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FIN 571 Assignment Select Fortune 500
Company
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Assignment Steps
Resources: Yahoo Finance
Select a Fortune 500 Company from one of the following industries:
· Pharmaceutical
· Energy
· Retail
· Automotive
· Computer Hardware
· Manufacturing
· Mining
Access Yahoo Finance and enter the company name.
Review the financial information and statistics provided for the stock
you selected and answer the following:
· What is the ticker symbol of the company you chose?
· What is the Current Stock Price?
· What is the Market Cap for the stock you chose?
· What is the Price to Earnings Ratio?
· What is the Dividend and Yield?
· What is the Enterprise Value?
· What is the Beta?
· Was there a Stock Split, and if so, when?
· What was the closing stock price for the last 5 days?
· What was the 52 Week High for this stock?
· What is the Book Value per Share?
· What type of rating are analysts recommending (i.e. buy, hold,
etc.)?
· What is the target price analysts are predicting for this stock?

· What is the analyst's average revenue estimate for next year?
· What are some of the significant news items and press releases
made by the company over the last year?
Explain in 700 words why you would or would not recommend
investing in this stock.
· Describe the relationship between the value of the stock and the
price to earnings ratio.
· What information does the Market Capitalization (Market Cap)
and Beta provide to the investor?
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FIN 571 Entire Course+ Final Guide
FIN 571 Week 1 Financial Ratio Analysis (Walmart)
FIN 571 Week 1 Financial Ratio Analysis (General Motors)
FIN 571 Week 2 Stock Valuation and Analysis (Apple)
FIN 571 Week 2 Stock Valuation and Analysis (Amazon)
FIN 571 Week 2 Stock Valuation and Analysis (Target)
FIN 571 Week 2 Stock Valuation and Analysis (Walmart)
FIN 571 Week 2 Stock Valuation and Analysis (Ford)

FIN 571 Week 3 Using the Payback Method, IRR, and NPV
FIN 571 Week 4 Assignment Rate of Return for Stocks and Bonds
(2 Papers)
FIN 571 Week 3 Researching Industry Financial Statistics
FIN 571 Week 6 Signature Assignment Short Term Funding (2
PPT)
FIN 571 Week 5 Assignment Capital Market Efficiency Paper (2
Papers)
FIN 571 Week 5 Assignment Effect of Debt Issuance on Stock
Valuation
FIN 571 Final Exam Guide (New, 2017)
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FIN 571 Final Exam Guide (New, 2018)

Question 1 The underlying assumption of the dividend growth
model is that a stock is worth:
A. An amount computed as the next annual dividend divided by
the required rate of return.
B. An amount computed as the next annual dividend divided by
the market rate of return.
C. The same amount computed as any other stock that pays the
same current dividend and has the same required rate of return.
D. The present value of the future income that the stock is
expected to generate.
E. The same amount to every investor regardless of their desired
rate of return.
• Question 2 You plan to invest $6,500 for three years at 4
percent simple interest. What will your investment be worth at
the end of the three years?
A. $6,941.11
B. $7,280.00
C. $7,311.62
D. $6,760.00
E. $7,250.00
• Question 3 A firm has a debt-equity ratio of.64, a pre tax cost
of debt of 8.5 percent, and a required return on assets of 12.6
percent, What is the cost of equity if you ignore taxes ?

A. 16.38%
B. 8.55%
C. 15.22%
D. 11.22%
E. 8.06%
• Question 4 What is the present value of $6,811 to be received in
one year if the discount rate is 6.5 percent ?
A. $6,395.31
B. $7,253.72
C. $6,023.58
D. $6,643.29
E. $6,671.13
• Question 5 Under the____________ method, the underwriter
buys the securities for less than the offering price and accepts the
risk of not selling the issue, while under the _________ method,
the underwriter does not purchase the shares but merely acts as
an agent.
A. Best efforts; firm commitment
B. Seasoned; unseasoned
C. Firm commitment; best efforts
D. Negotiated offer; competitive offer
E. Competitive offer; negotiated offer

Question 6 All else held constant, interest rate risk will increase
when the time to maturity:
A. Increase or the coupon rate increases.
B. Increase or the coupon rate decreases.
C. Decrease and the coupon rate equals zero.
D. Decrease or the coupon rate increases.
E. Decrease or the coupon rate decreases.
Question 7 The process of planning and managing a firm’s long-
term assets is called:
A. Agency cost analysis.
B. Working capital management.
C. Financial depreciation.
D. Capital structure.
E. Capital budgeting.
Question 8 An efficient capital market is one in which:
A. Securities always offer a positive NPV.

