The document contains examples and problems related to valuation of bonds and shares. It discusses calculating present value of bonds with different maturity periods, yields, interest rates and cash flows. It also provides examples of calculating intrinsic value of perpetual and redeemable preference shares, and value of common shares using dividend discount model and two-stage growth model. The problems cover various bond and share valuation concepts including yield to maturity, current yield and effective yield.
This document outlines the tariff plans for landline and wireless local loop (WLL) services provided by Chennai Telephones as of May 22, 2012. It provides details of security deposits, installation charges, monthly rental charges, free call allowances, call charges, and pulse rates for local, STD and international direct dialing calls for various plans for both urban and rural areas. It also describes special schemes including plans for credit/debit card authorization and concession plans for gallantry award winners and retired employees. New alternative plans TV-250, UL-450 and UL-600 introduced on promotional basis are also summarized.
The document provides a summary of Mr. Arnab Dutta's financial plan which includes an annual income statement, futuristic resource statement, application of funds statement, and risk analysis. It shows that Mr. Dutta earns Rs. 8,00,000 annually of which Rs. 42,230 is paid in taxes. Of the remaining Rs. 7,57,770, Rs. 3,50,000 is allocated to non-discretionary expenses and Rs. 1,80,000 to discretionary expenses. The surplus each year is projected to total Rs. 10,76,41,174 over his working life along with existing investments of Rs. 1,16,12,577 for a total of Rs
This document provides an overview of various financial rates and concepts including:
1. It reviews simple vs. compound interest, nominal annual rate vs. effective annual rate, equivalent rates, interest rate vs. discount rate, and nominal vs. real rates.
2. It discusses yield to maturity, risk-free rate, spot rates, and forward rates. Examples are provided for calculating spot rates and relating spot and forward rates.
3. Key concepts covered include using spot rates to synthesize coupon bonds, and the relationship between spot rates, forward rates, and maturity/rollover strategies in theory.
The document provides information on investment projections for different insurance plans over a 10 year period. It shows projections for total pension funds, rider benefits, and life and accident coverage amounts for ages 18 to 50 for plans with annual premiums ranging from Rp6,000,000 to Rp36,000,000 with increasing coverage amounts corresponding to higher premium levels.
This document discusses various interest rates and yield curves. It begins with an overview of simple versus compound interest, nominal annual rate (NAR) versus effective annual rate (EAR), equivalent rates, and nominal versus real rates. It then covers the risk-free rate using US Treasury securities, yield to maturity (YTM), spot rates for zero-coupon bonds, and forward rates. Spot and forward rates are used to synthesize coupon bonds or determine future implied interest rates between two periods.
Bill Stankeiwicz Copy Scope 2010 Bristlecone Co. StrategyBillStankiewicz
Sara Lee implemented SAP BusinessObjects solutions to gain visibility into their spend data across 19 business units and 22 source systems. This allowed them to aggregate billions in spend across approximately 15 sites and multiple business units. They were able to classify all of their spend into a proprietary taxonomy and perform supplier normalization in just 12 weeks. Leading companies are already benefiting from increased savings, improved processes, and reduced supplier risk through SAP's solutions.
C:\Fakepath\17255final Old Sugg Paper June09 1guest510ed56
This document summarizes the key details from a multi-part question regarding the amalgamation of two companies, Agni Ltd. and Bayu Ltd, into a new holding company called Chandrama Ltd.
The summary provides:
1) A statement of purchase consideration showing the calculation of amounts owed to Agni Ltd. and Bayu Ltd. shareholders based on profits and net assets.
2) A balance sheet for the new holding company Chandrama Ltd. after acquiring Agni Ltd. and Bayu Ltd., showing shares issued as consideration.
3) Several working notes providing adjustments made to Bayu Ltd.'s financials to make them comparable to Agni Ltd., and calculations of net profits and assets
The document is a race card for the Kentucky Derby at Churchill Downs on May 1, 2010. It lists the post positions and odds for the horses running in the race. Lookin At Lucky is the morning line favorite at 3-1 odds. Noble's Promise has odds of 5-1 and Ice Box is listed at 20-1 odds.
This document outlines the tariff plans for landline and wireless local loop (WLL) services provided by Chennai Telephones as of May 22, 2012. It provides details of security deposits, installation charges, monthly rental charges, free call allowances, call charges, and pulse rates for local, STD and international direct dialing calls for various plans for both urban and rural areas. It also describes special schemes including plans for credit/debit card authorization and concession plans for gallantry award winners and retired employees. New alternative plans TV-250, UL-450 and UL-600 introduced on promotional basis are also summarized.
The document provides a summary of Mr. Arnab Dutta's financial plan which includes an annual income statement, futuristic resource statement, application of funds statement, and risk analysis. It shows that Mr. Dutta earns Rs. 8,00,000 annually of which Rs. 42,230 is paid in taxes. Of the remaining Rs. 7,57,770, Rs. 3,50,000 is allocated to non-discretionary expenses and Rs. 1,80,000 to discretionary expenses. The surplus each year is projected to total Rs. 10,76,41,174 over his working life along with existing investments of Rs. 1,16,12,577 for a total of Rs
This document provides an overview of various financial rates and concepts including:
1. It reviews simple vs. compound interest, nominal annual rate vs. effective annual rate, equivalent rates, interest rate vs. discount rate, and nominal vs. real rates.
2. It discusses yield to maturity, risk-free rate, spot rates, and forward rates. Examples are provided for calculating spot rates and relating spot and forward rates.
3. Key concepts covered include using spot rates to synthesize coupon bonds, and the relationship between spot rates, forward rates, and maturity/rollover strategies in theory.
The document provides information on investment projections for different insurance plans over a 10 year period. It shows projections for total pension funds, rider benefits, and life and accident coverage amounts for ages 18 to 50 for plans with annual premiums ranging from Rp6,000,000 to Rp36,000,000 with increasing coverage amounts corresponding to higher premium levels.
This document discusses various interest rates and yield curves. It begins with an overview of simple versus compound interest, nominal annual rate (NAR) versus effective annual rate (EAR), equivalent rates, and nominal versus real rates. It then covers the risk-free rate using US Treasury securities, yield to maturity (YTM), spot rates for zero-coupon bonds, and forward rates. Spot and forward rates are used to synthesize coupon bonds or determine future implied interest rates between two periods.
