The Between Corporate Strategy And Finance

The Between Corporate Strategy And Finance
Week six continued to expand on the concept of NPV, with emphasis on financial tools such as the
sensitivity analysis, break–even analysis, simulation, real options and decision trees. These tools
allowed the class further insights into projects' financial status before making the final accept–reject
decision. Hence, at the end of the week, students that were able to grasp the concept introduced in
week's one through week five were able to apply important financial tools learned thus far to
analyze projects and explain the link between corporate strategy and finance, these students were
able to recap the relationships between economic rent, market prices, competitive advantages and
the NPV analysis in relation to capital budgeting activities (Allen, Brealey, & Myers, 2013;
"Overview & Objectives", n.d.).
Week seven of the course focused on how managers can successfully develop sets of tools to help
decide what the adequate capital structure of their company should be. This week was very
interesting because the class was able to discuss how financial markets and related institutions
contributed to the overall economy of various countries. At the end of week seven, the class learned
more business theories related to capital structure and the importance of financial markets and
institutions to the various economies ("Overview & Objectives", n.d.).
Week eight marked the final week of the course, and as stated in the syllabus the class had a final
exam, this exam was to assess
... Get more on HelpWriting.net ...

You Work in the Corporate Finance
You work in the corporate finance Click Link Below To Buy:
http://hwaid.com/shop/corporate–finance/
You work in the corporate finance division of The Home Depot and your boss has asked you to
review the firm's capital structure. Specifically, your boss is considering changing the firm's debt
level.Your boss remembers something from his MBA program about capital structure being
irrelevant, but isn't quite sure what that means. You know that capital structure is irrelevant under
the conditions of perfect markets and will demonstrate this point for your boss by showing that the
weighted average cost of capital remains constant under various levels of debt. So, for now, suppose
that capital markets are perfect as you prepare ... Show more content on Helpwriting.net ...
The next page will contain information for all of Home Depot's outstanding and recently matured
bonds. Select the latest yield on an outstanding bond with the shortest remaining maturity (the
maturity date is on the line describing each issue; some–times the list also contains recently retired
bonds, so make sure not to use one of those). For simplicity, since you are just trying to illustrate the
main concepts for your boss, you may use the existing yield on the outstanding bond as rD.
Compute the market D/E ratio for Home Depot. Approximate the market value of debt by the book
value of net debt; include both Long–Term Debt and Short–Term Debt/Current Portion of Long–
Term Debt from the balance sheet and subtract any cash holdings. Use the stock price and number
of shares outstanding to calculate the market value of equity.
Compute the cost of levered equity (rE) for Home Depot using their current market debt–to–equity
ratio and Eq. 14.5.
Compute the current weighted average cost of capital (WACC) for Home Depot using Eq. 14.6
given their current debt–to–equity ratio.
Repeat Steps 3 and 4 for the two scenarios you would like to analyze, issuing $1 billion in debt to
repurchase stock, and issuing $1 billion in stock to repurchase debt. (Although you realize that the
cost of debt capital rD may change with changes in leverage, for these modestly small changes you
decide to assume that rD remains constant. We will explore the relation between changing

Case Study : ' Corporate Finance And Investment Planning '...
`A Training Report
On
Analysis of Financial Statements
Carried at
Micromax Informatics Ltd.
In partial fulfilment of the requirements for the award of degree of Bachelor of Technology in
Electronics and Communication + MBA
For evaluation in 11th semester
By
Harshit Goel
A2324811007
B.Tech ECE + MBA (2011–16)
Under the guidance of
Industry guide Faculty Guide
CA. Sanjay Kumar Sah Ms. Tavishi
(Micromax Informatics Ltd.) (Amity University)
Amity Business School
Amity University Uttar Pradesh
Noida, U.P.
July, 2015
Declaration
I, Harshit Goel, student of B.Tech ECE + MBA, Amity Business School, Amity University Uttar
Pradesh, Noida, hereby declare that the project titled "Corporate Finance and Investment Planning"
which is submitted by me and carried out at Micromax Informatics Ltd. In partial fulfilment of

requirement for the award of degree of Bachelor of Technology in Electronics and Communication,
has not been previously formed the basis for the award of any degree, diploma or other similar title
or recognition.
Noida
Date Harshit Goel
Certificate
On the basis of declaration submitted by Harshit Goel, student of B.Tech ECE + MBA, Amity
Business School, Amity University Uttar Pradesh, Noida, I hereby certify that the project titled
"Analysis of Financial Statements", at Micromax Informatics Ltd., submitted to Amity University,
in partial fulfilment of the requirement for the award of degree of Bachelor of

Syllabus: Corporate Finance and Business Journal/newspaper...
BUSI K4003 Corporate Finance Syllabus
Summer 2012, (Summer Q)
Instructor: Brendan Mallee bm2115@columbia.edu Class Time/Location: July 2nd – August 8th
MW 6:10–9:30pm / Hamilton Hall 516
Course Description:
This course examines important issues in corporate finance from the perspective of financial
managers who are responsible for making significant investment and financing decisions. The
course is designed to develop critical corporate finance skills including: financial statement analysis,
time value of money, valuation of stocks and bonds, net present value, risk adjusted return,
opportunity cost of capital, capital budgeting and planning, company valuation and M&A. At
the end of this course students will ... Show more content on Helpwriting.net ...
It is essential to the academic integrity and vitality of this community that individuals do their own
work and properly acknowledge the circumstances, ideas, sources and assistance upon which that
work is based. Academic honesty in class assignments and exams is expected of all students at all
times.
SCE holds each member of its community responsible for understanding and abiding by the SCE
Academic Integrity and Community Standards at: http://ce.columbia.edu/node/217. You are required
to read these standards within the first few days of class. Ignorance of the School 's policy
concerning academic dishonesty shall not be a defense in any disciplinary proceedings.
Schedule (subject to revisions as needed):
Unit | Dates | Topic | Readings | Assignments Due | 1 | Monday July 2 | Introduction to the
CourseGoals and Governance of the Firm – "Value Maximization"Introduction to Financial
Statements | | | 2 | Friday July 6 | Financial Statement Analysis Measuring Corporate Performance |
Fundamentalspages: 2–26;52–110Chapters 1: Goals & GovernanceChapter 3: Accounting
& FinanceChapter 4: Measuring Corporate Performance | DUE: Register for Wall Street
Survivor Problem Set 1 – Financial Statements | 3 | MondayJuly 9 | Time Value of