B. Taxes are irrelevant.
C. All investments earn the market rate of return.
D. Brokerage commissions are zero.
E. Security prices reflect all available information.
Question 9 Which one of these statements is correct concerning
the cash cycle?
A. Increasing the accounts payable period increases all cash cycle.
B. A positive cash cycle is preferable to a negative cash cycle.
C. The cash cycle can exceed the operating cycle if the payables
period is equal to zero.
D. The longer the cash cycle, the more likely a firm will need
external financing.
E. A dopting a more liberal accounts receivable policy will tend
to decrease the cash cycle.
Question 10 The costs of avoiding a bankruptcy filing by a
financially distressed firm are classified as _______ costs.
A. Direct bankruptcy
B. Financial solvency
C. Flotation
D. Indirect bankruptcy
E. Capital structure

Question 11 Which one of the following is an example of a
nondiversifiable risk?
A. A well-respected president of a firm suddenly resigns
B. A well-respected chairman of the Federal Reserve Bank
suddenly resigns
C. A poorly managed firm suddenly goes out of business due to
lack of sales
D. A key employee suddenly resigns and accepts employment with
a key competitor
E. A well-managed firm reduces its work force and automates
several jobs
Question 12 One disadvantage of the corporate form of business
ownership is the:
A. Limited liability protection provided for all owners.
B. Unlimited life of the firm.
C. Difficulties encountered when changing ownership.
D. Double taxation of profits.
E. Firms ability to raise cash.
Question 13 Which one of the following statements about
preferred stock is true?

A. There is no significant difference in the voting rights granted
to preferred and common shareholders.
B. If preferred dividends are non-cumulative, then preferred
dividends not paid in a particular year will be carried forward to
the next year.
C. Preferred stock usually has a stated liquidating value of $100
per share.
D. Unlike dividends paid on common stock. Dividends paid on
preferred stock are a tax-deductible expenses.
E. Dividends on preferred stock payable during the next twelve
months are considered to be a corporate liability.
Question 14 Book value :
A. Is adjusted to market value whenever the market value exceeds
the stated book value.
B. Is based on historical cost.
C. Is equivalent to market value for firms with fixed assets.
D. Generally tends to exceed market value when fixed assets are
included.
E. Is more of a financial than an accounting valuation.
Question 15 The primary goal of financial management is to:
A. Avoid financial distress.
B. Maintain steady growth sales and net earnings.
C. Maximize the current value per share of the existing stock.

D. Minimize operational costs and maximize firm efficiency.
E. Maximize current dividends per share of the existing stock.
Question 16 Which term defines the tax rate that applies to the
next dollar of taxable income earned ?
A. Deductible
B. Total
C. Marginal
D. Residual
E. Average
Question 17 Lois is purchasing an annuity that will pay $5,000
annually for 20 years, with the first annuity payment made on the
date of purchase. What is the value of the annuity on the purchase
date given a discount rate of 7 percent ?
A. $56,191.91
B. $52,970.07
C. 54,282.98
D. $66,916.21
E. 56,677.98
Question 18 The cash flow resulting from a firm’s ongoing,
normal business activities is referred to as the:
A. Net capital spending.

B. Cash flow to investors.
C. Additions to net working capital.
D. Operating cash flow.
E. Cash flow to retained earnings.
Question 19 The market price of a bond increases when the:
A. Par value decreases.
B. Coupon rate decreases.
C. Discount rate decreases.
D. Face value decreases.
E. Coupon is paid annually rather than semiannually
Question 20 The excess return you earn by moving from a
relatively risk-free investment to a risky investment is called :
A. Arithmetic average return.
B. Geometric average return.
C. Time premium.
D. Risk premium.
E. Inflation premium.
Question 21 A firn has a total debt ratio of . 47. This means the
firn has 47 cents in debt for every:

A. $ 1 in fixed assets.
B. $ 53 in total equity.
C. $ 1 in total equity.
D. $ 1 in current assets.
E. $ 53 in total assets.
Question 22 A ll else equal, the contribution must increase as:
A. Both the sales price and variable cost per unit increase.
B. The variable cost per unit declines.
C. The fixed cost per unit declines.
D. Sales price per unit declines.
E. The sales price minus the fixed per unit increases.
Question 23 A project has an initial cost of $2,250.The cash
inflows are $0,$500,$900,and $700 for years 1 to 4, respectively.
What is the payback period ?
A. 3.92 years
B. 2.84 years
C. Never
D. 2.97 years
E. 3.98 years

Question 24 Ratios that measure a firm’s ability to pay its bills
over the short run without undue stress are known as:
A. Liquidity measures.
B. Asset management ratios.
C. Long-term solvency measures.
D. Profitability ratios.
E. Market value ratios.
Question 25 The discount rate that makes the net present value
of an investment exactly equal to zero is called the:
A. Profitability index.
B. External rate of return.
C. Averages accounting return.
D. Equalizer.
E. Internal rate of return.
Question 26 An interest rate that is compounded monthly, but is
expressed as if the rate were compounded annually, is called
the________ rate.
A. Compound interest
B. Stated interest
C. Effective annual

