @ 14%

Cost
b)

Problem 12-13
Homeland Security Systems
Equipment	$40,000	STEP 1:	Average the inflows
Cash Flow
$20,000
$18,000
$13,000
STEP 2:	Divide investment by annuity from step 1
STEP 3:	Find the rate that corresponds to the value in Step 2:
STEP 4:	Calculate the Present Value at 14%
Because the inflows are biased toward the early years, we will use the higher rate of 14%.
PVIF @ 14%
STEP 5:	Calculate the Present Value at	15%
Since the NPV is slightly over $40,000, we need to try a higher rate. We will try 15%.
	PVIF @ 15%
INTERPOLATION:
	PV @ 14%
PV @ 15%
IRR =
With a cost of capital of 12 percent, should the machine be purchased?
Explain:

12-21

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Solution:

Year Inflows

Value

1

Year

2

1

3

2

3

,000

b)

Problem 12-21
Caffeine Coffee Company
			Investment	$27,000		a)	Rate	Number	FVIF	Future
Cost of Capital	12%	of Periods
Cash Inflows
$15,000
$12,000
$	9	PVIF =

13-3

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Solution:

a)

D P

=
b) D P P
50
70
90
140
=

Problem 13-3
Northern Wind Power
Possible Market Reaction	Sales	Probabilities
in Units
Low Response		50	0.10	DP
Moderate Response		70	0.40
High Response		90	0.20
Very High Response		140	0.30
0.00

13-10

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Solution:

1

3

6

9

Problem 13-10
Sensor Technology
Year	Profits:	Standard	Coefficient of
Expected Value	Deviation	Variation
$90	$31
$120	$52
$150	$83
$200	$146
Explain: b)

13-15

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Solution:

Years Product 1

Year Inflows PVIF @ 10% PV

1

1 $25,000

2

2 $30,000

3

3 $38,000

4

4 $31,000

5

5 $19,000

Investment

10% Net Present Value

15%

Investment $90,000 Product 2
Year Inflows PVIF @ 15% PV
1 $16,000
2 $22,000
3 $34,000
4 $29,000
5 $70,000

PV of Inflows

Investment $90,000
Net Present Value

Problem 13-15
Payne Medical Labs		Product 1
	Product 2
	$25,000		$16,000
	$30,000		$22,000
	$38,000		$34,000
	$31,000		$29,000
	$19,000		$70,000
	PV of Inflows
Additional Information			$90,000
Discount Rate – Product 1
Discount Rate – Product 2
Which product should be selected using net present value analysis?

DDP

=

å

D

(

D D)

–
2

(DD)

–
2
(DD)
–
(
)
2

D DP

s

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Instructions

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a

me: Save your work as ‘lastnamefirstinitial-FINC400-6 Example: FinanceA-FINC400-6 FINC 400 Principles of Financial Management Week 6 Homework Pro

b

lems Complete the following problems:

Problem

15-5

Problem

15-10

Problem

15-14

Master 11/2011-kT

15-5

– Refer to problems at the end of the chapter for details and instructions:

per share before stock issue

Earnings

=

=

P/E =

=

Problem 15-5
		Use the template to complete the problem :
Jordan Broadcasting Company			Solution:
Shares Outstanding	8,000,000			a)		Earnings					=
$24,000,000
New Stock Issue	3,000,000	Earnings per share after stock issue
Price of new shares	$40
	P/E	23			b)	Earnings per Share
Stock Price
	c)

15-10

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

a

b

Solution:
a)

b) Spread =

% underwriting spread =

c)

Problem 15-10
The Wrigley Corporation
Offer	Size of Offer	Public Price	Net to Corp.
2.00	$15.70	$15.00
0.3	$1,001	$992.00
	Spread =
	% underwriting spread =

15-14

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Solution:

a)

Spread (%) =
b)

Problem 15-14
Winston Sporting Goods
Retail Price per Share	$18	Spread ($) =
# of shares	600,000		Spread (%) =
Company Proceeds	$16.50	Total Value =
Registration Fees	$150,000
Amount Needed (b)	$18,000,000	Out-of-pocket / Total Value =
Out-of-pocket =
Total (%) =
Amount needed =
Required Shares to Sell =

Instructions< /

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Name: Save your work as ‘lastnamefirstinitial-FINC

40

0-7 E

x

ample: FinanceA-FINC400-7 FINC 400 Principles of Financial Management Week 7 Homework Problems Complete the following problems:

Problem

16-

5

Problem

17-7

Problem

16-7

Problem

17-

13

Problem

16-11

Problem

17-16

Master 11/

20

11-kT

16-5

– Refer to problems at the end of the chapter for details and instructions:

Security Provision Yield to Maturity

a. Debenture
b. Secured debt
c. Subordinated debenture

Problem 16-5
					Use the template to complete the problem :
	Security Provision			Yield to Maturity
	a.		Debenture	7.7	9%
	b.		Secured debt	9.17%
	c.		Subordinated debenture	8.67%
					Solution:

16-7

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Solution:

A × PVIFA

Yield to Maturity

A =

20

Pay

Semiannual Interest

FV × PVIF

40

PV =
Present Value of Interest Payments

Problem 16-7
Cox Media Corporation
Annual Interest		11%					a)		Present Value of Interest Payments
	Par Value		$1,000	PV	A			=
8%
	Maturity (years)	PVIFA =
PVA =
Assumption of	Semiannual Interest
5.50%				Present Value of Principal Payment at Maturity
Semiannual Y’ to Maturity	4.00%					PV =
Maturity (semiannual)				FV =
			PVIF =
TOTAL PRESENT VALUE:
Present Value of Principal Pay. at Maturity
Total Present Value of Price of the Bond
				b)

16-11

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Solution:

Par Value $1,000 a) Present Value of Principal Payment at Maturity

11%

Maturity (years) 20 FV =

9% PVIF =

PV =

b) Present Value of Principal Payment at Maturity
PV = FV × PVIF
FV =
PVIF =
PV =
c) Present Value of Principal Payment at Maturity

PV = FV × PVIF
FV =
PVIF =
PV =

Problem 16-11
Information:
Yield to Maturity (a)			PV = FV × PVIF
Yield to Maturity (b)
Yield to Maturity (			c)	13%

17-7

Use the template to complete the problem :

Solution:

13

a) x =

b) x = votes
c) / =

Problem 7-17 – Refer to problems at the end of the chapter for details and instructions:
Hansen Fabrics Company
Shares owned by Betsy	918	Votes = Number of shares × number of directors to be elected
# of directors to be elected
# of shares outstanding	31,000		votes

17-13

Use the template to complete the problem :

Solution:

a)

5

b)

Price =

Problem 17-13 – Refer to problems at the end of the chapter for details and instructions:
Prime Bankcorp	Show your work!
Subscription price = S	$50	R=
# of rights = N
Selling Price = Mo	$59	New			Stock

17-16

– Refer to problems at the end of the chapter for details and instructions:

Use the template to complete the problem :

Solution:

5 a)

holdings

b)

$48 Stock

Cash
c)

Portfolio Value
Stock
Cash

Total portfolio value

Stock

Cash

Total portfolio value

Problem 17-16
Magic Tricks Corp. (The Andersons)
# of shares owned	R =
Market value of stock	$60
			Cash		$48		Portfolio Value
Purchase price – new share
		Total portfolio value
Diluted value =
d)	Portfolio Value
Proceeds from sale of 5 rights