FIN 380 Take-Home Final Examination- Fall, 2018 The following pages contain the take home midterm for Finance 380, sections A, B and C. The exam is due no later than Monday, December 17th at 9:00 AM. Late exams will lose 1 point for every minute late. By electronically submitting the final exam, you are attesting to the following. Please READ carefully. 1. I understand that this is an examination and attest that the work presented is my own; that it is done without outside assistance of any kind (except that provided by the instructor). I understand that the penalty for cheating or collusion of any kind is a grade of F for the course. 2. Spreadsheet solutions will be appropriately formatted and developed in a logical, readable, coherent fashion. Confusing or unformatted spreadsheets may result in a reduction of points. 3. I understand that the file tabs are in their original order and understand that out-of-order problems will not be graded (Note: it is YOUR responsibility to insure that what you pass in ordered correctly) 4. I understand that the due date and time for the exam is Monday, December 17th at 9:00 AM. I understand that the exam must be submitted electronically. I understand that exams passed in after that time will be considered late and will incur a minimum penalty of 1 point lost per minute late. 5. The file name should contain both your last name, first name, section and the word “Final” in that order. For example, if you’re in the 10AM section (Section A), your file name should be Ketcham.David.A.Final.xlsx 6. Make sure you pass in the FINAL exam, not a homework assignment or your midterm. I don’t have time to hunt you down. 7. If you submit your exam early, I’ll try to open the file and make sure I have the right exam and that I can view it. I’ll let you know if I have problems. It is unlikely that I will be able to do so for any exam submitted after 5:00 P.M. on the day (Sunday) before the due date. 8. The exam is being made available to you on or before December 10th and is due December 17th. That means you have ample time to ask questions in class, during office hours, via email, or through myriad other means. If you don’t understand a question, ask BEFORE the exam is due for clarification. Misunderstood questions leading to wrong answers will count against you. 9. Good luck! It’s almost over. INDEX [10] This worksheet contains prices and dividends (Hyatt recently began paying dividends in March, 2018) for four companies; each is chosen to represent a different industry sector. Note that Kroger split 1 for 2 in July 2015. Share prices and dividends have been adjusted so that pre-split values are consistent with values after the split. The number of shares for Kroger as shown in the table below should be used for all dates. Construct a Price Index, and Equally Weighted Returns Index, and a Value Weighted Returns Index. Set the initial index level at 25. Graph all three indices on the same graph. Co.

1. FIN 380 Take-Home Final Examination- Fall, 2018
The following pages contain the take home midterm for Finance
380, sections A, B and C. The exam is due no later than
Monday, December 17th at 9:00 AM. Late exams will lose 1
point for every minute late. By electronically submitting the
final exam, you are attesting to the following. Please READ
carefully.
1. I understand that this is an examination and attest that the
work presented is my own; that it is done without outside
assistance of any kind (except that provided by the instructor).
I understand that the penalty for cheating or collusion of any
kind is a grade of F for the course.
2. Spreadsheet solutions will be appropriately formatted and
developed in a logical, readable, coherent fashion. Confusing or
unformatted spreadsheets may result in a reduction of points.
3. I understand that the file tabs are in their original order and
understand that out-of-order problems will not be graded (Note:
it is YOUR responsibility to insure that what you pass in
ordered correctly)
4. I understand that the due date and time for the exam is
Monday, December 17th at 9:00 AM. I understand that the
exam must be submitted electronically. I understand that exams
passed in after that time will be considered late and will incur a
minimum penalty of 1 point lost per minute late.
5. The file name should contain both your last name, first name,
section and the word “Final” in that order. For example, if
you’re in the 10AM section (Section A), your file name should
be Ketcham.David.A.Final.xlsx
6. Make sure you pass in the FINAL exam, not a homework
assignment or your midterm. I don’t have time to hunt you
down.
7. If you submit your exam early, I’ll try to open the file and
make sure I have the right exam and that I can view it. I’ll let
you know if I have problems. It is unlikely that I will be able to