D. Periodic interest
E. Daily interest
Question 27 Which one of the following statements is false?
A. If sales are seasonal, the percentages shown on an aging
schedule will vary during the year.
B. Aging schedules are used to monitor accounts receivable.
C. An aging schedule includes only overdue accounts
D. Investments in accounts equal average daily sales times
average collection period.
E. Collection efforts may involve legal action.
Question 28 Which one of these is a correct definition ?
A. Long-term debt is defined as a residual claim on a firm’s
assets.
B. Current assets are assets with short lives, such as inventory,
C. Tangible assets are fixed assets such as patents.
D. Current liabilities are debts that must be repaid in 18 months
or less.
E. Net working capital equals current assets plus current
liabilities.
Question 29 Futures contracts contrast with forward contracts
by:

A. Allowing the seller to deliver any day during the delivery
month.
B. Requiring contract fulfilment by the two originating parties.
C. Providing an option for the buyer rather than an obligation.
D. Marking to the market on a weekly basis.
E. Allowing the parties to negotiate the contract size.
Question 30 The higher the inventory turnover, the:
A. Lesser the amount of inventory held by a firm.
B. Higher the inventory as a percentage of total assets.
C. Less time inventory items remain on the shelf.
D. Greater the inventory of inventory help by a firm.
E. Longer it takes firm to sell its inventory.
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FIN 571 Week 1 DQ 1
What is ethics? If you follow all applicable rules and regulations, are
you an ethical person?
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FIN 571 Week 1 DQ 2
Assume that interest rates have increased substantially. Would this
tend to increase or decrease
the market value (meaning the price an investor in the firm's paper is
willing to pay) of a firm’s liabilities (relative to the book value of
liabilities)?
This question is referring to a firm's liability such as a bond or
debenture that has been issued in the markets. What happens to the
price an investor who is looking to purchase that bond or debenture is
willing to pay if the market interest rate increases above the rate that
the bond or debenture pays.
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FIN 571 Week 1 Financial Ratio Analysis
(Apple)
Purpose of Assignment

The purpose of this assignment is to help students gain a better
understanding of the financial statements used for corporate financial
reporting and the key ratios used to make business decisions.
Assignment Steps
 Pharmaceutical
 Energy
 Retail
 Automotive
 Computer Hardware
Review the balance sheet and income statement in the company's
2015 Annual Report.
Calculate the following ratios using Microsoft®
Excel®
:
 Current Ratio
 Quick Ratio
 Debt Equity Ratio
 Inventory Turnover Ratio
 Receivables Turnover Ratio
 Total Assets Turnover Ratio
 Profit Margin (Net Margin) Ratio
 Return on Assets Ratio
Analyze in 1,050 words why each ratio is important for financial
decision making.
Submit your analysis as well as your calculations.
Click the Assignment Files tab to submit your assignment.
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(General Motors)

Assignment Steps
 Pharmaceutical
 Energy
 Retail
 Automotive
2015 Annual Report.
Excel®
:
 Current Ratio
 Quick Ratio
decision making.

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(Pfizer)
Assignment Steps
 Pharmaceutical
 Energy
 Retail
 Automotive
2015 Annual Report.
Excel®
:
 Current Ratio
 Quick Ratio

decision making.
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(Walmart)
Assignment Steps
• Pharmaceutical
• Energy

• Retail
• Automotive
• Computer Hardware
2015 Annual Report.
Calculate the following ratios using Microsoft® Excel®:
• Current Ratio
• Quick Ratio
• Debt Equity Ratio
• Inventory Turnover Ratio
• Receivables Turnover Ratio
• Total Assets Turnover Ratio
• Profit Margin (Net Margin) Ratio
• Return on Assets Ratio
decision making.
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FIN 571 Week 1 Individual Assignment
Business Structures

Watch the "Your Business Structure" and "Corporate Business
Structures" videos on the Electronics Reserve Readings page.
Identify the different business structures.
Write a 350 to 700 word explanation of how each business structure
might and might not be advantageous.
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FIN 571 Week 2 DQ 1
In order to receive proper credit, please reply to this message when
posting your answers to WK2 DQ1.
Suppose you own $1 million worth of 30-year Treasury bonds.
Is this asset riskless?
You own $1 million worth of 90-day Treasury bills. You “roll
over” this investment every 90 days by reinvesting the proceeds in
another issue of 90-day Treasury bills. Is this investment riskless?
 Can you think of an asset that is truly riskless?
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FIN 571 Week 2 DQ 2
Suppose rf is 5% and rM is 10%. According to the SML and the
CAPM, an asset with a beta of −2.0
has a required return of negative 5% [= 5 − 2(10 − 5)]. Can this be
possible? Does this mean that
the asset has negative risk? Why would anyone ever invest in an asset
that has an expected and required return that is negative? Explain
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Business Structure Advice
Write a 350 to 700 word response to the following e-mail:
Dear Consultant,
I am currently starting a business and developing my business plan.
I'm in need of some advice on how to start forming my business. I am

not sure exactly how it will be financed and whether or not I want to
take on partners. I am interested and willing to learn the intricacies of
my options to determine how to best proceed with my plan.
Please advise on what my options are, the advantages and
disadvantages of each, and possible tax consequences for each
scenario?
Respectfully,
John Owner
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FIN 571 Week 2 Individual Assignment Ethics
and Finance
The Sarbanes-Oxley Act of 2002 (SOX) was passed as the result of
the Enron scandal and other instances of accounting fraud. This act
was passed to strengthen the role of the Securities and Exchange
Commission (SEC).
Research a case of corporate financial abuse related to the Sarbanes-
Oxley Act of 2002 and apply this to your current work or desired
place of employment.
Create a 1,400-word analysis of the application of SOX in which you
include the following:

 Discuss the mistakes made by the company and their leadership.
 Discuss the steps leadership could have taken to prevent or
mitigate the repercussions.
 Explain the role of market pressures on unethical behavior.
 Examine the influence of the basics of finance and how the
Sarbanes-Oxley Act of 2002 changed things.
 Evaluate the influence of Sarbanes-Oxley Act on ethical
behavior. Are businesses more ethical since the enactment?
 Explain the changes companies needed to make in how they use
and present financial statements.
 Discuss how SOX has affected your current place of
employment if at all, and if not, how it has affected others in the
same industry.
Cite a minimum of 2 scholarly sources.
Format your paper consistent with APA guidelines.
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FIN 571 Week 2 Individual Assignment Ratio
Analysis Problems
Ratio Analysis Problems
Ratio Analysis
(Individual Assignment)

You may use excel or word.doc format for this assignment.
Please post your homework as a word.doc or excel file in the class
discussion section below by the due date.
1. Analysis of cost of goods sold problem.
1992 1993 1994
Gross Profit Margin
60% 55% 51%
What is happening to cost of goods sold? As was done in the week 2
online lecture on ratio analysis, please assume sales of 1 dollar each
year as you do your analysis. This problem follows the process
shown in the Week 2 Ratio Analysis online lecture section titled:
"Another Income Statement Analytical Approach: Percent of
Sales"
(5 points)
2. Overhead (or Sales, General and Administrative Expense)
problem.
1992 1993 1994
Gross Profit Margin
40% 39% 41%
Operating Margin (NOI/Sales)
15% 10% 5%
What is happening to S,G and A (or overhead expenses)? Please set
up an illustration assuming sales of 1.00 dollar each year just as you
did in problem number one.
(5 points)
3. Balance Sheet Problem

1992 1993 199
4
Annual Sales Growth (over prior yr) +
1% 0% +1%
Current
Ratio 3.5X 2X 1.2X
Average Collection Period 25 days 30
days 55 days
What is happening to liquidity? Why? What are some follow-up
questions your would ask? (5 points)
4. Using the data provided below, which is the better managed
company? Why? Please support your answers by calculating
appropriate ratios. (5 points)
Company A Company B
Sales 10 million dollars 20 million dollars
Net Income 1 million dollars 2 million dollars
Total Assets 10 million dollars 15 million dollars
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FIN 571 Week 2 Stock Valuation and Analysis
(Amazon)

The purpose of this assignment is to allow students the opportunity to
research a Fortune 500 company stock using the popular online
research tool Yahoo Finance. The tool allows the student to review
analyst reports and other key financial information necessary to
evaluate the stock value and make an educated decision on whether to
invest.
Assignment Steps
 Pharmaceutical
 Energy
 Retail
 Automotive
 Manufacturing
 Mining
 What is the ticker symbol of the company you chose?
 What is the Current Stock Price?
 What is the Market Cap for the stock you chose?
 What is the Price to Earnings Ratio?
 What is the Dividend and Yield?
 What is the Enterprise Value?
 What is the Beta?
 Was there a Stock Split, and if so, when?
 What was the closing stock price for the last 5 days?

 What was the 52 Week High for this stock?
 What is the Book Value per Share?
 What type of rating are analysts recommending (i.e. buy, hold,
etc.)?
 What is the target price analysts are predicting for this stock?
 What is the analyst's average revenue estimate for next year?
 What are some of the significant news items and press releases
 Describe the relationship between the value of the stock and the
 What information does the Market Capitalization (Market Cap)
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(Ford)

invest.
Assignment Steps
 Pharmaceutical
 Energy
 Retail
 Automotive
 Manufacturing
 Mining
etc.)?

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(Target)
invest.
Assignment Steps
 Pharmaceutical
 Energy

 Retail
 Automotive
 Manufacturing
 Mining
etc.)?

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(Walmart)
invest.
Assignment Steps
 Pharmaceutical
 Energy
 Retail
 Automotive
 Manufacturing
 Mining

etc.)?
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FIN 571 Week 3 DQ 1

Why are interest rates on short-term loans not necessarily comparable
to each other? Give three possible reasons.
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FIN 571 Week 3 DQ 2
Optical Supply Company offers credit terms of 2/10, net 60. If Optical
Supply is considering a change in its credit terms to one of those
indicated, explain whether the change should increase or decrease
sales. (a) 2/10, net 30, (b) net 60, (c) 3/15, net 60, (d) 2/10, net 30, 30
extra
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Interpreting Financial Results
Resource: Financial Statements for the company assigned by your
instructor in Week 2.
Review the assigned company's financial statements from the past
three years.