Bill Stankeiwicz Copy Scope 2010 Bristlecone Co. StrategyBillStankiewicz
Sara Lee implemented SAP BusinessObjects solutions to gain visibility into their spend data across 19 business units and 22 source systems. This allowed them to aggregate billions in spend across approximately 15 sites and multiple business units. They were able to classify all of their spend into a proprietary taxonomy and perform supplier normalization in just 12 weeks. Leading companies are already benefiting from increased savings, improved processes, and reduced supplier risk through SAP's solutions.
C:\Fakepath\17255final Old Sugg Paper June09 1guest510ed56
This document summarizes the key details from a multi-part question regarding the amalgamation of two companies, Agni Ltd. and Bayu Ltd, into a new holding company called Chandrama Ltd.
The summary provides:
1) A statement of purchase consideration showing the calculation of amounts owed to Agni Ltd. and Bayu Ltd. shareholders based on profits and net assets.
2) A balance sheet for the new holding company Chandrama Ltd. after acquiring Agni Ltd. and Bayu Ltd., showing shares issued as consideration.
3) Several working notes providing adjustments made to Bayu Ltd.'s financials to make them comparable to Agni Ltd., and calculations of net profits and assets
The document is a race card for the Kentucky Derby at Churchill Downs on May 1, 2010. It lists the post positions and odds for the horses running in the race. Lookin At Lucky is the morning line favorite at 3-1 odds. Noble's Promise has odds of 5-1 and Ice Box is listed at 20-1 odds.
The document lists various services, companies, associated bills, and referral fees. It includes services like feng shui, home loans, home security cameras, insurance, investments in UK land, maid services, motor car insurance, property transactions, renovation, used car dealership, virtual offices, web design, web hosting, and will writing. Referral fees range from $5 for every $100 to $800 for seller referrals over $1 million for property transactions. Distributor prices and referral fees are also listed for air purifiers. Overall referral fees can provide up to a 10% overriding commission at the first level and 5% at the second level. Rates are subject to change so checking the listed website for updates
Sweco is an engineering consultancy firm with 5,400 employees across Europe. In 2010, Sweco had net sales of SEK 5,272.4 million and an operating profit of SEK 432.7 million. Sweco carried out close to 30,000 projects for around 10,000 clients in 2010 across 11 countries in Europe and exported projects to 80 countries worldwide. The Board proposes a dividend of SEK 3.00 per share for 2010.
This report summarizes the debt collection performance of 4 agents over time. It shows the number of daily calls made by each agent compared to their targets, as well as the ratio of cash collected to delinquent amounts owed. It also provides statistics on each agent's number of clients, proportion of promises kept to pay, total delinquent amounts and amounts of cash collected. Charts display the delinquent amounts and cash collected for each agent and bucket of days past due, with the highest collection rates for buckets between 31-90 days past due.
This document provides an overview of yield curves and interest rate concepts. It defines key terms like spot rates, forward rates, and yield to maturity. It also discusses theories that aim to explain the shape of the yield curve, including expectations theory, liquidity preference theory, and market segmentation theory. While each theory provides some insights, the document concludes that the real shape of the yield curve at any point in time depends on expected inflation, liquidity preferences, and the supply and demand of funds in the market.
Equity effectiveness: creating alignment and value with your equity compensat...Buck Consultants
Play on demand https://buckconsultants.omnovia.com/archives/121832
Creating equity compensation arrangements that are in the best interests of stakeholders requires an understanding of the technical intricacies of equity plan design, as well as how equity works as a tool for motivating your employees. Evaluating whether a stock-based compensation plan effectively serves its intended purpose is the challenge.
- What engages and motivates the global workforce
- Whether the fit between your equity programs and your organization’s culture is enough to create a motivated work force
- What business and financial metrics are most relevant in driving fundamental financial performance
- Where plan design may deviate from the Company’s objectives
This document discusses how Expense Reduction Analysts (ERA) helps private equity firms, portfolio companies, and corporations reduce expenses. ERA introduces portfolio companies to cost savings opportunities and works directly with private equity firms on post-closing projects. ERA's process benchmarks costs, conducts procurement processes, and identifies savings opportunities across various expense categories. ERA achieves an average of 20% savings for clients through renegotiating supplier contracts and benchmarking against industry peers, with savings realized in 91% of projects.
Using a private cloud powers analytics for Everyclick, a UK charity that generates donations for charities through online retail sales. Everyclick has grown 15.8% monthly and retained 56% of customers. The Kognitio cloud provides flexible analytics capabilities allowing Everyclick to gain insights like high spenders spending for multiple months, retention of long-term customers, and where customers are spending. This has enabled Everyclick to have instant data access and train-of-thought analysis to support growth while avoiding large infrastructure investments.
Valente provides employees with several benefits options including:
- 401(k) matching up to 3% of salary and Roth 401k option
- Voluntary life, short-term disability, and long-term disability insurance
- Three medical plans through Aetna with different costs and coverage levels
- Two dental plans through Principal - a buy-up plan with higher coverage and a base plan
- Vision coverage, flexible spending account, and employee assistance program
National Automobile Dealers Association
2009 Bi-Annual Survey of
Dealership Satisfaction with
Dealer System Providers’ Products and Services
(Market Research Study, October,2009)
spectra energy Q307MarginByContract_DCPMidstreamfinance49
This document provides gas volume and margin data by contract type for DCP Midstream for various quarters in 2006 and 2007. It shows that the majority of DCP's margin comes from percentage of proceeds (POP) contracts, where margins have remained steady. Keepwhole contract margins have increased, while fee-based gas and NGL transport margins have remained stable. Total margins, EBIT, and net income for DCP have increased over this period.
The Sherwin-Williams Company reported record financial results for 2007. Net sales increased 2.5% to $8 billion, a new record. Net income grew 6.9% to $615.6 million. Earnings per share increased 12% to $4.70. Cash from operations was $874.5 million, an increase of nearly $60 million over 2006. The company completed seven acquisitions to expand its product offerings and store presence globally.
DCP Midstream reported gas volume and margin results by contract type for the first quarter of 2007 compared to the fourth quarter of 2006 and the first three quarters of 2006. The document shows that for percentage of proceeds (POP) contracts, DCP Midstream's gas volume was 3.8 trillion British thermal units per day in the first quarter of 2007, with a margin of $296 million. Keepwhole contracts had a gas volume of 1.1 trillion British thermal units per day in the first quarter of 2007 and a margin of $43 million. Total margin for the company was $468 million in the first quarter of 2007.