Corporate Business Finance
Corporate Business Finance
Seminar 5
Project Finance
Lauren Leigh Essaram
207507339
Ruvimbo Mukorera
206525531
27 September 2010
Submitted in partial fulfilment of the duly performed requirement of International Business Finance,
School of Economics and Finance, University of KwaZulu–Natal
Abstract
Non–recourse financing has grown in popularity, especially in developing countries. It has done so
more specifically in the basic infrastructure, natural resources and also in the energy sectors. Large–
scale investments are mostly financed by project finance, due to the costs and complexities that face
the standard sources of finance. The main feature of Project Finance is in the accurate estimation of
cashflows and a precise ... Show more content on Helpwriting.net ...
There are a diverse range of definitions given for the term project finance, but in essence the
underlying theme that runs through them all is that it involves the creation of a legally autonomous
project financed with equity from one or more sponsoring firms and non–recourse debt for the
purpose of investing in a capital asset (Esty, 2006: 213). In simpler terms, according to R. J. Herring
(2006), project finance can be defined as a form of financing structure that is specialised in order to
offer a few cost advantages when there is a large amount of capital being invested. Project finance
involves the use of funds that are raised for a specific self–contained venture such as construction or
a developmental project (Qfinance, 2009: 1). It is a useful and innovative financing technique that
has helped with the timely financing of many important and high–profile corporate projects such as
EuroTunnel, EuroDisneyland, Enron's Dabhol Power Plant, Iridium, Globalstar, Global Crossing –
the Atlantic Crossing and Pacific Crossing cables, Canary Wharf and so forth (Esty, 2006: 214).
This type of financing can help with the facilitation and start of projects anywhere in the world, but
is especially good for projects that are undertaken in developing countries in which great difficulty
arises when trying to secure financial resources for a new project (Henrique and Sabal, 2006: 5).
Project finance uses a well engineered finance mix in order to

Corporate Finance Practices in Frontier Markets and...
Corporate finance practices frontier markets: Empirical evidence companies listed Malawi Stock
Exchange Literature review 1. Introduction to the literature review chapter The literature review
chapter is designed to provide relevant input from the specialized literature on the topic of corporate
frontier markets, with emphasis on four specific elements, namely the capital budgeting practices,
the cost capital, the capital structure and the dividend policy. The current section is constructed with
in depth research into the available sources, including all books and textbooks, specialized journals
and internet articles. Each of these three sources has its own limitations and strengths. Internet
articles for instance are of increased actuality, yet they are not all entirely reliable. The articles in the
specialized journals are more elaborate, yet they address niche topics. Last, the books address the
topics in depth, but they can sometimes integrated outdated information. In order to maximize the
advantages of these three categories of sources, the current project would be using them in a
combined manner. 2. Frontier markets The first step in assessing the corporate financial practices
among frontier markets is that of clearly understanding the concept of the frontier market. This is
important since most studies of corporate practices have focused on more developed regions, yet the
frontier states raise more and more interest. The frontier market is thus

Intro to Corporate Finance Chap. 1
Chapter 1
INTRODUCTION TO CORPORATE FINANCE
GOAL
Today, corporate finance managers must make decision in a much more coordinated manner and
generally has direct responsibilities for a control process. Because there are financial implications in
virtually all segments of business, she/he must have sufficient knowledge of finance to work these
implications into the area.
At the end of this chapter, you should be able to:
Undenstand the nature of corporate finance .
Understand financial management framework.
Identify the basic corporate finance goals.
objectives and functions of corporate finance.
Finance is the science of management of money ... Show more content on Helpwriting.net ...
This leads to the basic differentiation between wealth maximization and profit maximization
approach. There are several arguments of why getting as much profit as possible will not ensure the
firm's viability in the long–term. In contrast to wealth maximization, the profit maximization holds
on to the following views in term of:
1. Time Horizons. It focuses on short–term benefits and tries to gain as much profit as possible
regardless of the long–term effects.
2. Timing of Returns. It does not consider the timing of returns and thus time value of money.
3. Distributions of Income. It tends to ignore the owners wish to receive a portion of earnings in the
form of dividends.
4. Risk. It gives less consideration to risk in an attempt to maximize profits, as higher risks will
associate with higher return.

Other goals of the firm are essential to be stated to avoid any misunderstanding. In order to achieve
wealth maximization, the following goals are essentials:
1. Maximization of profits. To make profits is essential to provide stability and growth in operations
and rewards to individuals and institutions that contribute to the firm. It is essential, however to
consider the above constraints and the risk of making a decision that is higher risk relates to higher
return.
2. Maximization of

Corporate Finance Ch 1 Solutions
Solutions to Chapter 1
The Firm and the Financial Manager
1. real executive airplanes brand names financial stock investment capital budgeting financing
2. A firm might cut its labor force dramatically which could reduce immediate expenses and
increase profits in the short term. Over the long term, however, the firm might not be able to serve
its customers properly or it might alienate its remaining workers; if so, future profits will decrease,
and the stock price will decrease in anticipation of these problems.
Similarly, a firm can boost profits over the short term by using less costly materials even if this
reduces the quality of the product. Once customers catch on, sales will decrease and profits ... Show
more content on Helpwriting.net ...
A personal IOU financial c. A trademark real d. A truck real e. Undeveloped land real f. The balance
in the firm's checking account financial g. An experienced and hardworking sales force real h. A
bank loan agreement financial
10. Capital budgeting decisions Should a new computer be purchased? Should the firm develop a
new drug? Should the firm shut down an unprofitable factory?
Financing decisions Should the firm borrow money from a bank or sell bonds? Should the firm issue
preferred stock or common stock? Should the firm buy or lease a new machine that it is committed
to acquiring?
11. The stock price reflects the value of both current and future dividends the shareholders will
receive. In contrast, profits reflect performance in the current year only. Profit maximizers may try
to improve this year's profits at the expense of future profits. But stock price maximizers will take
account of the entire stream of cash flows that the firm can generate. They are more apt to be
forward looking.
12. a. This action might appear, superficially, to be a grant to former employees and thus not
consistent with value maximization. However, such 'benevolent' actions might enhance the firm's
reputation as a good place to work, might result in greater loyalty on the part of current employees,

and might contribute to the firm's recruiting efforts. Therefore, from a broader perspective, the
action may

Corporate Finance Test with Answers
Corporate Finance: An Introduction (Welch)
Chapter 1
Introduction
1.1 The Goal of Finance: Relative Valuation
1)
Which of the following statements is true? A)
In finance, it is important to determine an asset 's absolute value. B)
The relative value of any asset is, at best, a lucky guess. C)
The true value of an asset is unaffected by externalities such as interest rate levels, the state of the
economy, etc. D)
Valuation is not an exact science. Answer:
D
Diff: 1 Topic:
Valuation
2)
The law of one price stipulates that A) identical goods must be sold to all buyers at the same price;
otherwise price discrimination occurs. B) ... Show more content on Helpwriting.net ...
B)
Although most projects involve both financial and non–financial costs and benefits, the non–
financial items are typically minor and can be ignored when estimating a project 's value. C)
Opportunity costs––e.g., cash flows that would be generated by an alternative project––should be
included in your cash flow analysis. D)
Both B and C are false statements. Answer:
B
Diff: 1 Topic:
Project cash flows
3)
David owns the building out of which he operates a small graphic arts business. He has extra space
available and is considering converting the extra space into a gourmet coffee shop that he would
also run. A local businesswoman has offered to rent the extra space from him for her own needs. She
has suggested she would be willing to pay $1,000 a month in rent. In estimating the cash flows

associated with the gourmet coffee shop, David should A) include the $1,000 rent as a cash inflow.
B) include the $1,000 rent as a cash outflow. C) ignore the $1,000 rent since it is a non–issue if
David decides to undertake the coffee shop project. D) consider the $1,000 as an added benefit.
Answer:
B
Diff: 2 Topic:
Project cash flows
4)
You own a firm if A) you own all the outstanding stock. B) you own all the outstanding bonds. C)
you own all the outstanding stock and bonds. D) you own all the