Calculate the financial ratios for the assigned company's financial
statements, and then interpret those results against company historical
data as well as industry benchmarks:
 Compare the financial ratios with each of the preceding three (3)
years (e.g. 2014 with 2013; 2013 with 2012; and 2012 with
2011).
 Compare the calculated financial ratios against the industry
benchmarks for the industry of your assigned company.
Write a 500 to 750 word summary of your analysis.
Show financial calculations where appropriate.
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FIN 571 Week 3 Researching Industry
Financial Statistics
The purpose of this assignment is to allow the students an opportunity
to complete their financial evaluation of a company using the
financial research database Plunkett Research Online. Plunkett
Research Online provides in-depth analysis of a company's financials,
comparisons to industry averages, a list of top executives, how the

company compares to other competitors in terms of revenue, number
of employees, market capitalization and other key financial metrics.
Assignment Steps
Resources: Plunket Research Online located in the Week 3 Electronic
Reserve Readings; Microsoft® Excel®
Access the the Plunkett Research database in the University Library
by following these steps:
1. Click on the University Library link.
2. Click "Company Directories and Financials" under Library
Resources.
3. Click "Plunkett Research Online" under Company Directory and
Financials.
4. Review the following "HOW TO USE" videos:
o Plunkett Research Online Overview
o How to Export Company and Exec. Lists
o How to Build-a-Report
o How to Use Industry Analytics
o How to Research an Industry
o How to Use Company Profiles
5. Click "Research A Company."
6. Select a company (i.e. Walmart) and input into the Search Box.
7. Scroll through the search results to choose the correct company.
8. Click the link to the company profile (in blue).
Review the Company Profile and answer the following questions in
Microsoft® Word:
• What is the Ticker Symbol for the company you have selected?
• When was the company established?
• How many employees does it have?
• What is the NAICS Code?
• Who is the CEO?
• Where does the company rank in terms of Total Revenue when
compared to its competitors?
• Where does the company rank in terms of Net Income when
• Where does the company rank in terms of Return on Assets when
• What is the Revenue in 2014 and 2015?

• What was the Gross Margin in 2014 and 2015?
• What was the Earnings per Share in 2014 and 2015?
Save the Company Profile as a PDF document.
Compare the 2015 Company Financials to the Industry Averages and
export the results into a Microsoft® Excel® document.
Add a new column in your Microsoft® Excel® document titled
"Change" and calculate the difference between the company's 2015
financial results and the industry averages.
Explain in 1,050 words how the company you selected compares to
the industry averages in terms of financial profitability, liquidity and
solvency, and why the difference is important. Also review the
financial statements over the last three years, and discuss any positive
and negative trends would you report to the company's management.
Submit the calculations as well as the explanation.
Note: Grades are awarded based upon individual contributions to the
Learning Team assignment. Each Learning Team member receives a
grade based upon his/her contributions to the team assignment. Not all
students may receive the same grade for the team assignment.
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FIN 571 Week 3 Team Assignment Financial
Statement Interpretation
Select three publicly traded companies. Choose one each from the
following sectors: manufacturing, service, and retail. At least one of
the three companies should be foreign. If possible, choose from
among the team members' places of business or similar industries.
Calculate the following:

 Current ratio
 Quick ratio
 Net profit margin
 Asset utilization
 Financial leverage
Analyze the Return on Equity (ROE) for the last 2 years using the
DuPont method.
Develop a 2,100-word comparison of your three companies in which
you include the following:
 Discuss the differences in the industries
 Discuss the different measurement conventions and how this
affects presentations.
 Contrast IASB basis for accounting (IFRS) and FASB/GAAP
accounting.
 Compare the three companies and their strategies for managing
their working capital.
 Discuss the financial ratios and analyses and what they indicate
about the companies and their financial forecast.
Incorporate the calculated ratios and analysis into the paper.
Include the financial statements for the 3 companies as an appendix
to the paper.
Cite at least 3 scholarly sources.
Format the paper consistent with APA guidelines.
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FIN 571 Week 3 Using the Payback Method,
IRR, and NPV