Melford Hospital's pediatrics unit operated at 100% capacity for 90 days last year, exceeding their maximum capacity by 20 patients. Using CVP analysis, the hospital determined adding 20 beds would allow them to meet increased demand and breakeven. However, adding beds only increased costs and decreased profits. Instead, the hospital recommends renting the additional beds to an outpatient surgical group, sharing costs. Estimating the surgical group will use the beds for 4,200 patient days, annual profit is projected to increase to $786,333 with 26,000 total patient days.
DCP Midstream reported financial and volume metrics for various natural gas contracts and marketing activities in 2007 and 2006. Percentage of Proceeds (POP) contracts had the highest margins, ranging from $0.87-$0.97 per million British thermal units. Keepwhole contracts produced lower but steady margins of $0.42-$0.70 per million British thermal units. Total margins were $468-$591 million per quarter.
1) The document discusses the distribution of cooperative profits (SHU) from PT. Akebono Brake Astra Internasional for the period ending December 31, 2010.
2) It details the allocation of the Rp. 16,538,947,000 in SHU to reserves, member benefits based on transactions and capital, as well as funds for management, employees, education, development, and social causes.
3) Tables show members' savings and transactions, and individual members' allocation of SHU based on transaction and capital indices.
Norfolk Southern Corporation's 2008 Annual Report summarizes the company's strong financial performance in 2008. Some key highlights include record operating revenues and income, an improved operating ratio of 71.1%, and continued growth in net income and earnings per share. The report also discusses Norfolk Southern's focus on safety, service quality, growing its business, supporting communities, and investing in infrastructure and technology to position the company for long-term success.
This document provides an overview of Panasonic Manufacturing Malaysia Berhad (PMMA). [1] It discusses PMMA's history, founding, products, and financial performance between 2008-2010. [2] Key metrics like gross profit margin, operating profit margin, net profit margin, return on assets (ROA), and return on equity (ROE) are presented for these three years. [3] Overall, PMMA's financial performance improved in 2010 compared to 2009.
This document summarizes the financial analysis of capacity expansion options for Divya Handtools Pvt. Ltd. It compares the net present value (NPV), annual payments, and total costs of borrowing from the State Bank of India (SBI) or a financial institution (FI), or leasing equipment. The analysis shows that borrowing from the FI has the lowest annual interest rate at 13.5% and a quarterly payment of Rs. 9.2 million. Borrowing is also cheaper than leasing, as the value of lease rentals of Rs. 314 million is higher than the borrowing amount of Rs. 300 million.
The document discusses various time value of money concepts including future and present value, compound interest, annuities, loan amortization, and effective interest rates. It provides examples and formulas for calculating things like future value, present value, interest rates, loan payments, and more. Tables are included showing factors for various interest rates and time periods.
The Quantification Of Loan Restructuringjpkelly_ie
This document discusses various quantitative tools for analyzing loans and portfolios. It introduces the key variables in time value of money calculations, including number of periods, interest rate, present value, payment per period, and future value. It demonstrates how changing these variables, such as increasing the number of periods or interest rate, impacts the total cost of credit. The document also discusses compounding interest and its effect on the effective interest rate. Risk and the costs associated with lending are also covered.
1. A cash flow statement was constructed for a van purchased for Rs. 1000 that was rented out for 5 years. Revenue was received each year between Rs. 300-800.
2. Using a 10% discount rate, the net present value was calculated to be Rs. 568, indicating the investment was profitable.
3. Net present value analysis discounts future cash flows to determine if the present value of future cash flows exceeds the initial investment amount.
This document contains 12 problems related to capital budgeting decisions. The problems involve calculating net present value (NPV), internal rate of return (IRR), and comparing project cash flows discounted at different rates. The cash flows include both positive and negative amounts over multiple time periods. The problems demonstrate techniques for capital budgeting analysis including calculating NPV and IRR, comparing projects, and determining if a project should be accepted.
The document lists various services, companies, associated bills, and referral fees. It includes services like feng shui, home loans, home security cameras, insurance, investments in UK land, maid services, motor car insurance, property transactions, renovation, used car dealership, virtual offices, web design, web hosting, and will writing. Referral fees range from $5 for every $100 to $800 for seller referrals over $1 million for property transactions. Distributor prices and referral fees are also listed for air purifiers. Overall referral fees can provide up to a 10% overriding commission at the first level and 5% at the second level. Rates are subject to change so checking the listed website for updates
Sweco is an engineering consultancy firm with 5,400 employees across Europe. In 2010, Sweco had net sales of SEK 5,272.4 million and an operating profit of SEK 432.7 million. Sweco carried out close to 30,000 projects for around 10,000 clients in 2010 across 11 countries in Europe and exported projects to 80 countries worldwide. The Board proposes a dividend of SEK 3.00 per share for 2010.
This report summarizes the debt collection performance of 4 agents over time. It shows the number of daily calls made by each agent compared to their targets, as well as the ratio of cash collected to delinquent amounts owed. It also provides statistics on each agent's number of clients, proportion of promises kept to pay, total delinquent amounts and amounts of cash collected. Charts display the delinquent amounts and cash collected for each agent and bucket of days past due, with the highest collection rates for buckets between 31-90 days past due.
This document provides an overview of yield curves and interest rate concepts. It defines key terms like spot rates, forward rates, and yield to maturity. It also discusses theories that aim to explain the shape of the yield curve, including expectations theory, liquidity preference theory, and market segmentation theory. While each theory provides some insights, the document concludes that the real shape of the yield curve at any point in time depends on expected inflation, liquidity preferences, and the supply and demand of funds in the market.
Equity effectiveness: creating alignment and value with your equity compensat...Buck Consultants
Play on demand https://buckconsultants.omnovia.com/archives/121832
Creating equity compensation arrangements that are in the best interests of stakeholders requires an understanding of the technical intricacies of equity plan design, as well as how equity works as a tool for motivating your employees. Evaluating whether a stock-based compensation plan effectively serves its intended purpose is the challenge.