Corporate Finance Bible
The Bible and Corporate Finance
People rarely associate religion with the business world or the finance industry, nor do they think
religion can guide the practice. From a logical standpoint religion and a firm's operations do not
correlate. From a societal view people see good religious peoples businesses fail while godless
industries thrive. The question usually asked is how does the Bible apply to business world? The
real question should be how could the Bible and God guide me in my profession or my business?
Accounting, Finance, and Performance
Making a profit is not bad; in fact it is very good. Being a profitable business owner or just an
upstanding employee are also good things. In order to do that though, we need ... Show more
content on Helpwriting.net ...
Risk, Return and Capital Budgeting
Christ like life experience during any financial capital planning. The most important part during the
business financial planning is outweighing risk and return on business investments. Managers
should remember to be transparent not hiding any financial exceptions that could alter or change the
outcome of the financial statements. Building a professional group that is consistent year by year
requires enforcing professional financing standards by put into effect a detail transparent investment
and expenditure planning process. The establishment of clear guidelines of budget and projected
benchmarks must be discussed before, during and after budget development. It is mentioned
that capital budgeting is a systematic method of allocating financial, physical, and human resources
to achieve strategic goals. Companies develop budgets in order to monitor progress toward their
goals, help control spending, and predict cash flow and profit (Inc., 2000). The expertise for a
successful final capital budget is a combination of Gods teachings, individual's expertise and
businesses strategic goals.
In conclusion, the expertise and financial understanding of business are Gods given talents to us to
use for the betterment of the mankind and the economy. The bible s mentioned that, But
remember the LORD your God, for it is he who gives

corporate finance
Exam Resit Corporate Finance 1
Januari 25th, 2009
1.
The secondary market is the market in which: A. the sale proceeds of a trade flow to the issuer of
the security.
B.
one shareholder sells securities to another shareholder.
C.
publicly held firms issue new shares of stock.
D.
only bonds or other debt securities are sold.
E.
trades occur on exchanges other than the New York Stock Exchange.
2.
Which of the following questions are addressed by financial managers?
I. How long will it take to produce a product?
II. Should customers be given 30 or 45 days to pay for their credit purchases?
III. Should the firm borrow more money?
IV. Should the firm acquire new equipment? A.
I and IV only
B.
II and III ... Show more content on Helpwriting.net ...
The inventory is valued on the balance sheet at $289,000 and has a retail market value equal to 1.4
times its cost. Peter expects the store to collect 97 percent of the $48,041 in accounts receivable.
The firm has $11,200 in cash and has total debt of $167,400. What is the market value of this firm?
A.
$771,000
B.
$907,800
C.
$919,000
D.
$945,800
E.

$957,000
14.
The equity multiplier ratio is measured as: A. total equity divided by total assets.
B.
(total equity plus total debt) divided by total assets.
C.
(total assets minus total equity) divided by total assets.
D.
(total assets minus total equity) divided by total equity.
E.
total assets divided by total equity.
15.
The financial ratio measured as net income divided by total equity is known as the firm 's: A. profit
margin.
B.
return on assets.
C.
return on equity.
D.
asset turnover.
E.
earnings before interest and taxes.
16.
Margo 's Dress Shoppe had the following values as of the end of last year and the end of this year.
Which of the following are sources of cash for the year?
A. cash and accounts receivable
B.
cash and accounts payable
C.
accounts receivable and inventory
D.
cash, accounts payable, and inventory
E.
accounts payable, accounts receivable, and inventory
17.
Your firm currently has $1,800 in sales and is operating at 60 percent of the firm 's capacity. What is
the full capacity level of

Corporate Finance Study Notes
Solutions to Chapter 10 Introduction to Risk, Return, and the Opportunity Cost of Capital capital
gain + dividend ($44 − $40) + $2 = = 0.15 = 15.0% initial share price $40
1.
Rate of return =
Dividend yield = dividend/initial share price = $2/$40 = 0.05 = 5% Capital gains yield = capital
gain/initial share price = $4/$40 = 0.10 = 10%
2.
Dividend yield = $2/$40 = 0.05 = 5% The dividend yield is unaffected; it is based on the initial
price, not the final price. Capital gain = $36 – $40 = −$4 Capital gains yield = –$4/$40 = –0.10 = –
10% capital gain + dividend ($38 − $40) + $2 = = 0% initial share price $40
1 + nominal rate of return 1+ 0 −1 = − 1 = −0.0385 = −3.85% 1 + inflation rate 1 + 0.04
3.
a.
Rate of return = ... Show more content on Helpwriting.net ...
When the economy does well and the lawyer's bankruptcy business suffers, the stock return is
excellent, thereby stabilizing total income.
10–4
16.
Boom:
$0 + ($18 − $25) = −28.00% $25 $1 + ($26 − $25) = 8.00% $25 $3 + ($34 − $25) = 48.00% $25
Normal:

Recession: r= (−28) + 8 + 48 = 9.33% 3 1 1 1 × (−28 − 9.33) 2 + × (8 − 9.33) 2 + × (48 − 9.33) 2 =
963.56 3 3 3
Variance =
Standard deviation = variance = 31.04% Portfolio Rate of Return Boom: (−28 + 150)/2 = 61.00%
Normal: (8 + 27.5)/2 = 17.75% Recession: (48 –100)/2 = –26.0% Expected return = 17.58%
Standard deviation = 35.52%
17. a.
Interest rates tend to fall at the outset of a recession and rise during boom periods. Because bond
prices move inversely with interest rates, bonds provide higher returns during recessions when
interest rates fall. rstock = [0.2 × (−5%)] + (0.6 × 15%) + (0.2 × 25%) = 13.0% rbonds = (0.2 ×
14%) + (0.6 × 8%) + (0.2 × 4%) = 8.4% Variance(stocks) = [0.2 × (−5−13)2] + [0.6 × (15−13)2] +
[0.2 × (25 – 13)2] = 96 Standard deviation = 96 = 9.80% Variance(bonds) = [0.2 × (14−8.4)2] + [0.6
× (8−8.4)2] + [0.2 × (4−8.4)2] = 10.24 Standard deviation = 10.24 = 3.20%
b.
c.
Stocks have both higher expected return and higher volatility. More risk averse investors will
choose bonds, while those who are less risk averse might choose stocks.
10–5
18. a.
Recession Normal economy Boom
(−5% × 0.6) + (14% × 0.4)