2. do so for any exam submitted after 5:00 P.M. on the day
(Sunday) before the due date.
8. The exam is being made available to you on or before
December 10th and is due December 17th. That means you
have ample time to ask questions in class, during office hours,
via email, or through myriad other means. If you don’t
understand a question, ask BEFORE the exam is due for
clarification. Misunderstood questions leading to wrong
answers will count against you.
9. Good luck! It’s almost over.
INDEX [10] This worksheet contains prices and dividends
(Hyatt recently began paying dividends in March, 2018) for four
companies; each is chosen to represent a different industry
sector. Note that Kroger split 1 for 2 in July 2015. Share
prices and dividends have been adjusted so that pre-split values
are consistent with values after the split. The number of shares
for Kroger as shown in the table below should be used for all
dates.
Construct a Price Index, and Equally Weighted Returns Index,
and a Value Weighted Returns Index. Set the initial index level
at 25. Graph all three indices on the same graph.
Company
Shares (MM)
Industry
1
Coca Cola
4,260.0
Food and Beverage
2
Hyatt Hotels
40.3
Hotels
3

3. Kroger Markets
797.4
Food Distribution
4
CVS Health
1,290.0
Health Care
===============================================
======================================
DECIDE [10] Write a spreadsheet that allows the user to input
an initial outlay, up to 10 years of non-constant cash-flows after
tax and a discount rate. The spreadsheet should return the
Payback Period, the Discounted Payback Period, the Internal
Rate of Return , the Modified Internal Rate of Return, and the
Net Present Value.
===============================================
======================================
EQUATION [5] Consider the following system of four
equations and four unknowns:
3α + β +2γ + 3δ =30
2α - β +8γ - δ =-21
-9α +7β +9γ + 6δ =-70
α + 8β +7γ - 8δ =5
Solve for α, β, γ, and δ.
===============================================
======================================
IRON [10] Iron Mountain, Inc. is one of the highest dividend
yield stocks on the NYSE, currently yielding 7.65% p.a. I have
provided monthly stock price and dividend information as well
as index levels of the S&P 500 and monthly risk free rates.
Using a characteristic line in risk premium form, calculate beta
and determine if Iron Mountain, Inc. stock has outperformed
the market on a risk-adjusted basis.
===============================================
======================================

4. PORT [10] In Investment class, you’ve no doubt seen the
derivation (at least graphically) of the Capital Market Line, a
line which shows the risk-return tradeoffs for efficient
portfolios when the risk-free asset is added to the mix. The
market portfolio is found by drawing a line from the risk-free
rate of interest (rf) on the Y axis tangent to the efficient
frontier. The market (or tangent) portfolio is the portfolio ON
THE EFFICIENT FRONTIER that maximizes the slope of the
Capital Market Line. That is, it is the portfolio (call it portfolio
T) that maximizes:
Subject to the usual constraints (ie the weights add up to one).
The worksheet PORT contains the covariance matrix and mean
returns for eight stocks. Using the matrix approach and
SOLVER, solve for the weights in the tangent portfolio
assuming the risk-free rate of interest is 5% (you may allow for
short-selling).
===============================================
======================================
SPORT-T [15] Sports-T Company makes T-shirts for sports
fans. I have provided pro forma balance sheets, income
statements the structure for a statement of cash flows. Using
the percent of sales method. Forecast financial statements
(balance sheets, income statements, and statements of cash
flow) for the next five years. Assume excess funds are invested
in marketable securities, and any financing shortfall is made up
by ISSUING LONG TERM DEBT. Estimate the share price.
===============================================
======================================CAPITAL
[15] Capital Choppers is a new business making frames for
custom-built motorcycles. The company must buy three pieces
of equipment; a pipe cutter, a pipe bender, and a robotic welder
to accomplish these tasks. The project is expected to produce
bike frames for eight years.