- What engages and motivates the global workforce
- Whether the fit between your equity programs and your organization’s culture is enough to create a motivated work force
- What business and financial metrics are most relevant in driving fundamental financial performance
- Where plan design may deviate from the Company’s objectives
This document discusses how Expense Reduction Analysts (ERA) helps private equity firms, portfolio companies, and corporations reduce expenses. ERA introduces portfolio companies to cost savings opportunities and works directly with private equity firms on post-closing projects. ERA's process benchmarks costs, conducts procurement processes, and identifies savings opportunities across various expense categories. ERA achieves an average of 20% savings for clients through renegotiating supplier contracts and benchmarking against industry peers, with savings realized in 91% of projects.
Using a private cloud powers analytics for Everyclick, a UK charity that generates donations for charities through online retail sales. Everyclick has grown 15.8% monthly and retained 56% of customers. The Kognitio cloud provides flexible analytics capabilities allowing Everyclick to gain insights like high spenders spending for multiple months, retention of long-term customers, and where customers are spending. This has enabled Everyclick to have instant data access and train-of-thought analysis to support growth while avoiding large infrastructure investments.
Valente provides employees with several benefits options including:
- 401(k) matching up to 3% of salary and Roth 401k option
- Voluntary life, short-term disability, and long-term disability insurance
- Three medical plans through Aetna with different costs and coverage levels
- Two dental plans through Principal - a buy-up plan with higher coverage and a base plan
- Vision coverage, flexible spending account, and employee assistance program
National Automobile Dealers Association
2009 Bi-Annual Survey of
Dealership Satisfaction with
Dealer System Providers’ Products and Services
(Market Research Study, October,2009)
spectra energy Q307MarginByContract_DCPMidstreamfinance49
This document provides gas volume and margin data by contract type for DCP Midstream for various quarters in 2006 and 2007. It shows that the majority of DCP's margin comes from percentage of proceeds (POP) contracts, where margins have remained steady. Keepwhole contract margins have increased, while fee-based gas and NGL transport margins have remained stable. Total margins, EBIT, and net income for DCP have increased over this period.
The Sherwin-Williams Company reported record financial results for 2007. Net sales increased 2.5% to $8 billion, a new record. Net income grew 6.9% to $615.6 million. Earnings per share increased 12% to $4.70. Cash from operations was $874.5 million, an increase of nearly $60 million over 2006. The company completed seven acquisitions to expand its product offerings and store presence globally.
DCP Midstream reported gas volume and margin results by contract type for the first quarter of 2007 compared to the fourth quarter of 2006 and the first three quarters of 2006. The document shows that for percentage of proceeds (POP) contracts, DCP Midstream's gas volume was 3.8 trillion British thermal units per day in the first quarter of 2007, with a margin of $296 million. Keepwhole contracts had a gas volume of 1.1 trillion British thermal units per day in the first quarter of 2007 and a margin of $43 million. Total margin for the company was $468 million in the first quarter of 2007.
Melford Hospital's pediatrics unit operated at 100% capacity for 90 days last year, exceeding their maximum capacity by 20 patients. Using CVP analysis, the hospital determined adding 20 beds would allow them to meet increased demand and breakeven. However, adding beds only increased costs and decreased profits. Instead, the hospital recommends renting the additional beds to an outpatient surgical group, sharing costs. Estimating the surgical group will use the beds for 4,200 patient days, annual profit is projected to increase to $786,333 with 26,000 total patient days.
DCP Midstream reported financial and volume metrics for various natural gas contracts and marketing activities in 2007 and 2006. Percentage of Proceeds (POP) contracts had the highest margins, ranging from $0.87-$0.97 per million British thermal units. Keepwhole contracts produced lower but steady margins of $0.42-$0.70 per million British thermal units. Total margins were $468-$591 million per quarter.
1) The document discusses the distribution of cooperative profits (SHU) from PT. Akebono Brake Astra Internasional for the period ending December 31, 2010.
2) It details the allocation of the Rp. 16,538,947,000 in SHU to reserves, member benefits based on transactions and capital, as well as funds for management, employees, education, development, and social causes.
3) Tables show members' savings and transactions, and individual members' allocation of SHU based on transaction and capital indices.
Norfolk Southern Corporation's 2008 Annual Report summarizes the company's strong financial performance in 2008. Some key highlights include record operating revenues and income, an improved operating ratio of 71.1%, and continued growth in net income and earnings per share. The report also discusses Norfolk Southern's focus on safety, service quality, growing its business, supporting communities, and investing in infrastructure and technology to position the company for long-term success.
This document provides an overview of Panasonic Manufacturing Malaysia Berhad (PMMA). [1] It discusses PMMA's history, founding, products, and financial performance between 2008-2010. [2] Key metrics like gross profit margin, operating profit margin, net profit margin, return on assets (ROA), and return on equity (ROE) are presented for these three years. [3] Overall, PMMA's financial performance improved in 2010 compared to 2009.
This document summarizes the financial analysis of capacity expansion options for Divya Handtools Pvt. Ltd. It compares the net present value (NPV), annual payments, and total costs of borrowing from the State Bank of India (SBI) or a financial institution (FI), or leasing equipment. The analysis shows that borrowing from the FI has the lowest annual interest rate at 13.5% and a quarterly payment of Rs. 9.2 million. Borrowing is also cheaper than leasing, as the value of lease rentals of Rs. 314 million is higher than the borrowing amount of Rs. 300 million.
The document discusses various time value of money concepts including future and present value, compound interest, annuities, loan amortization, and effective interest rates. It provides examples and formulas for calculating things like future value, present value, interest rates, loan payments, and more. Tables are included showing factors for various interest rates and time periods.
The Quantification Of Loan Restructuringjpkelly_ie
This document discusses various quantitative tools for analyzing loans and portfolios. It introduces the key variables in time value of money calculations, including number of periods, interest rate, present value, payment per period, and future value. It demonstrates how changing these variables, such as increasing the number of periods or interest rate, impacts the total cost of credit. The document also discusses compounding interest and its effect on the effective interest rate. Risk and the costs associated with lending are also covered.
1. A cash flow statement was constructed for a van purchased for Rs. 1000 that was rented out for 5 years. Revenue was received each year between Rs. 300-800.
2. Using a 10% discount rate, the net present value was calculated to be Rs. 568, indicating the investment was profitable.
3. Net present value analysis discounts future cash flows to determine if the present value of future cash flows exceeds the initial investment amount.