The purpose of this assignment is to allow the student to calculate the
project cash flow using net present value (NPV), internal rate of
return (IRR), and the payback methods.
Assignment Steps
Resources: Corporate Finance
Create a 350-word memo to management including the following:
· Describe the use of internal rate of return (IRR), net present
value (NPV), and the payback method in evaluating project cash
flows.
· Describe the advantages and disadvantages of each method.
Calculate the following time value of money problems:
1. If you want to accumulate $500,000 in 20 years, how much do
you need to deposit today that pays an interest rate of 15%?
2. What is the future value if you plan to invest $200,000 for 5
years and the interest rate is 5%?
3. What is the interest rate for an initial investment of $100,000 to
grow to $300,000 in 10 years?
4. If your company purchases an annuity that will pay
$50,000/year for 10 years at a 11% discount rate, what is the value of
the annuity on the purchase date if the first annuity payment is made
on the date of purchase?
5. What is the rate of return required to accumulate $400,000 if
you invest $10,000 per year for 20 years. Assume all payments are
made at the end of the period.
Calculate the project cash flow generated for Project A and Project B
using the NPV method.
· Which project would you select, and why?
· Which project would you select under the payback method?
The discount rate is 10% for both projects.
· Use Microsoft®
Excel®
to prepare your answer.
· Note that a similar problem is in the textbook in Section 5.1.

Sample Template for Project A and Project B:
Show all work.
Submit the memo and all calcluations
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FIN 571 Week 4 Assignment Rate of Return
for Stocks and Bonds
The purpose of this assignment is to allow the student an opportunity
to calculate the rate of return of equity and debt instruments. It allows
the student to understand the effects of dividends; capital gains;
inflation rates; and how the nominal rate of return affects valuation
and pricing. The assignment also allows the student to apply concepts
related to CAPM, WACC, and Flotation Costs to understand the
influence of debt and equity on the company's capital structure.
Assignment Steps
Resources: Corporate Finance
Calculate the following problems and provide an overall summary of
how companies make financial decisions in no more than 700 words,
based on your answers:
1. 1) Stock Valuation: A stock has an initial price of $100 per
share, paid a dividend of $2.00 per share during the year, and had an
ending share price of $125. Compute the percentage total return,
capital gains yield, and dividend yield.
2.
3. 2) Total Return: You bought a share of 4% preferred stock for
$100 last year. The market price for your stock is now $120. What
was your total return for last year?
4.

5. 3) CAPM: A stock has a beta of 1.20, the expected market rate
of return is 12%, and a risk-free rate of 5 percent. What is the
expected rate of return of the stock?
6.
7. 4) WACC: The Corporation has a targeted capital structure of
80% common stock and 20% debt. The cost of equity is 12% and the
cost of debt is 7%. The tax rate is 30%. What is the company's
weighted average cost of capital (WACC)?
8.
9. 5) Flotation Costs: Medina Corp. has a debt-equity ratio of .75.
The company is considering a new plant that will cost $125 million to
build. When the company issues new equity, it incurs a flotation cost
of 10%. The flotation cost on new debt is 4%. What is the initial cost
of the plant if the company raises all equity externally?
10.
Secondly:
he purpose of this assignment is to allow the student an opportunity to
explain what it means to have an efficient capital market. Students
will gain an understanding of the different levels of market efficiency
and how behavioral finance can inhibit reaching market transparency.
Assignment Steps
Resources: Microsoft®
Word
Explain in 525 words what it means to have efficient capital market,
including:
· Describe the behavioral challenges in achieving efficiency.
· Discuss the three forms of market efficiency.
· What are the implications to corporate finance?
· Would you consider the real estate market an efficient capital
market? Please explain why or why not.
************************************
FIN 571 Week 4 DQ 1

A firm uses a single discount rate to compute the NPV of all its
potential capital budgeting projects, even though the projects have a
wide range of nondiversifiable risk. The firm then undertakes all those
projects that appear to have positive NPVs. Briefly explain why such
a firm would tend to become riskier over time.
************************************
FIN 571 Week 4 DQ 2
Phyllis believes that the firm should use straight-line depreciation for
a capital project because it results in higher net income during the
early years of the project’s life. Joanna believes that the firm should
use the modified accelerated cost recovery system depreciation
because it reduces the tax liability during the early years of the
project’s life. Assuming you have a choice between depreciation
methods, whose advice should you follow? Why?
************************************
Analyzing Pro Forma Statements

Decide upon an initiative you want to implement that would increase
sales over the next five years, (for example, market another product,
corporate expansion, and so on).
Using the sample financial statements, create pro forma statements of
five year projections that are clear, concise, and easy to read. Be sure
to double check the calculations in your pro forma statements. Make
assumptions that support each line item increase or decrease for your
forecasted statements.
Discuss and interpret the financials in relation to the initiative. Make
recommendations on potential discretionary financing needs.
Write a 350 - 700 word analysis of the company's short term and long
term financing needs and determine strategies for the company to
manage working capital.
************************************
FIN 571 Week 4 Team Assignment Operating
Leverage and Forecasting
Operating Leverage and Forecasting Problems Team Assignment
Please complete the following problems. When calculating earnings
per share and PE ratios, please show your work. This problem is
similar to the examples shown in the lecture.