Final Question Paper: Corporate Finance
/MiddSuppose that in the coming year, you expect Exxon–Mobil stick to have a volatility of 42%
and a beta of 0.9, and Merck 's stock to have a volatility of 24% and a beta of 1.1. The risk free
interest rate is 4% and the markets expected return is 12%.
The cost of capital for a project with the same beta as Merck 's stock is closest to: . | d. 12.8% | E[R]
= Rf + Beta × Risk Premium = .04 + 1.1 × (.12 – .04) = .128 |
Which stock has the highest total risk? | c. Exxon–Mobil since it has a higher volatility | |
–––––––––––––––––––––––––––––––––––––––––––––––––
If a stock pays dividends at the end of each quarter, with realized returns of R1, R2, R3, and R4
each quarter, then the annual realized return is calculated as ... Show more content on
Helpwriting.net ...
| a. .000024% | Stock Name | Price per Share | Shares Outstanding (Billions) | Market Capitalization
(Billions) | Percent of Total | Number of Shares | Lowes | $28.80 | 1.53 | $44.06 | 10.6% | 368 | Wal–
Mart | $47.90 | 4.17 | $199.74 | 48.0% | 1,002 | Intel | $19.60 | 5.77 | $113.09 | 27.2% | 1,387 | Boeing
| $75.00 | 0.79 | $59.25 | 14.2% | 190 | | | Total | $416.15 | | |
Number of shares = percentage shares outstanding = 190 / 790000000 = .000024% |
If you are interested in creating a value–weighted portfolio of these four stocks, then the percentage
amount that you would invest in Lowes is closest to: | d. 11% | Stock Name | Price per Share |
Shares Outstanding (Billions) | Market Capitalization (Billions) | Percent of Total | Lowes | $28.80 |
1.53 | $44.06 | 10.6% | Wal–Mart | $47.90 | 4.17 | $199.74 | 48.0% | Intel | $19.60 | 5.77 | $113.09 |
27.2% | Boeing | $75.00 | 0.79 | $59.25 | 14.2% | | | Total | $416.15 | | |
The market capitalization for Wal–Mart is closest to:
Choose one answer. | a. $200 Billion | Stock Name | Price per Share | Shares Outstanding (Billions) |
Market Capitalization (Billions) | Lowes | $28.80 | 1.53 | $44.06 | Wal–Mart | $47.90 | 4.17 | $199.74
| Intel | $19.60 | 5.77 | $113.09 | Boeing | $75.00 | 0.79 | $59.25 | | | Total | $416.15 | |
–––––––––––––––––––––––––––––––––––––––––––––––––
Use the

Corporate Finance Notes
Study notes
By Zhipeng Yan
Corporate Finance
Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe
Chapter 1 Introduction to Corporate Finance ..................................................................... 2 Chapter 2
Accounting Statements and Cash Flow.............................................................. 3 Chapter 3 Financial
Markets and NPV: First Principles of Finance................................... 6 Chapter 4 Net Present
Value............................................................................................... 6 Chapter 5 How to Value Bonds
and Stocks........................................................................ 7 Chapter 6 Some Alternative Investment ...
Show more content on Helpwriting.net ...
Partnerships are usually inexpensive and easy to form. II. General partners have unlimited liability
for all debts. The general partnership is terminated when a general partner dies or withdraws. It is
difficult for a partnership to transfer ownership without dissolving. The advantage is the cost of
getting started. The disadvantages are: 1) unlimited liability, 2) limited life of the enterprise, and 3)
difficulty of transferring ownership. These three disadvantages lead to 4) the difficulty of raising
cash. 5. the corporation: limited liability, ease of ownership transfer, and perpetual succession are
the major advantages; Disadvantage: government taxes corporate income. 6. agency costs: the cost
of resolving the conflicts of interest b/w managers and shareholders are special types of costs.
Residual losses are the lost wealth of the shareholders due to divergent behavior of the managers. 7.
G. Donaldson concluded that managers are influenced by two basic motivations: I. survival. II.
Independence and self–sufficiency: this is the freedom to make decisions without encountering
external parties or depending on outside financial markets. The Donaldson interviews suggested that
managers do not like to issue new shares of stock. Instead, they like to be able to rely on internally
generated cash flow. III. Therefore, the basic financial objective of managers: the maximization of
corporate wealth. Corporate wealth is that wealth over which management has effective

Corporate Finance Assignment 1
Assigment 1
Problem 1
a)
The fact that firms so heavily rely on their internal capital market as a source of financing is strong
evidence that internal markets are more efficient than external markets. Firms use internal capital
because it is much easier for managers to use profits from previous years to finance their
investments, management don´t have to prove their investment decisions to investors. If
management would need to finance investment with external capital, the cost of the capital would
much higher than using internal capital. Issues would cause direct costs for (järjestämisestä) and
take time and effort from the management. Indirect costs could also (accure) when management
would need to underprice the issue to ... Show more content on Helpwriting.net ...
b)
Problem 3 – IPO Underpricing
a)
average initial return on IPO`s = (40% + 20% + 0% + (–12%))/4 = 12%
b)
10 000 * 0,1 + 10 000 * 0,2 + 10 000 + 10 000 = 23 000
c)
1 000 * 1,4 + 2 000 * 1,2 + 10 000 * 1 + 10 000 * (0,88) = 22 600
i) 100% * ((22 600 – 23 000) / 23 000) = –1,74 % ii) 22 600 – 23 000 = – 400euros.
d)
Winner´s curse
Uninformed investors, such as Ms.Smith, will get relatively more overprised than underprised
shares.
Problem 4 – Share Repurchases
100 000 000 shares
150 000 000 free cash
65 000 000 expected cash flow (annual) cost of capital 10 % increased future cash flow 10 000 000

earnings per share
(10 000 000 + 65 000 000)/100 000 000 = 0,75 / share
Share price (EPS / rate of return)
0,75/0,1 = 7,5€
b)
Share price without 10 million increase in cash flow:
0,65/0,10 = 6,5€
Shares repurchased:
150 000 000 / 6,5 = 23 076 923
Shares outstanding after the repurchase: 100 000 000 – 23 076 923 = 76 923 076.
Share price after the repurchase:
(650 000 000 – 150 000 000) / 76 923 076 = 6,5€.
Problem 5 – Rights Offer (TARKISTA e/d)
a)
New money raised:
10 000 000 / 4 * 5€ = 12 500 000 €
b)
Value of a right:
(6 – 5) / (1 + 4) = 0,2€
c)
(10 000 000 * 6 + 12 500 000) / (10 000 000 + 2 500 000)
=

Corporate Finance
Corporate Finance Exam with Answers
Posted on May 10, 2012 by Sam
Corporate Finance, Chapters 8, 9 10. Exam Questions: 1. A project's opportunity cost of capital
is: A. The forgone return from investing in the project. 2. Which of the following statements is
correct for a project with a positive NPV? A. The IRR must be greater than 1. 3. What is the NPV of
a project that costs $100,000 and returns $50,000 annually for 3 years if the opportunity cost of
capital is 14%? C. $16,085 4. The decision rule for net present value is to: C. Accept all projects
with positive net present values 5. What is the maximum that should be invested in a project at time
zero if the inflows are estimated at $50,000 annually for 3 years, ... Show more content on
Helpwriting.net ...
A. 3.5% 25. What nominal annual return is required on an investment for an investor to experience a
12% gain in purchasing power? Assume inflation to be 4%. D. 16.48% 26. What is the undiscounted
cash flow in the final year of an investment, assuming $10,000 after–tax cash flows from operations,
$1,000 from the sale of a fully depreciated machine, $2,000 required in additional working capital,
and a 35% tax rate? C. $12,650 27. For a profitable firm in the 30% marginal tax bracket with
$100,000 of annual depreciation expense, the depreciation tax shield would be: B. $40,000 28. Why
is accelerated depreciation often favored for the corporation's set of tax books? D. It impacts
favorably with the time value of money 29. Why is it likely that firms use straight–line depreciation
methods for reporting to shareholders? D. It allows asset balances to decline more slowly 30. What
is the net effect on a firm's working capital if a new project requires $30,000 in inventory, $10,000
increase in accounts receivable, $35,000 increase in machinery, and a $20,000 increase in accounts
payable? C. +$20,000 31. What level of management is responsible for originating capital budgeting
proposals? D. All levels of management 32. Which of the following is least likely to be responsible
for a regional manager's conflict of interest in promoting a capital budgeting proposal? B.