This document contains 12 problems related to capital budgeting decisions. The problems involve calculating net present value (NPV), internal rate of return (IRR), and comparing project cash flows discounted at different rates. The cash flows include both positive and negative amounts over multiple time periods. The problems demonstrate techniques for capital budgeting analysis including calculating NPV and IRR, comparing projects, and determining if a project should be accepted.
This document contains 17 problems related to capital budgeting decisions. Problem 1 presents a sample cash flow table and calculates NPV using different discount rates. Problem 2 similarly presents a cash flow table, calculates NPV and finds the IRR. Later problems calculate NPV, IRR, payback period and other capital budgeting metrics for various investment projects.
This document contains 12 problems related to capital budgeting decisions. The problems involve calculating net present value (NPV), internal rate of return (IRR), and comparing project cash flows discounted at different rates. The cash flows include both positive and negative amounts over multiple time periods. The problems demonstrate techniques for capital budgeting analysis including calculating NPV and IRR, comparing projects, and determining if a project should be accepted.
1) The document discusses various capital budgeting techniques for evaluating investment projects, including payback period, net present value (NPV), internal rate of return (IRR), and modified internal rate of return (MIRR).
2) The payback period is the number of years to recover the initial investment of a project, while NPV discounts future cash flows to determine if a project adds value. IRR is the discount rate that sets NPV equal to zero.
3) For mutually exclusive projects, the crossover rate technique involves finding the discount rate where the two projects' NPV profiles cross and the project with the higher NPV should be selected below the crossover rate.
This document discusses the time value of money concepts covered in Chapter 3, including:
1. The relationship between present and future value and how interest rates can adjust cash flows over time.
2. Calculating the future and present value of amounts, annuities, and mixed cash flows.
3. Using interest factor tables to solve problems involving unknown interest rates, time periods, or present/future values.
4. Examples of using the time value of money formulae and calculator to solve for future or present value in scenarios like investments, loans, or required future amounts.
The document provides an overview of key concepts related to the time value of money, including simple and compound interest, present and future value calculations, and annuities. It explains time value of money principles, interest rates, and how to use tables or calculators to solve for unknown values like future or present worth when given other known amounts. The chapter aims to help readers understand how to adjust the value of cash flows to a single point in time using interest rates.
The document recommends buying shares of Hindalco, an aluminum company trading on Indian stock exchanges. It is recommended to buy now at the current price of 108.90 rupees per share, with an expected upside of 16.6% to a target price of 127 rupees within 90 days. Hindalco's stock performance has lagged the overall market in the last year. The company's most recent financial results show revenues increasing but profits decreasing compared to the previous year. The recommendation is based on a technical analysis of Hindalco's stock price movements.
This document discusses several capital budgeting techniques:
1) The payback period measures the number of years to recover the initial investment of a project. However, it ignores cash flows beyond the payback period.
2) The book rate of return measures average income divided by average book value of assets. It does not consider the time value of money.
3) The internal rate of return (IRR) is the discount rate that sets the net present value (NPV) of a project to zero. It is commonly used but can be problematic for multi-period projects or when projects have different scales.
4) The profitability index is the NPV divided by initial investment. It generally agrees with NPV
Team maverick bond portfolio managment projekt 1Predrag Pesic
The document outlines steps to match a bond portfolio's cash flows to a set of liabilities through cash matching and duration matching. It first calculates adjusted bond prices with accrued interest, then derives a term structure using zero-coupon bonds and a polynomial curve fit. Cash matching aims to minimize portfolio cost by ensuring cash flows meet or exceed liabilities at each date, holding excess cash at zero rate. Duration matching seeks to match the portfolio and liabilities' sensitivity to interest rates by minimizing the number of bonds while satisfying cash flow and duration constraints.
This document contains information about a 10-year bond with a face value of $1,000, coupon rate of 10%, and yield to maturity of 10%. It calculates the bond's price of $1,000 using the present value of cash flows. It also shows the bond's duration is 6.76 years and how its price would change with a change in interest rates based on duration.
The document contains 10 tables that provide results and calculations for investment evaluation projects. Each table shows the cash flows, balance, present value of cash flows, and other metrics for a different project over 10 years. The final summary provides totals for the net present value and internal rate of return across all 10 projects.
This document discusses real options valuation and investment strategy through 5 problems:
1) Calculates the value of an expansion option for a project with NPV of -100 Rs crore that can expand for 2000 Rs crore with NPV of 2100 Rs crore, giving a total project value of 601.72 Rs crore.
2) Values an abandonment option for a project with NPV of -200 Rs crore that can be abandoned for 450 Rs crore, giving a value of 551.31 Rs crore.
3) Uses Black-Scholes to value a 25-year project's call and put options.
4) Analyzes investment strategy considering uncertainty in a project's
This document provides practice questions and answers related to valuing bonds. Specifically:
- It gives the calculations for determining the present value of various bonds with different coupon rates, payment frequencies, yields, and maturity dates.
- Tables show the effect of changing interest rates on the price of a bond over time.
- Questions ask the reader to calculate bond prices based on yields, determine if the expectations hypothesis holds based on changing forward rates, and compare the attractiveness of bonds with different coupons but the same yields.
- Duration and convexity are calculated for bonds to determine which has the highest risk given a rising yield curve. The relationship between bond prices and yields is examined.
In summary,
This document contains sample questions and solutions for computing financial metrics such as future value, present value, bond prices, yield to maturity, and internal rate of return. The questions provide numerical inputs and ask the reader to calculate specific financial values. The solutions show the calculations required to derive metrics like future value=$6,419.51 given inputs of principal=$2,250, rate=10%, and years=11.
- Asset and liability management involves managing interest rate risk by balancing interest-earning assets and interest-bearing liabilities.
- Unexpected changes in interest rates can significantly impact a bank's profitability and market value through reinvestment rate risk and price risk.
- Tools like gap analysis and duration analysis are used to measure a bank's interest rate sensitivity over different time periods and assess the impact of rate changes on net interest income and market value.
- Factors like the size and composition of the balance sheet, as well as changes in interest rate levels and spreads, influence a bank's interest rate risk profile. Managing this risk requires forecasting interest rates and balancing rate-sensitive assets and liabilities.