5. Equipment
Cost
Salvage (year 9)
MACRS life
Pipe Cutter
$75,000
$0
3 yrs
Pipe Bender
$175,000
$10,000
5 yrs
Robot Welder
$850,000
$40,000
5 yrs
The pipe cutter is expected to wear out and must be replaced in
year 5 (assume the cost of the asset increases at 2% per year).
The other two pieces of equipment will last through the entire
project life. Sales are expected to increase by 3% per year
throughout the project life. COGS/Sales is 73%; fixed costs are
$95,000 per year and working capital/sales (starting in year 1)
is 6% (assume it can be recovered in year 9). The project is
partially financed by $550,000 in interest only debt paying 4%
interest. The tax rate is 25% and the discount rate is 12.5%.
What minimum level of sales (in year 1) is necessary to justify
this project?
===============================================
======================================
OPTION [5] The stock for Bryant Company is currently trading
for $85.77 per share. A put option with an exercise price of
$90.00 per share and expiring 37 days from now sells for $6.22.
If the annual risk free rate is 2.45%, what is the standard
deviation of Bryant’s stock?
===============================================

6. ======================================
POLLING [10] Bryant Polling has been hired to do political
research for Kurt Blovian, a local candidate for State
Representative. The costs of interviewing prospective voters
varies by gender and political affiliation; for males, it costs $9
per Democrat, $10 per Republican, and $12.50 per Independent.
For females, the costs are $10 per Democrat, $13 per
Republican, and $14.50 per Independent. In order to assure
quality, the polling company has been given the following
criteria.
· They must interview at least 4,500 voters
· They sample must interview a minimum of 1,000 independent
voters.
· At least 2,000 males must be interviewed
· At least 1,750 females must be interviewed
· No more than 30% of those interviewed should be Democrats
· No more than 30% of those interviewed should be Republicans
· No more than 25% of those interviewed should be Republican
males
· Each of the six categories of voters (Republican males,
Republican females, Democratic males, Democratic females,
Independent males or Independent females) must constitute at
least 10% of the total interviews
Determine the least expensive sampling plan. What is the total
cost of that plan?
===============================================
======================================
SUNNY [10] Sunny Solar Energy is considering a highly
variable capital budgeting project which will last for four years.
(Assume the salvage value can be recovered, along with the
working capital in year 5). The project will carry a discount
rate of 11% and will be depreciated using 3 year MACRS
factors. You have been provided the following information:
Variable

7. Distribution
Mean
Standard Deviation
Initial Outlay
Normal
$ 1,000,000
$ 10,000
Initial Sales
Normal
$ 1,600,000
$ 200,000
Growth in Sales
Normal
4%
2%
COGS/Sales
Normal
70%
4%
Initial Fixed Cost
Normal
$ 100,000
$ 10,000
Growth in Fixed Cost
Normal
3%
2%
Working Capital/Sales
Normal
5%
1%
Salvage
Normal
$ 100,000
$ 5,000
Discount Rate

8. Normal
12%
2%
Minimum
Maximum
Tax Rate
Uniform
22%
30%
Sunny figures that growth in sales, COGS/Sales, growth in fixed
costs, WC/Sales and tax rate can vary each year. Estimate the
project’s cash flows and calculate the project’s NPV. Run 100
simulations, and graph out the frequency distribution of the
project’s NPV. Determine the probability that the NPV is
positive.
1. How do you plan on conducting the dialogue, over multiple
sessions or in a one-time sitting?
2. When do you expect to complete the dialogue?
3. How does the person you intend to have the dialogue with fit
the characteristics of the population you are studying?
My final project for this class I’m going to learn more about
those who are HIV/AIDS positive and seeing which cultures are
mostly affected. The HIV/AIDS community increases daily and
so many are affected by the lack of knowledge. So many
communities need help but trying to see which is needed the
most and why that culture percentage is so high.
For this dialogue I am planning to meet with individuals from