1. You manufacture hunting pack systems in China for 80 dollars
each, including shipping. The manufacturing costs only include
variable costs. Variable costs are not calculated as a percentage
of sales in this case. Sales are a function of the number of
packs sold and the price per pack. Likewise, variable costs are a
function of the number of packs sold and the cost to produce
each pack. You sell these packs to retailers for 200 dollars each.
In the current year you will sell 100,000 packs. Your fixed costs
including such items as insurance, marketing, travel, shows,
office supplies, warehouse rentals etc. totals 5 million dollars
this year and are not part of the 80 dollars per pack
manufacturing cost. The federal income tax rate for your
company is 40 percent.
Your company is publicly traded on the NASDAQ with 1,000,000
shares outstanding.
1. Please create a current income statement using the same format
as found in the lecture. (5 points)
2. Please calculate earnings per share. (2 points)
3. Please calculate the price/earnings multiple assuming that the
current stock price is 10 dollars per share. (2 points)
2. Create a two-year forecast of the income statement from the
information provided in problem number one. Please create
three columns of data: current year, year 2, and year 3. Assume
that sales increase ten percent per year for year's two and three.
Please show the earnings per share for each of the three years.
(10 points)
3. Please estimate the stock price for year's two and three,
assuming that the current PE multiple remains constant for each of the
two forecasted years. (6 points)
************************************

FIN 571 Week 5 Assignment Capital Market
Efficiency Paper
The purpose of this assignment is to allow the student an opportunity
to explain what it means to have an efficient capital market. Students
will gain an understanding of the different levels of market efficiency
and how behavioral finance can inhibit reaching market transparency.
Assignment Steps
Resources: Microsoft®
Word
Explain in 525 words what it means to have efficient capital market,
including:
 Describe the behavioral challenges in achieving efficiency.
 Discuss the three forms of market efficiency.
 What are the implications to corporate finance?
 Would you consider the real estate market an efficient capital
market? Please explain why or why not.
 ************************************
FIN 571 Week 5 Assignment Effect of Debt
Issuance on Stock Valuation

The purpose of this assignment is to demonstrate to students how the
issuance of debt to purchase outstanding common stock could affect
the value of the company's equity and redefine the capital structure.
The problem will also allow students to explore the effect of corporate
taxes through debt financing.
Assignment Steps
Resources:Corporate Finance
Scenario: Hightower, Inc. plans to announce it will issue $2.0 million
of perpetual debt and use the proceeds to repurchase common stock.
The bonds will sell at par with a coupon rate of 5%. Hightower, Inc. is
currently an all-equity company worth $7.5 million with 400,000
shares of common stock outstanding. After the sale of the bonds, the
company will maintain the new capital structure indefinitely. The
company currently generates annual pretax earnings of $1.5 million.
This level of earnings is expected to remain constant in perpetuity.
The tax rate is 35%.
Prepare a 1,050-word memo advising the management of Hightower,
Inc. on the financial impact, including the following:
· What is the expected return on the company's equity before the
announcement of the debt issue?
· Construct the company's market value balance sheet before the
announcement of the debt issue. What is the price per share of the
firm's equity?
· Construct the company's market value balance sheet
immediately after the announcement of the debt issue.
· What is the company's stock price per share immediately after
the repurchase announcement?
· How many shares will the company repurchase as a result of
the debt issue? How many shares of common stock will remain after
the repurchase?
· What is the required return on the company's equity after the
restructuring?
· Discuss the advantages and disadvantages of debt financing
over equity financing.
************************************
FIN 571 Week 5 DQ 1

Because the weighted average is always a correct measure of a
required return, why do firms not create securities to finance each
project and offer them in the capital market in order to accurately
determine the required return for the project?
************************************
FIN 571 Week 5 DQ 2
The development of the new issue junk bond market had important
implications for capital structure choice. The existence of a viable
junk bond market means that firms can comfortably maintain higher
degrees of leverage than they could prior to the development of this
market. Do you agree or disagree? Justify your answer.
************************************
FIN 571 Week 5 Individual Assignment DCF
and WACC Problems

Discounted Cash Flows and WACC Homework Problems
Please post the answers (and show your work) in the assignments
section by midnight the last day of the week assigned.
1. Calculate the future value of 1,535 invested today for 8 years at
6 percent.
(5 points)
2. What is the total present value of the following cash stream,
discounted at 8 percent? (5 points)
Year Amount
1 400
2 750
3 945
4 145
5 78