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1. Chapter 3: Valuation of Bonds and Shares
Problem 1
(1) 1-year government bond maturity value (Rs) 1,000
Market rate of interest 8%
PV of the bond: 1,000/1.08 (Rs) 925.93
(2) Purchase price of bond (Rs) 904.98
Implied return: (1,000 – 904.98)/904.98 10.50%
Problem 2
Perpetual interest (Rs) 140
Current yield 0.13
Price of bond (B) (Rs): 140/0.13 1076.92
Required rate 0.15
New price of bond (B) (Rs) : 140/0.15 933.33
Problem 3
Face value (Rs) 1000
Annual interest (Rs) 140
Maturity (years) 10
Maturity value (Rs) 1000
Required rate 0.12 0.14 0.16
PVAF, 10 year 5.6502 5.2161 4.8332
PVF, 10 year 0.3220 0.2697 0.2267
PV of interest (Rs) 791.03 730.26 676.65
PV of maturity value (Rs): (d x g) 321.97 269.74 226.68
PV of 10-year debenture (Rs) 1113.00 1000.00 903.34
n =10
PV of 10 - year bond = ∑ (1.12)
140
t =1
t
t
+
1,000
(1 .12 )10
= 140 × PVAF .12,10 + 1,000 × PVF.12,10
= 140 × 5 .6502 + 1,000 × 0 .3220 = Rs 1,113.00
Similar calculations can be made if the required rate is 14% or 16%.
What would happen to the present value of bond if it had a maturity of 5 years? A similar procedure can be
followed. PV of a 5-year bond at 12%, 14% and 16% respectively will be as shown below:
Required rate 0.12 0.14 0.16
PVAF, 5 year 3.6048 3.4331 3.2743
PVF, 5 year 0.5674 0.5194 0.4761
PV of interest (Rs) 504.67 480.63 458.40
PV of maturity value (Rs) 567.43 519.37 476.11
PV of 5-year debenture (Rs) 1072.10 1000.00 934.51
Problem 4
Face value (Rs) 1000
Interest rate 0.16
Interest (Rs): (1,000 x 0.16) 160
Price of bond, B0 (Rs) 800 1300 1000
INT
Yield =
B 0
0.20 0.123 0.16
Problem 5
Taxco (three-year maturity): PVF PVF
3. 20 1,000 0.610 610.27 0.554
1,545.62
* Annuity factor
Problem 7
Face value (Rs) 1,000
Maturity periods (half-yearly) 20
Half-yearly interest rate 6%
Interest payment period 10
Maturity value (Rs) 1,050
Required rate (half-yearly) 7%
Interest payment, 11 to 20 years (Rs) 60.00
Value of interest (Rs) 214.23
Value of maturity value (Rs) 271.34
Value of bond (Rs) 485.57
20
∑ (1.07)
60t 1,050
Valueof bond = t
+
t =11
(1.07)n
20(
= 60 × PVAF ,7% − PVAF ,7% + 1,050 × PVF ,7%
10 20 )
= 60 × (10.5940 − 7.0236) + 1,050 × 0.2584 = Rs 485.57
Problem 8
Bond 1 Bond 2 Bond 3 Bond 4
Interest rate 16% 14% 12% 12%
Required rate of return 15% 13% 8% 8%
Maturity period (years) 25 15 20 10
Par/maturity value (Rs) 100 100 100 100
Semi-annual interest rate 8.00% 7.00% 6.00% 6.00%
Required rate of return (half-yearly) 7.50% 6.50% 4.00% 4.00%
Compounding periods 50 30 40 20
PVAF (annuity) 12.9748 13.0587 19.7928 13.5903
Half-yearly interest (Rs) 8 7 6 6
PV of interest (Rs) 103.80 91.41 118.76 81.54
PVF (lump sum) 0.0269 0.1512 0.2083 0.4564
PV of maturity value (Rs) 2.69 15.12 20.83 45.64
Bond value (Rs) 106.49 106.53 139.59 127.18
Current market price of bonds (Rs) 95 100 110 115
Annual yields (by trial & error) 16.86% 14.00% 10.76% 9.60%
Semi-annual yield (by trial & error) 8.43% 7.00% 5.39% 4.82%
Value of a bond that pays interest half-yearly can be calculated by the following equation:
2n 1 ( INT t )
∑ 2 Bn
B0 = kd
+ k d 2n
t =1 (1 + 2
)t (1 + 2
)
Problem 9
4. 20 − year bond redeemable in 12 years : Half - yearly interes t 5%; periods 24
24
∑ (1 + YTC )
50 t 1,150
1, 000 = t
+
t =1
(1 + YTC ) n
YTC = 5 . 32 %
24
∑ (1 + YTC )
50 t 1,100
1, 000 = t
+
t =1
(1 + YTC ) n
YTC = 5 . 22 %
20 − year bond redeemable in 8 years : Half - yearly interes t 5%; periods 16
16
∑ (1 + YTC )
50 t 1,150
1, 000 = t
+
t =1
(1 + YTC ) n
YTC = 5 . 60 %
Problem 10
20 − year bond redeemable in 12 years : Half - yearly interest 5%; periods 24
24
∑ (1 + YTC )
50 t 1,150
1,000 = +
t
t =1
(1 + YTC ) n
YTC = 5 .32 %
24
∑ (1 + YTC )
50 t 1,100
1,000 = +
t
t =1
(1 + YTC ) n
YTC = 5 .22 %
20 − year bond redeemable in 8 years : Half - yearly interest 5%; periods 16
16
∑ (1 + YTC )
50 t 1,150
1,000 = +
t
t =1
(1 + YTC ) n
YTC = 5 .60 %
Problem 11
Annual interest rate 15%
Quarterly interest rate 3.75%
Market price (Rs) 875
Maturity value (Rs) 1000
Quarterly periods 60
New interest rate 12.00%
New quarterly interest rate 3.00%
Stated yield
Quarterly interest (Rs) 37.5
Market price (Rs) 875
Quarterly yield 4.34%
Expected yield
Quarterly interest (Rs) 30
Market price (Rs) 875
Quarterly yield 3.50%
Quarterly yields can be found by trial and error. You can also use the Excel formula for rate to calculate yield:
= RATE(nper,pmt,pv,[fv],[type],guess)
Problem 12
Value of perpetual preference share =12/0.10 = Rs 120 120
5. 7
∑
12 t 110
Value of redeemable preference share = t
+
t =1
(1 . 10 ) (1 . 10 ) 7
= 12 × PVAF 7 ,10 % + 110 × PVF 7 ,10 %
= 12 × 4 . 868 + 110 × 0 . 513 = Rs 114 . 87
You can use the Excel formula to calculate value of redeemable preference share: =PV(rate,nper,pmt,[fv],[type])
Problem 13
Expected DPS (Rs) 3.00
Current share price (Rs) 50.00
Share price after 1 year (Rs) 53.00
Required rate 0.10
PV of share (Rs):
DIV 1 + P1 3 + 53
P = = 50.91
(1 + k e )1 1 .1
Return on share:
DIV1 + (P1 − P0 ) 3 + 53 − 50 12%
re = = =
P0 50
Problem 14
Share price (Rs) 75.00
Capitalisation rate 0.12
Year DPS Share price (Rs) PVF PV
(Rs) at 12% (Rs)
0
1 7.50 0.8929 6.70
2 7.50 0.7972 5.98
3 9.00 0.7118 6.41
4 15.00 0.6355 9.53
4 70.00 0.6355 44.49
Value of the share 73.10
It is a desirable investment since the present value of the share is more than its current price.