9. various cultures who have been affected. During this time, I
will speak with them about how they became infected and see
how much they new about this virus before contracting.
Completion time for this dialogue should be completed in a
month to two months. I am setting that time span because I want
to ensure that any valuable information that is provided can
assist me in the future with other clients.
INDEXDateCoca Cola Hyatt HotelsKroger MarketsCVS
HealthStock PriceDividendStock PriceDividendStock
PriceDividendStock
PriceDividend12/1/18$49.09$71.31$80.2011/1/18$50.40$0.390$
69.20$0.15$29.66$0.140$72.3910/1/18$47.88$79.59$29.76$78.
72$0.5009/1/18$46.19$0.390$77.36$0.15$29.11$75.248/1/18$4
4.57$78.23$31.50$0.140$64.867/1/18$46.63$77.15$29.00$64.3
5$0.5006/1/18$43.86$0.390$81.73$0.15$28.45$63.395/1/18$43.
00$76.87$24.33$0.125$69.834/1/18$43.21$76.26$25.19$62.21$
0.5003/1/18$43.43$0.390$77.27$0.15$23.94$67.732/1/18$43.22
$81.30$27.12$0.125$78.691/1/18$47.59$73.54$30.36$72.50$0.
50012/1/17$45.88$0.370$72.36$27.45$76.6011/1/17$45.77$62.
66$22.28$0.125$68.5310/1/17$45.98$61.79$20.70$81.32$0.500
9/1/17$45.01$0.370$59.51$20.06$77.348/1/17$45.55$55.57$21.
87$0.125$79.937/1/17$45.84$56.21$24.52$80.46$0.5006/1/17$
44.85$0.370$57.70$23.32$76.835/1/17$45.47$55.50$29.78$0.1
20$82.444/1/17$43.15$53.98$29.65$78.50$0.5003/1/17$42.44$
0.370$51.34$29.49$80.582/1/17$41.96$54.71$31.80$0.120$78.
811/1/17$41.57$55.26$33.96$78.91$0.50012/1/16$42.00$51.34
$34.51$76.8911/1/16$40.35$0.350$50.79$32.30$0.120$84.1010
/1/16$42.40$49.22$30.98$88.99$0.4259/1/16$42.32$0.350$53.4
8$29.68$93.408/1/16$43.43$50.44$31.99$0.120$92.727/1/16$4
3.63$49.14$34.19$95.74$0.4256/1/16$45.33$0.350$45.91$36.7
9$96.455/1/16$44.60$47.88$35.76$0.105$100.504/1/16$44.80$
49.49$35.39$103.73$0.4253/1/16$46.39$0.350$46.15$38.25$97
.172/1/16$43.13$38.68$39.91$0.105$96.591/1/16$42.92$47.02$

10. 38.81$97.77$0.42512/1/15$42.96$49.29$41.83$94.0911/1/15$4
2.62$0.330$50.40$37.66$0.105$98.7810/1/15$42.35$47.10$37.
80$96.48$0.3509/1/15$40.12$0.330$51.91$36.07$102.408/1/15
$39.32$55.83$34.50$0.105$112.477/1/15$41.08$56.69$39.24$1
04.88$0.3506/1/15$39.23$0.330$57.46$36.26$102.385/1/15$40.
96$58.05$36.40$0.090$99.294/1/15$40.56$59.22$34.46$103.21
$0.3503/1/15$40.55$0.330$60.54$38.33$103.872/1/15$43.30$5
6.26$35.58$0.090$98.161/1/15$41.17$60.21$34.53$96.31$0.35
012/1/14$42.22$58.93$32.11$91.3611/1/14$44.83$0.305$59.22
$29.92$0.090$85.8110/1/14$41.88$60.52$27.86$79.59$0.2759/
1/14$42.66$0.305$61.09$26.00$79.458/1/14$41.72$58.83$25.4
9$0.083$76.367/1/14$39.29$60.98$24.49$75.37$0.2756/1/14$4
2.36$0.305$61.16$24.72$78.325/1/14$40.91$56.28$23.87$0.08
3$72.724/1/14$40.79$53.81$23.02$74.86$0.2753/1/14$38.66$0.
305$52.16$21.83$73.142/1/14$38.20$47.79$20.97$0.083$67.72
1/1/14$37.82$49.46$18.05$71.57$0.27512/1/13$41.31$48.37$1
9.76$66.9611/1/13$40.19$0.280$47.60$20.88$0.083$62.2610/1/
13$39.57$42.96$21.42$56.75$0.2259/1/13$37.88$0.280$43.40$
20.17$58.058/1/13$38.18$45.25$18.30$0.075$61.497/1/13$40.0
8$40.36$19.64$57.18$0.2256/1/13$40.11$0.280$41.12$17.27$5
7.585/1/13$39.99$42.68$16.83$0.075$58.184/1/13$42.33$43.23
$17.19$54.99$0.2253/1/13$40.44$0.280$41.09$16.57$51.122/1/
13$38.72$40.07$14.61$0.075$51.201/1/13$37.24$38.57$13.85$
48.35$0.22512/1/12$36.25$36.50$13.01$46.5111/1/12$37.92$0.
255$36.50$13.12$0.075$46.40
DECIDE
EQUATION
IRONDatePriceDividendS&P500Risk-Free11/1/18$
33.972,740.370.149%10/1/18$ 30.612,924.590.148%9/1/18$
34.52$ 0.58752,901.130.145%8/1/18$
36.102,813.360.142%7/1/18$ 35.112,718.370.140%6/1/18$
35.01$ 0.58752,734.620.147%5/1/18$
33.292,654.800.150%4/1/18$ 33.94$
0.58752,648.050.147%3/1/18$ 32.282,640.870.139%2/1/18$
30.902,713.830.135%1/1/18$ 34.41$
0.58752,823.810.119%12/1/17$ 36.492,673.610.113%11/1/17$