Corporate Finance
Corporate finance When investors prefer low dividend payout and what is the relation between
dividend payout and cash flow (what will increase and what will decrease when using low dividend
payment?) Dividend payout ratio refers to the amount of earnings of a particular company that seeks
to issue out to its investors in the form of cash dividends. Dividends payouts may vary depending on
the industry and a low dividend payout may signify a good thing or a bad thing. Investors who may
opt for a low dividend payout may mean that they are willing to allow the company plough back its
annual earnings for the purpose of capital growth of the company they have invested in as well as
capital gains incur lower tax rates. It may show that the investors are willing to forgo part of their
dividends to generate greater returns which lead to higher stock market prices (Sedzro 2010). On the
bad side, it may mean that the company does not have enough capital to pay dividends to its
investors. The relationship between dividend payout and cash flow is that a company that pays
higher dividends may seem to be having a greater cash flow to meet its daily operational needs but a
company paying low dividend payout may seem to be having a low cash flow hence, the company
needs to retain the dividends for operational needs. This therefore, translates to an increase in cash
flow and a decrease in dividend payout when using low dividend payout (Sedzro 2010). What is the
relationship between

Corporate Finance Essay
To start any business activities in an organization or a group of it calls for the managers to decide on
how to finance the whole project execution; managers are compelled to seek consultative meetings
from which a lot of thoughts and strategic plans are laid down systematically. To start the business,
owners or shareholders are required to make a choice and put attention to the existing multiple and
differing financing options, terms, and conditions that require contractual arrangements. It is,
therefore, important for business people to review all the available financial options while taking
into consideration for conditions to be met in order to have the project commencing at the
anticipated pace. This paper, therefore, will seek to ... Show more content on Helpwriting.net ...
For instance, one may choose to involve an angel or venture capitalist. An angel capitalist is a
prominent successful business person who invests their own assets to come up with profit
generation enterprises. It is good to note that the angel capitalists are also moved by the desire to
make a difference on top of making profits. They make decisions about investments and provide
advice about business. On the other hand, a venture capitalist is an individual investor who willingly
offers to provide capital assets to business starters and support already existing enterprises to expand
their premises over time. These people are important since they offer the needed financial support
and they tend to be attracted by potentially growing firms.
To start a business, the potential entrepreneur is also required to consider capital resources, external
resources, and intellectual properties. Capital resources would include all assets (goods) that can be
used to produce other goods and services and they include equipment and machinery. Building and
other equipment would also be accessed since they are inclusive in capital resources. It is also vital
for a starting business to consider and access external resources in their enterprises. These are
resources that are not directly linked with preserving user information and they may involve
numerous manual

Corporate Finance
Corporate finance
P. Frantz, R. Payne, J. Favilukis
FN3092, 2790092
2011
Undergraduate study in Economics, Management, Finance and the Social Sciences
This subject guide is for a Level 3 course (also known as a '300 course') offered as part of the
University of London International Programmes in Economics, Management, Finance and the
Social Sciences. This is equivalent to Level 6 within the Framework for Higher Education
Qualifications in England, Wales and Northern Ireland (FHEQ). For more information about the
University of London International Programmes undergraduate study in Economics, Management,
Finance and the Social Sciences, see:
www.londoninternational.ac.uk/current_students/programme_resources/lse/index.shtml
This ... Show more content on Helpwriting.net ...
10 Introduction ................................................................................................................ 10 Fisher
separation and optimal decision–making ............................................................ 10 Fisher separation
and project evaluation ...................................................................... 13 The time value of money
.............................................................................................. 14 The net present value rule
............................................................................................ 15 Other project appraisal techniques
............................................................................... 17 Using present value techniques to value stocks
and bonds ........................................... 21 A reminder of your learning
outcomes.......................................................................... 23 Key terms
.................................................................................................................... 23 Sample examination
questions ..................................................................................... 23 Chapter 2: Risk and return:
mean–variance analysis and the CAPM.................... 25 Aim of the
chapter....................................................................................................... 25 Learning outcomes

Corporate Finance
Table of Content
Executive Summary 3
1. Introduction 4 1.1 Overview of Harvey Norman Holding Limited 4 1.2 Major Competitor 5 1.2.1
JB Hi–Fi 5 1.2.2 Woolworth 5
2. Capital Structures 6 2.1 Types of Funding 6 2.2 Recent Trends of Leverage 7 2.3 Comparison of
capital structure with similar companies 9 2.4 Capital expenditures and its financing 10 2.5
Important factors influencing the use of debt financing 10 2.5.1 Tax Advantage 10 2.5.2 Corporate
Tax Rate 11 2.5.3 Credit rating 11 2.5.4 Interest rate 11 2.5.5 Company's Industry 12 2.5.6
Company's growth rate 12 2.5.7 Some other arguments about Harvey Norman 12 2.6 Evidence of
financial ... Show more content on Helpwriting.net ...
HVN appropriate share price is $4.23 which is $0.12 higher than the actual closing price of $4.11. It
is recommended for the investor to purchase more of the company's share as it was undervalued.
The sensitivity analysis shows the theoretical share price is very sensitive to change in WACC.
Careful and continuous observation might be needed to constantly monitor the factors that can alter
the WACC such as market return, the company's beta, risk free rate, and tax rate. D/E ratio can also
alter the WACC due to tax benefit on debt. This implies we should keep checking changes of the
company's capital structure, namely its financing decisions and activities because they are important
factors to create value of the company.
1. Introduction
1.1 Overview of Harvey Norman Holding Limited
Harvey Norman Holdings Ltd is a public company whose principal activities consist of an
integrated franchising, retail, and property entity. As a franchisor it give franchises to independent
business operator and as business owners HVN provide retail product for home and office with
different range of categories such as electrical, computers and communications, small appliances,
furniture, bedding and Manchester, home improvements, lighting, carpet, and flooring. HVN started
it business since October 1982 with only one store. For the past 26 years they are experiencing
massive growth. As at 7 Oct 2008, there were 192 franchised complexes around

Finance in Corporate America
Joanne Jackson
June 1, 2011
Corporate Finance 620
M 600–950
Ch. 12 Mini Case
A. Do you think Adam Lee should develop a strategic plan for the company? Why? What are the
central elements of such a plan? What is the role of finance in a strategic plan?
Yes. The goal of companies is to create more wealth for the owners and for financial managers to
make their company more valuable and without well designed strategic and tactical plans in place it
is impossible to do. The central elements of a strategic plan are: (1) statement for mission (2)
corporate scope (3) corporate objectives (4) strategies (5) the operating plan and (5) the financial
plan.
The role of finance in a strategic plan is to add more ... Show more content on Helpwriting.net ...
E. Define the term self–supporting growth rate.
The self–supporting growth rate is the maximum growth rate that a firm can achieve if it had no
access to external capital.
Based on the Figure MC–1 data, what is Hatfield's self–supporting growth rate? Would the self–
supporting growth rate be affected by a change in the capital intensity ratio or the other factors
mentioned in question d? M (1 – POR)(S0) 0.012(1 – 0.675)(2,000) Self–supporting g = = A0 * –
L0* – M(1 – POR)(S0) 1,200 – 100 – 0.012(1 – 0.675)(2,000) $7.8 = = 0.7% $1,092.32 The self–
supporting growth rate would be affected by a change in capital intensity because if the capital
intensity ratio is high then the lower the self–supporting growth rate will be because the company
would need more assets for each dollar of sales they have. The higher the profit margin the higher
the self–supporting growth rate because the need for external financing would be low because the
company would be able to support the increase in assets. The lower the payout ratio the higher the
higher the self–supporting growth rate because the company is holding more