3. If you invested $2,000 per year into an IRA for 30 years and
received 6 percent return each year, what would the account balance
be in 30 years? (5 points)
4. A friend gives you a proposition. If you give him 1,500 dollars
today, he will guarantee your receive 12 percent a year for the next 5
years. How much money will you receive from him at the end of 5
years? (5 points)
5. You want to buy a new Computer Aided Design (CAD) system for
your business. The cost of the system is $150,000 and you expect to
save over $40,000 per year in reduced labor costs. Please calculate
the net present value of the CAD if your required return is 10 percent
and the life of the system is expected to be 5 years. (10 points)
6. Your company is considering converting its heating system in the
main office from coal to heating oil. The initial cost of removing the
coal fired furnace and installing an new oil fired unit is $60,000. The
life of the analysis is 7 years. In the past you spent $25,000 per year
on coal. The new company says you will spend no more than $15,000
per year on heating oil. If your required return is 12 percent, should
you make this investment? Please calculate the net present value of
this project. (10 points)
7. You have collected the following information:
a. the yield on your company’s preferred stock 8%
b. the yield on your company’s debt 10%

c. the required return on your company’s common stock and internal
equity 12%
d. debt total $5,000,000
e. preferred stock current market value $10,000,000
f. common stock and retained earnings total value $20,000,000
Please calculate the pre-tax weighted average cost of capital (WACC)
for your company.
(10 points)
8. Your company’s marginal income tax rate is 40%. Please
calculate the post tax WACC from the information provided in
problem 7. (10 points)
************************************
FIN 571 Week 5 Team Assignment Capital
Budgeting Assignment, Part 1 (New Heritage
Doll)
Acting as the executive team for a small company, your team will
apply the principles of capital budgeting to invest in growth and cash
flow improvement opportunities in three phases over 10 simulated

years. Each opportunity has a unique financial profile and you must
analyze the effects on working capital. Examples of opportunities
include taking on new customers, capitalizing on supplier discounts,
and reducing inventory.
The team must understand how the income statement, balance sheet,
and statement of cash flows are interconnected and be able to analyze
forecasted financial information to consider possible effects of each
opportunity on the firm's financial position. The company operates on
thin margins with a constrained cash position and limited available
credit. You must optimize use of internal and external credit as you
balance the desire for growth with the need for maintaining liquidity.
Create a 1,050-word analysis of the team members' decisions during
each phase (1-3) and how they influenced each member's final
results.
 Analyze the influence of member's decisions on sales outcomes
or metrics of SNC.
 Analyze the influence of member's decisions on EBIT outcomes
or metrics of SNC.
 Assess the influence of member's decisions on Net Income
outcomes or metrics of SNC.
 Analyze the influence of member's decisions on Free Cash Flow
 Assess the influence of member's decisions on Total Firm Value
Cite a minimum of two scholarly references.
Format your assignment consistent with APA guidelines.
************************************
FIN 571 Week 5 Working Capital Simulation
Managing Growth, Part 1 (SNC)

Acting as the executive team for a small company, your team will
apply the principles of capital budgeting to invest in growth and cash
flow improvement opportunities in three phases over 10 simulated
years. Each opportunity has a unique financial profile and you must
analyze the effects on working capital. Examples of opportunities
include taking on new customers, capitalizing on supplier discounts,
and reducing inventory.
The team must understand how the income statement, balance sheet,
and statement of cash flows are interconnected and be able to analyze
Sign-in to the Harvard Business Simulation and review each of the
following:
 Welcome Statement
 How to Play
 Terminology Primer
 More Details (this includes information to help you understand
how to play the simulation)
Complete the Harvard Business Simulation individually and track
and save your results.
Create a 1,050-word analysis of the team members' decisions during
each phase (1-3) and how they influenced each member's final
results.
 Analyze the influence of member's decisions on sales outcomes
or metrics of SNC.

 Analyze the influence of member's decisions on EBIT outcomes
or metrics of SNC.
 Assess the influence of member's decisions on Net Income
 Analyze the influence of member's decisions on Free Cash Flow
 Assess the influence of member's decisions on Total Firm Value
Cite a minimum of two scholarly references.
Format your assignment consistent with APA guidelines.
************************************
Working Capital Simulation Managing Growth
Assignment
Resources:
Harvard Business Publishing: Working Capital Simulation: Managing
Growth Assignment
Ch. 1 - 21 ofFundamentals of Corporate Finance
WileyPLUS Assignments
All additional resources from each week

Review the following scenario:
Acting as the CEO of a small company, you will apply the principles
of capital budgeting to invest in growth and cash flow improvement
opportunities in three phases over 10 simulated years. Each
opportunity has a unique financial profile and you must analyze the
effects on working capital. Examples of opportunities include taking
on new customers, capitalizing on supplier discounts, and reducing
inventory.
You must understand how the income statement, balance sheet, and
statement of cash flows are interconnected and be able to analyze
Sign-in to the simulation and review each of the following:
 Welcome Statement
 How to Play
 Terminology Primer
 More Details (this includes information to help you understand
how to play the simulation)
Write a paper of no more than 1,400 words that analyzes your
decisions during each phase (1-3) and how they influenced each of the
following final outcomes (metrics) of SNC:
 Sales
 EBIT
 Net Income
 Free Cash Flow
 Total Firm Value

Address the following in your paper:
 A summary of your decisions and why you made them
 How they affected SNC's working capital
 What general effects are associated with limited access to
financing
Include scholarly references (in addition to your course textbook and
simulation materials) to support your positions.
Format your paper consistent with APA guidelines.
************************************

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