Problem 15
Current share price 60.00
DPS 1.50
Growth rate 0.10
Required rate 0.12
Value of the share:
DIV 1
P0 =
k e − g
82.5
1 . 5 (1 . 1 ) 1 . 65
= = = 82 . 50
0 . 12 − 0 . 10 0 . 02
Share should be bought
6. Problem 16
Earnings growth up to 7 years 0.15
Perpetual growth after 7 years 0.09
Required rate for 7 years 0.12
Required rate after 7 years 0.10
EPS 4.00
DPS 2.00
DPS PVF PV
Year (Rs) @ 12% (Rs)
0 2.00
1 2.30 0.8929 2.05
2 2.65 0.7972 2.11
3 3.04 0.7118 2.17
4 3.50 0.6355 2.22
5 4.02 0.5674 2.28
6 4.63 0.5066 2.34
7 5.32 0.4523 2.41
15.58
Present value of dividend growing perpetually after 7 years
DIV 7 (1 + g n ) 5.32 (1.09 )
P7 = = = Rs 579.88 579.88
ke − gn 0.10 − 0.09
PV of Rs 579.88
579 . 88 1 . 10 7 = 579.88 × 0.5132 = Rs 297.57 297.57
Value of share: 15.58 + 297.57 313.16
Problem 17
(Rs)
Current EPS 5
Retention ratio, b 0.6
Current DPS, DIV0 = EPS0(1 - b) 2
Rate of return, r 0.15
Required rate, ke 0.13
Current share price (Rs) 60
Growth, g = b x r 0.09
Expected EPS (Rs): EPS1 = EPS0(1+g) = 5 x 1.09 5.45
Expected DPS (Rs): DIV1 = DIV0(1+g) = 2 x 1.09 2.18
Expected retained earnings, RE1 = EPS1 - DIV1 3.27
Value of share if g = 0
EPS 1 5 . 45
P 0 = =
k e − g 0 . 13 − 0
41.92
Value of share if g = 9%
D IV 1 2 ( 1 + .0 9 ) 2 .1 8
P0 = = =
k e − g 0 .1 3 − . 0 9 0 .0 4 54.50
Value of growth opportunities, Vg (Rs): 54.50 - 41.92 12.58
The following formula can be used to find Vg:
RE 1 (r − k e ) 3.27 (.15 − .13) .0654
Vg = = =
k e (k e − g) .13(.13 − .09 ) .0052 12.58
Problem 18
7. Total assets (Rs) 80,000
Equity (Rs) 80,000
Number of shares 10,000
Equity per share: 80,000/10,000 8
Internal rate of return, r 10%
Earnings: 10% × 80,000 8000
EPS 0.8
Capitalisation rate, k 12%
Retention ratio, b 70%
Dividend per share, DIV: 30% × 8 0.24
Growth rate, g: b × r 7%
Expected DIV: 0.240 × 1.07 0.2568
PV of share: 0.2568/(0.12 – 0.07) 5.14
Problem 19
Last year's DPS (Rs) 3
Current market price (Rs) 80
Required rate 0.1
Scenario 1: Scenario 2: Scenario 3:
No growth Perpetual growth Different
growth rates
Growth rate 0 0.06
Value of share (Rs) 3/.10= Rs 30 3(1.06)/.1 - .06 =Rs Rs 68.84 (see
79.5 below)
Scenario 3: Different growth rates
Growth rate Year DPS (Rs) PVF
1-3 years 0.12 0 3.00
4-6 years 0.07 1 3.36 0.9091
7 year and onwards 0.04 2 3.76 0.8264
3 4.21 0.7513
4 4.51 0.6830
5 4.83 0.6209
6 5.16 0.5645
PV of DPS at 10% from year 1 to 6
PV of DPS growing perpetually at the end of 6 years: 5.37 16.6667
5.16(1.04)/(.1 - .04)
PV of value of Rs 89.50 received at the end of 6th year: 0.5645
89.5 x 0.5645
Value of share (Rs): 18.32 + 50.42
Problem 20
Current DPS (Rs) 5
Current growth rate 0.05
New growth 0.1
Capitalisation rate 0.15
Share price (Rs) if g = 5%, [5(1.05)/(0.15-.05)] 52.5
Share price (Rs) if g = 10%, [5(1.1)/(0.15-0.1)] 110
When the firm’s growth increases from 5% to 10%, the share prices rises from Rs 52.50 to Rs 110. It is quite
logical since price depends on expected dividend and future growth opportunities.
Problem 21
Face value (Rs) 10
8. Market price
EPS (Rs) Dividend rate (Rs) DPS (Rs)
Bajaj 11.9 0.50 275.0 5.0
Hero Honda 10.2 0.22 135.0 2.2
Kinetic 12.0 0.25 177.5 2.5
Maharashtra. Scooters 20.1 0.25 205.0 2.5
Bajaj has the highest current share price but it also pays maximum dividend (as a percentage of its earnings). On the other hand, Maharashtra Scooters has maximu
EPS, lowest payout, lowest dividend yield and it is ranked third in terms of share price. Hero Honda has lowest EPS and lowest share price. Kinetic ranks at third p
in terms of EPS, DPS and share price. It appears that the market is giving consideration to the companies’ current performance as well as future growth prospects.