The Importance of Corporate Finance in a Business Plan
Introduction
The research is done by the request of the potential investors in the 5 Aces business club on the
basis of the business plan provided.
Problem faced: The importance of corporate finance in a business plan.
The author of the paper is a 3rd year bachelor student in corporate finance Olga Jegorova.
The aim of the paper is to elaborate the recommendations on the corporate finance importance when
faced with a business plan analysis based on the theory and particular cases.
To achieve the aim following tasks to be solved:
• Generalize professional literature on corporate finance importance
• To analyze the 5 Aces fitness club business plan
• To show specific examples of Corporate Finance importance
• To show ... Show more content on Helpwriting.net ...
This number tells you what the company can do with what it 's got, i.e. how many dollars of
earnings they derive from each dollar of assets they control. It 's a useful number for comparing
competing companies in the same industry.
ROA = Net income / Total Assets
6. Return on equity[4]
Indicates what return a company is generating on the owners ' investment
7. Debt to equity[4]
Financial ratio indicating the relative proportion of equity and debt used to finance a company 's
assets.
D/E = Debt (Liabilities)/ Equity
Now we shall take a specific example of a project that is described by a business plan, we will try to
present the figures to our potential investors so that they would look appealing and make them want

to invest into the project without hesitation.
8. Sales forecast[4]
The process of estimation in unknown situations. It usually refers to observations and analysis of
competitors revenues in order to estimate when the sales will be high and when they are expected to
slump. The sales forecast may be done in equivalent units or in terms of money. The sales forecast is
not a commitment to reach the forecasted figure, but rather a note of what to expect.
The 5 Aces business plan
The following part of the paper will be devoted to a concrete example of business plan which of
course incorporates corporate finance in it.
The author will perceive you –

Essay Mt480 Corporate Finance Unit 9 Project
Student MT480–01: Corporate Finance Unit Nine: Assignment Date Assignment: Complete the
following exercises and problems from the textbook. Some problems ask multiple questions; be sure
to answer every part of the exercise or problem unless otherwise noted * Chapter 28: Practice
Questions 2, 10, 11, and 13 * Chapter 34: Practice Questions 2, 3, and 7 Chapter 28: 2. Table 28.1
shows the 90–day forward rate on the South African rand. a. Is the dollar at a forward discount or
premium on the rand? The dollar is selling at a forward premium on the rand. b. What is the annual
percentage discount or premium? 4 x [(6.4662/6.5917) – 1] = –0.0762 = –7.62% c. If you have no
other information about the two ... Show more content on Helpwriting.net ...
Banks are not the only financial intermediary from which corporations can obtain financing. What
are the other intermediaries? How much financing do they supply, relative to banks, in the United
Kingdom, Germany, and Japan? The other financial intermediaries include insurance companies,
mutual funds and pension funds. In Japan, banks provide more financing than other financial
intermediaries do. In the U.K., other financial intermediaries provide substantially more financing.
In the U.S., banks are less important sources of financing compared to financial intermediaries.
While in Europe, financing provided by banks and financing provided by other financial
intermediaries are approximately equal. 3. Why is transparency important in a market–based
financial system? Why is it less important in a bank–based system? Transparency is essential in a
market based system, but is not necessarily a requirement for a bank–based system. In a bank based
system, banks have long–standing working relationships with the companies seeking financing, and
banks have on–going access to information about the firm. In a market based system, creditors and
equity–holders require that financial information about companies seeking financing be available,
sufficiently detailed and accurate if they are to participate in the market. This information, including
audited financial statements, allows participants in the market to make

46 Case Studies In Finance: Managing For Corporate Value...
Case Studies in Finance: Managing for Corporate Value Creation Fourth Edition July, 2002 Robert
F. Bruner
Distinguished Professor of Business Administration Darden Graduate School of Business
Administration University of Virginia Post Office Box 6550 Charlottesville, Virginia 22906 Email:
brunerr@virginia.edu Web site: http://faculty.darden.edu/brunerb/
ABSTRACT: This book presents 46 case studies in finance, targeted toward upper–level
undergraduates and introductory and intermediate–level MBA students. The purpose of these cases
is to afford the basis for classroom discussion of tools and concepts. The range of topics includes
value creation, market efficiency, economic profit, financial analysis and forecasting, cost of capital,
... Show more content on Helpwriting.net ...
So is the incomprehensible. So is the unintelligible. Interviewing Babe Ruth1 in 1928, I put it to him
People come and ask what's your system for hitting home runs–that so? Yes, said the Babe, and
all I can tell 'em is I pick a good one and sock it. I get back to the dugout and they ask me what it
was I hit and I tell `em I don't know except it looked good. Carl Sandburg2 Managers are not
confronted with problems that are independent of each other, but with dynamic situations that
consist of

Advanced Corporate Finance
University of Puget Sound
School of Business and Leadership
BUS 434 Advanced Corporate Finance
Professor Alva Wright Butcher
Tues–Thurs 11:00–12:20 McIntyre 107
Spring Semester 2012
Office: McIntyre 111 I Phone: 253–879–3349 FAX: 253–879–3156
Office Hours: T–Th: 1:00–1:50 Wed: 9:30–10:30 And by appointment
Note that I am always willing to schedule additional office hours by appointment. I check email
frequently, so that is also a good way to communicate. Do not hesitate to call me at home. If you
cannot reach me, please leave a number so that I can get back to you.
Email: butcher@pugetsound.edu
Home: 206–285–3990 or 360–779–4706
Required Course Materials: ... Show more content on Helpwriting.net ...
Click on access to free student content.
Course Objectives: Valuation will be discussed as a unifying theme in this course. This includes
such issues as how to value a firm that is not publicly traded, how to value a potential merger, how
to value an investment project. We will examine the use of debt in a firm's financial structure and
ask if that has an impact on the value of the firm. If a firm pays dividends, does that increase the
firm's value?
The key objective of this course is to build on the foundation of your introductory course in
financial concepts and to apply more advanced concepts in corporate finance in a decision making
context. Since computer literacy is essential to the application of finance theory, the course will
incorporate a number of opportunities for the use of computer tools in a problem solving
environment.
After you have successfully completed this course, you will be able to:

Apply value based management to guide valuation of a firm and valuation of a capital budget
project.
Be aware of the underlying factors that impact the value of a financial option.
Understand the basic features of options contracts and how they are priced.
Have an understanding of the use and misuse of derivatives.
Understand how the firm's mixture of debt and equity, the capital structure, can impact the value of
the firm.
Be able to apply the