11. 39.532,584.840.103%10/1/17$ 38.69$
0.55002,575.260.094%9/1/17$ 37.112,519.360.086%8/1/17$
37.602,471.650.082%7/1/17$ 34.75$
0.55002,470.300.088%6/1/17$ 32.252,423.410.083%5/1/17$
32.772,411.800.079%4/1/17$ 32.62$
0.55002,384.200.065%3/1/17$ 32.942,362.720.062%2/1/17$
33.572,363.640.044%1/1/17$ 33.06$
0.55002,278.870.042%12/1/16$ 29.512,238.830.040%11/1/16$
29.982,198.810.039%10/1/16$ 30.65$
0.48502,126.150.025%9/1/16$ 33.682,168.270.022%8/1/16$
34.472,170.950.027%7/1/16$ 36.99$
0.48502,173.600.020%6/1/16$ 35.272,098.860.021%5/1/16$
32.542,096.950.024%4/1/16$ 32.35$
0.48502,065.300.016%3/1/16$ 29.552,059.740.016%2/1/16$
25.601,932.230.026%1/1/16$ 24.001,940.240.025%12/1/15$
23.53$ 0.48502,043.940.012%11/1/15$
23.792,080.410.014%10/1/15$ 26.24$
0.47502,079.360.006%9/1/15$ 26.121,920.030.000%8/1/15$
23.871,972.180.004%7/1/15$ 25.31$
0.47502,103.840.005%6/1/15$ 25.722,063.110.001%5/1/15$
30.262,107.390.000%4/1/15$ 28.61$
0.47502,085.510.000%3/1/15$ 29.882,067.890.002%2/1/15$
30.102,104.500.001%1/1/15$ 32.63$
0.47501,994.990.000%12/1/14$ 31.28$
0.25502,058.900.003%11/1/14$ 30.552,067.560.000%10/1/14$
28.99$ 1.11402,018.050.000%9/1/14$
25.331,972.290.001%8/1/14$ 25.792,003.370.002%7/1/14$
24.02$ 0.27001,930.670.002%6/1/14$
25.171,960.230.002%5/1/14$ 22.111,923.570.003%4/1/14$
20.19$ 0.27001,883.950.002%3/1/14$
19.371,872.340.002%2/1/14$ 19.111,859.450.004%1/1/14$
18.55$ 0.54001,782.590.001%12/1/13$
20.911,848.360.005%11/1/13$ 19.371,805.810.005%10/1/13$
18.28$ 0.27001,756.540.003%9/1/13$
18.421,681.550.000%8/1/13$ 17.591,632.970.002%7/1/13$
18.96$ 0.27001,685.730.003%6/1/13$