Problem 22
DPS in year 0 (Rs) 3.5
DPS in year 10, (Rs) 10.5
Period (years) 10
1/10 0.1161
Dividend growth rate: [(10.5/3.5) -1]
Share price (Rs) 75
Expected dividend yield [3.5(1.1161)/75] 0.0521
Capitalisation rate: 0.1161 + 0.0521 0.1682
Problem 23
Current EPS (Rs) 8.6
Growth 0.12
Payout 0.4
Retention ratio: 1 - .4 0.6
Capitalisation rate 0.18
DPS (Rs) 3.44
Expected EPS: 8.6 × 1.12 9.63
Expected dividend: 3.44 ×1.12 3.85
Expected retained earnings: 9.63 x 0.60 5.78
Share value (12% growth) (Rs) 64.21
Share value (no growth) (Rs) 53.51
Value of growth opportunities: 10.70
Firm's rate of return:
g = r × b 0.20
r = g / b = . 12 / .6
Value of growth opportunities: 10.70
RE1(r − ke ) 5.78(.20− .18) .1156
Vg = = =
ke (ke − g) .18(.18− .12) .0108
Problem 24
12% 14% Pref. Equity
debenture debenture share share
Face value (Rs) 1000 1000 100 100
Interest or dividend rate 12% 14% 15%
Payment frequency annual half-yearly annual annual
Maturity (years) 12 10
Compounding periods 12 20
Maturity value (Rs) 1000 1000
Principal amount (Rs crore) 50 30 100 200
Required rate of return 0.100 0.060 0.135 0.150
PVAF (annuity) 6.8137 11.4699
PVF (lump sum) 0.3186 0.3118
Interest/dividend amount (Rs) 120 70 15 12
9. Perpetual growth rate 0.08
Market value of each debenture or share (Rs) 120 x 6.8137 70 x 11.4699
+ 1000 x .3186 + 1000 x .3118 15/.135 12/(.15 - .08)
1136.27 1114.70 111.11 171.43
Total market value (Rs crore) 56.81 33.44 111.11 342.86
Problem 25
Net profit (Rs crore) 50
Number of shares (crore) 2
EPS: 50/2 25
ROE 25%
Capitalisation rate, k 12%
Payout 60%
Retention ratio, b 40%
Dividend per share, DIV: 60% × 25 15
Growth rate, g: b × r: 40% × 25% 10%
Expected DIV: 25 × 1.10 16.5
Current share price (Rs), P0 240
Expected dividend yield: DIV1/ P0 6.88%
Capitalisation rate, k = (DIV1/ P0) + g 16.88%
Problem 26
Net earnings (Rs million) 25
Paid-up capital (Rs million) 200
Par value of share (Rs) 10
Number of shares: paid-up capital/par value of share 20
(mn.)
EPS = dividend per share, DIV (assumed): 25/20 1.25
Growth (without investment) 2%
Opportunity cost of capital 10%
Share price: P0 = (1.25 × 1.02)/ (0.10 – 0.02) 15.94
Investment (Rs million) 10
Earnings from investment (Rs million) 2
Life of investment, years 15
Investment’s NPV: PV of Rs 2 million for 15 years at
10%: 2*7.6061-10 5.21
Share price (with investment): 15.94 + 5.21 (million) 21.15
Problem 27
Earnings (without project) (Rs crore) 80
Number of shares (crore) 5
EPS: 80/5 16
Required rate of return 12.50%
Share price (without project): 16/0.125 128
Earnings from project after one year (Rs crore) 20
EPS from project: 20/5 4
Growth in earnings from project after one year 8%
Required rate of return 12.50%
Value of growth opportunities: 4/(0.125 – 0.08) 88.89
Share value with project: 128 + 88.89 216.89
EPS after project 20
P/E ratio: 216.89/20 10.84
Problem 28
Number of shares (million) 10
10. Net cash profits (Rs million) 80
Cash EPS: 80/10 8
Opportunity cost of capital 20%
(a) (i) Retention ratio 40%
Return on retained earnings 20%
Growth: 40% × 20% 8%
Expected Dividend per share, DIV1: 8 × (1 – 0.40) × 1.08 5.18
Share price: 5.18/(0.20 – 0.08) 43.20
(a) (ii) Retention ratio 60%
Return on retained earnings 20%
Growth: 60% × 20% 12%
Expected Dividend per share, DIV1: 8 × (1 – 0.60) × 1.12 3.58
Share price: 3.58/(0.20 – 0.12) 44.80
(b) (i) Retention ratio 40%
Return on retained earnings 24%
Growth: 40% × 24% 9.60%
Expected Dividend per share, DIV1: 8 × (1 – 0.40) × 1.096 5.26
Share price: 5.26/(0.20 – 0.096) 50.58
(b) (ii) Retention ratio 60%
Return on retained earnings 24%
Growth: 60% × 24% 14.40%
Expected Dividend per share, DIV1: 8 × (1 – 0.60) × 1.144 3.66
Share price: 3.66/(0.20 – 0.144) 65.37
Problem 29
Year EPS DPS
Cash EPS (perpetuity) 10 0 10.00 5.00
Payout 100% 1 10.90 5.45
DIV 10 2 11.88 5.94
Opportunity cost of capital 15% 3 12.95 6.48
(a) Share price: 10/0.15 66.67 4 14.12 7.06
(b) Expansion opportunity 5 15.39 7.69
Earnings retention 50% 6 16.77 8.39
Rate of return 18% 7 18.28 9.14
Growth: 50% × 18% 9% 8 19.93 9.96
DIV1: 5 × 1.09 5.45 9 21.72 10.86
Period of growth, years 10 10 23.67 11.84
Value of growth opportunity:
1 n
1 + g
V = DIV 1 × × 1 −
k − g 1 + k
10
1 1 . 09 37.68
= 5 . 45 × × 1 −
0 . 15 − 0 . 09 1 . 15
= 5 . 45 × 16 . 67 × 0 . 4148 = Rs 37.68
10 157.80
Value after growth opportunity: (10×1.09 /0.15)
PV after growth opportunity: 157.80 × 1/1.1510 39.01
Total share price with growth opportunity: 37.68 + 39.01 76.69
18. Payout Earnings Dividend
yield yield
0.420 0.0433 0.0182
0.216 0.0756 0.0163
0.208 0.0676 0.0141
0.124 0.0980 0.0122
rnings). On the other hand, Maharashtra Scooters has maximum
has lowest EPS and lowest share price. Kinetic ranks at third place
nies’ current performance as well as future growth prospects.