Notes for Corporate Finance
Corporate Finance Notes * Chapter One: Introduce to Corporate Finance 1. Three Questions: A.
What Long–term asset should be invested? Capital Budgeting B. How to raise cash for capital
expenditures? Capital Structure C. How to manage short–term cash flow? Net Working Capital 2.
Capital Structure: Marketing Value of Firm = MV of Debt + MV of Equity 3. Finance perspect and
Accountant perspect: Finance: Cash Flow ! Accountant: A/R means profit ! 4. Sole proprietorship,
parternership and corporation | 5. The goal of financial management: Maximize the current value
per share of the existing stock. 6. Agency problem and Control of the Corporation Agency
Relations: stockholders with ... Show more content on Helpwriting.net ...
The total Remarks: * Net Income is not Cash Flow, always different number * Outflow is –, Inflow
is + 8. Statement of Cash Flow Cash Flow from Operation (OP CF): Net Income + Non–cash
Expense + Adjustment in CAamp;CL (except Cash amp; N/P) Cash Flow from Investing
(Capital Spending): Acquisition of FA (–) + Sales of FA (+) Cash Flow from Financing: changes in
equity and debt * Chapter Three (Part One): Financial Statement Analysis 1. Standardizing
Statement amp; Common–size Balance Sheets Common–size Balance Sheet / Income Statement:
percent – noted sheet 2. Short–term Solvency or Liquidity Measures: A. Current Ratio = CA / CL
CA: the book value and market value are likely to be similar B. Quick Ratio (Acid–Test) = (CA –
INV) / CL INV is least liquid CA. Thus the BV of INV is least reliable. C. Cash Ratio = Cash / CL
3. Long–term Solvency Measures (Financial Leverage / Leverage Ratio) A. Total Debt Ratio = (TA
– TE) / TA Debt–Equity Ratio = TD / TE Equity Multiplier = TA / TE B. Times Interest Earned
(TIE) = EBIT / INT Interest coverage ratio C. Cash Coverage = (EBIT + Dep.) / INT EBIT + Dep.
is called EBITD, A basic measurement of the firm`s ability to generate cash from OP. 4. Asset

Corporate Finance Essays
Table of content Executive summary
1.Introduction 4 1.1. Overview of Adelaide Brighton Limited 4 1.1.1. History 4 1.1.2. Industry 4
1.2. Major competitors 5 1.2.1. Boral Limited 5 1.2.2. Fletcher Building Limited 5 1.2.3. Brickwork
Limited 5
2.Capital structure 6 2.1. Leverage 6 2.1.1. Current ABC's leverage 6 2.1.2. Recent history of ABC's
leverage 6 2.2. ABC's capital expenditures and its financing 9 2.3. Comparison of ABC's capital
structure with similar companies 10 2.4. Characteristics of the company influencing the leverage
policy 11 2.4.1. Tax advantage 11 2.4.2. Corporate tax rate 11 ... Show more content on
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This report also uses some forecasting technique to evaluate the future position of the company. The
discount rate (WACC), which incorporates the risk–free rate and risk factor for individual stock, is
the key driver of share prices. The sensitivity analysis shows that the theoretical share price is very
sensitive to change in WACC. Thus, slightly changes in WACC will lead to a significant impact on
the current stock price. The factors that can take the place of WACC such as market return, the
company's beta, risk free rate, and tax rate should be used to observe the fluctuation of stock price
which is WACC forecast. This may indicate that ABC value is currently overvalued since the
valuation of the share is slightly lower than the actual share price. In addition, although the value of
ABC might increase in the future, share price is changed by the movement of WACC. Therefore, it
should not hold the shares in the company.
1. Introduction
1. Overview
Adelaide Brighton Ltd is an Australia–based company which engaged in manufacture and
distribution of cement, and cementations products, lime, ready mixed concrete, aggregates, sand and
concrete products. It's operate centre is on Birkenhead, a suburb of Adelaide, from where product is
shipped to markets around the Australian coast and overseas. The company has strong developed
from a small

University of Phoenix Corporate Finance Syllabus
| Syllabus School of Business FIN/571 Version 5 Corporate Finance | Copyright © 2011, 2010,
2009, 2008 by University of Phoenix. All rights reserved. Course Description This course applies
corporate finance concepts to make management decisions. Students learn methods to evaluate
financial alternatives and create financial plans. Other topics include cash flows, business valuation,
working capital, capital budgets, and long–term financing. Policies Faculty and students/learners
will be held responsible for understanding and adhering to all policies contained within the
following two documents: University policies: You must be logged into the student website to view
this document. Instructor policies: This document ... Show more content on Helpwriting.net ...
3.8 Identify sources and uses of short–term financing. 3.9 Evaluate how the business policies of a
firm affect accounts receivable and inventories. | | | Readings | Read Ch. 22 amp; 23 of Corporate
Financial Management. | | | Participation | Participate in class discussion. | Monday | 3 | Learning
Team Lawrence Sports Simulation | Resource: The Lawrence Sports Simulation located at
https://ecampus.phoenix.edu/secure/resource/vendors/tata/sims/finance/finance_simulation1.html
Create at least three alternative working capital policies that reduce future difficulties, and make a
recommendation on which policy Lawrence Sports should follow. Your recommendation must
include: An evaluation of the risk associated with the recommendationContingencies for the
recommendationPerformance measures that are used to evaluate your recommendation An
implementation plan for your recommendation Write a paper in no more than 1,750 words
discussing your recommendation. Your paper must include a review of the cash conversion cycle for
Lawrence Sports Simulation and its importance to their working capital management. Develop and
explain your recommendation as fully as possible. Format your paper

Fundamentals of Corporate Finance 9e
http://helpyoustudy.info
Chapter 01 – Introduction to Corporate Finance
Chapter 01 Introduction to Corporate Finance Answer Key
Multiple Choice Questions
1. Which one of the following terms is defined as the management of a firm 's long–term
investments? A. working capital management B. financial allocation C. agency cost analysis D.
capital budgeting E. capital structure Refer to section 1.1
AACSB: N/A Difficulty: Basic Learning Objective: 1–1 Section: 1.1 Topic: Capital budgeting
2. Which one of the following terms is defined as the mixture of a firm 's debt and equity financing?
A. working capital management B. cash management C. cost analysis D. capital budgeting E.
capital structure Refer to section 1.1
AACSB: N/A ... Show more content on Helpwriting.net ...
I, II, III, and IV Refer to section 1.1
AACSB: N/A Difficulty: Basic Learning Objective: 1–1 Section: 1.1 Topic: Financial management
1–24
11. Which one of the following functions should be the responsibility of the controller rather than
the treasurer? A. daily cash deposit B. income tax returns C. equipment purchase analysis D.
customer credit approval E. payment to a vendor Refer to section 1.1
AACSB: N/A Difficulty: Basic Learning Objective: 1–1 Section: 1.1 Topic: Financial management

12. The controller of a corporation generally reports directly to the: A. board of directors. B.
chairman of the board. C. chief executive officer. D. president. E. vice president of finance. Refer to
section 1.1
AACSB: N/A Difficulty: Basic Learning Objective: 1–1 Section: 1.1 Topic: Corporate structure
1–25
13. Which one of the following correctly defines the upward chain of command in a typical
corporate organizational structure? A. The vice president of finance reports to the chairman of the
board. B. The chief executive officer reports to president. C. The controller reports to the president.
D. The treasurer reports to the vice president of finance. E. The chief operations officer reports to
the vice president of production. Refer to section 1.1
AACSB: N/A Difficulty: Basic Learning