12. 17.951,606.280.003%5/1/13$ 24.181,630.740.003%4/1/13$
25.54$ 0.27001,597.570.004%3/1/13$
24.301,569.190.005%2/1/13$ 23.091,514.680.008%
PORTIbarInkyIzapIvisionIstandIprayIaloneIweepIbar0.14890.00
42-0.02910.0775-0.02180.0273-0.06350.0147Inky0.00420.2911-
0.00760.07110.07820.02110.03230.0090Izap-0.0291-
0.00760.23810.01500.0483-
0.00020.02070.0819Ivision0.07750.07110.01500.6240-
0.09830.04690.01450.0253Istand-0.02180.07820.0483-
0.09830.3754-0.01580.0395-0.0711Ipray0.02730.0211-
0.00020.0469-0.01580.0634-0.01050.0178Ialone-
0.06350.03230.02070.01450.0395-0.01050.2803-
0.0408Iweep0.01470.00900.08190.0253-0.07110.0178-
0.04080.2611Mean10.35%19.95%20.88%25.88%36.01%8.14%1
9.63%18.25%
SPORT-TSales
Growth15.00%COGS/SalesCash/SalesSG&A/SalesA/R
SalesInterest/LTDebt6.00%Inventory/SalesInterest/ST
Debt4.00%Net Fixed Assets/SalesInt
Earned1.50%A/P.SalesTaxes/EBTOther
CL/SalesDPS/EPSShares Outstanding (in
thousands)425,500Depr/NFARequired Return8.00%Long-Term
CF growth3.00%BALANCE SHEET12/31/17AssetsCurrent
Assets Cash And Cash Equivalents$ 681,000 Marketable
Securities$ 305,100 Net Receivables$ 506,000
Inventory$ 3,338,000Total Current Assets$
4,830,100Property Plant and Equipment$ 2,751,800Total
Assets$ 7,581,900LiabilitiesCurrent Liabilities Accounts
Payable$ 516,900 Notes Payable Other Current
Liabilities$ 469,000Total Current Liabilities$ 985,900Long
Term Debt$ 5,100,000Total Liabilities$
6,085,900Stockholders' Equity Common Stock$
49,000Retained Earnings$ 1,304,000Capital Surplus$
143,000Total Stockholder Equity$ 1,496,000Total Liabilities +
Net Worth$ 7,581,900Balance Sheet Check$ - 0INCOME
STATEMENT2017Total Revenue$ 30,848,000Cost of

13. Revenue$ (23,122,000)Gross Profit$ 7,728,017Operating
ExpensesSelling General and Administrative$
(5,626,000)Depreciation$ (456,000)Total Operating Expenses$
(6,082,000)Income from Continuing Operations$
1,646,017Total Other Income/Expenses Net$ - 0Earnings
Before Interest And Taxes$ 1,646,017Interest Expense$
(293,000)Income Before Tax$ 1,353,017Income Tax Expense$
(371,525)Net Income From Continuing Ops$ 981,492Net
Income$ 981,492Dividends Paid$ (151,000)Change in
Retained Earnings$ 830,492STATEMENT OF CASH
FLOWS2017Cash Flows from OperationsNet
IncomeDepreciation ExpenseDecrease (Increase) in
ReceivablesDecrease (Increase) in InventoriesDecrease
(Increase) in Other Current AssetsIncrease (Decrease) in
Accounts PayableIncrease (Decrease) in Other Current
LiabilitiesIncrease (Decrease) in Other Non-Current Liabilities
Total Cash Flow From OperationsCash Flows from
Investing(Additions to) Gross Property Plant and
EquipmentInvestment in Other Non-Current Assets Total
Cash Flows from InvestingCash Flows from FinancingFrom
Issuance (Repayment) of Short-Term DebtFrom Issuance
(Repayment) of Long-Term DebtFrom Sale (Repurchase) of
EquityDividends Paid to Shareholders Cash Flows From
FinancingNet Change in Cash and Marketable
SecuritiesBeginning Cash and Marketable SecuritiesEnding
Cash and Marketable SecuritiesNet Change in Cash and
Marketable Securities
CAPITALMACRS
FactorsYear3510.33330.200020.44440.320030.14820.192040.07
410.115250.115260.0576
OPTION
POLLING
SUNNYAsset Life Year310.333320.444430.148240.074156