Corporate Social Responsibility And Access Of Finance
The article Corporate Social Responsibility and Access to Finance was written by Cheng et al.
(2014) in order to show that firms that have better CSR performance are less capital constrained.
The aim of the essay is to argue that the analysis of the relationship between CSR policies and the
access to finance is a well done research with interesting arguments and analysis; however, it has
several limitations, which will be examined. The aim will be achieved through a critical analysis of
the paper. It will be done in four stages: first, the key arguments of the article, second, the strong
points of the article, third, the limitations of the research, and final stage, the specifications of the
outcome. In this paper Cheng et al. (2014) argued that the implementation of successful CSR
policies leads to lower idiosyncratic risk due to improved stakeholder engagement, which reduce
agency costs of an organisation, and increased transparency, which results a company becoming less
capitally constrained and enhances a firm's access to finance in capital markets. In order to achieve
their aim the authors use cross sectional analysis of firms around the world and apply different
variables and methods. They concluded that there is a link between good CSR activities and access
to finance; however, social and environmental components of CSR are more significant for
investors than the factor of governance since the former ones have higher impact on capital
constraints. It can be

Corporate Finance
There is nothing like optimum capital structure for a firm.
The Optimal Capital structure is that Capital Structure at which the weighted Average cost of capital
(Ko) is Minimum. It is that combination of Equity and Debt at which the total cost of capital is
mini–mum.
Trade–off theory argues that there 's an optimal amount of debt of each firm. At this level of debt,
firms can take the most advantage of debts. Debts can be tax shield so that they can save money for
firms to reinvest in other projects so as to earn more profits. However, debts can be quite dangerous
because highly leveraged firms may face bankruptcy and financial distress costs (no matter they 're
direct or indirect) may increase the cost of debt of the company. ... Show more content on
Helpwriting.net ...
They have shown that the financial leverage doesn 't matter and the cost of capital and the value of
the firm are independent of the capital structure. Modigliani–Miller methods show that there is
nothing which may be called as Optimal Capital Structure – to get high valuation of the firm.
Modigliani–Miller model is based on following assumptions:
1. The capital markets are perfect and complete information is available to all the investors free of
cost. The implication of this assumption is that investors can borrow and lend funds at the same rate
and can move quickly from one security to another,
2. Securities are infinitely divisible; Investors are rational and well informed about the risk–return of
all the securities.
Modigliani–Miller model says that the total value of the firm is equal to the capitalized value of the
operating earnings of the firm. The capitalization is to be made at a rate appropriate to the risk class
of the firm.
Growth Plans, are involved in capital structural theories in which a certain amount will be allocated
for the growth plans. A finance manager should draw a plan according for the dividend policy.
For Example: The firm has $10 million as equity capital and $6 million as debt capital and the firm
made a profit (after tax) of $2 million, and the fund allocated to the growth plan was $1 million.
For suppose there are 10,000 shareholders in the company and as per

Corporate Finance
1. Which one of the following is a means by which shareholders can replace company management?
A. stock options
B. promotion
C. Sarbanes–Oxley Act
D. agency play
E. proxy fight
2. Decisions made by financial managers should primarily focus on increasing which one of the
following?
A. size of the firm
B. growth rate of the firm
C. gross profit per unit produced
D. market value per share of outstanding stock
E. total sales
3. Which one of the following is the financial statement that shows the accounting value of a firm's
equity as of a particular date?
A. income statement
B. creditor's statement
C. balance sheet
D. statement of cash flows
E. dividend statement
4. Which one of the following is the financial statement ... Show more content on Helpwriting.net ...
What is the price of this stock today given a required return of 15 percent?
A. $67.54
B. $69.90
C. $72.47
D. $77.67
E. $78.19
15. Hardwoods, Inc. is a mature manufacturing firm. The company just paid a $10 dividend, but
management expects to reduce the payout by 9 percent each year, indefinitely. How much are you
willing to pay today per share to buy this stock if you require a 15 percent rate of return?
A. $34.79
B. $37.92
C. $38.27
D. $41.33
E. $42.09

Corporate Finance And Investments, Issues Prevailing India...
Corporate Finance Investments, Issues Prevailing In India at Present
Dr. Rahul Pandey
Abstract:
The subject of corporate finance has assumed tremendous significance in the light of the ongoing
economic uncertainty across the world. Apart from the three most important decisions of fund
raising, fund deployment and generation of returns, greater emphasis has been laid down upon
creating a long term value through Economic value addition (EVA). The role of assets in generation
of cash flows has become even more pronounced in modern day changing dynamics. More than the
external factors, India has certain homegrown structural problems which seriously needs to be
addressed at this point in time; the prominent ones being ensuring a high ICOR and addressing the
supply side bottlenecks in the economy. Indian companies will have to address the financial
problems in the light of the current macroeconomic turmoil of high inflation and revised growth
projection of 5%. This has to be done despite having a sound corporate financial framework. This
paper attempts to address these problems and tries to suggest some solution to overcome the period
of uncertainty
Introduction to Corporate Finance:
Corporate finance, as a specialized branch of Finance deals mainly with making three crucial
decisions by the firm. They are:
1) Raising of funds from the various available sources of finance (from domestic and international
markets) at the minimum possible cost of capital
2) Investment of the

Most corporate financing decisions in practice reduce to a choice between debt and equity. The
finance manager wishing to fund a new project, but reluctant to cut dividends or to make a rights
issue, which leads to the decision of borrowing options. The issue with regards to shareholder
objectives being met by the management in making financing decisions has come to become a
major issue of recent times. This relates to understanding the concept of the agency problem. It
deals with the separation of ownership and control of an organisation within a financial context. The
financial manager can raise long–term funds internally, from the company's cash flow, or externally,
via the capital market, the market for funds ... Show more content on Helpwriting.net ...
Any profits remaining after deducting operating costs, interest payments, taxation, and dividend are
reinvested in the business and regarded as part of the equity capital. The finance manager will
monitor the long–term financial structure by examining the relationship between loan capital, where
interest and loan repayments are contractually obligatory, and ordinary share capital, where dividend
payment is at the discretion of directors. This is known as gearing. There are two basic types of
gearing, they are capital gearing which indicates the proportion of debt capital in the firm's overall
capital structure; and income gearing indicates the extent to which the company's income is pre–
empted by prior interest charges. Both are indicators of financial gearing.
Now, the advantages of debt capital centre on its relative cost. Debt capital is usually cheaper than
equity because, the pre–tax rate of interest is invariably lower than the return required by
shareholders. This is due to the legal position of lenders who have a prior claim on the distribution
of the company's income and who in liquidation precede ordinary shareholders in the queue for the
settlement of claims. Debt is usually secured on the firm's assets, which can be sold to pay off
lenders in the event of default, i.e. failure to pay interest and capital according to the pre–agreed
schedule;

Corporate Finance, Investment Banking And Risk Management
Having a great interest in Corporate Finance, International Financial Markets and Institutions,
Advanced
Financial Management, Small Business Finance, Investment Banking and Risk Management, I have
decided to devote my academic and future professional career to this field.
Classes in Econometrics, Advanced Mathematics, and Quantitative Methods in Economics, taken at
UWED, strengthened my numerical, research and analytical skills, as well as proficiency in using
econometric software, such as Maple, Minitab and MathCAD. In addition, I have gained expertness
in calculus, discrete mathematics, econometric regression modeling, detecting and eliminating the
problems arising from the data collection methods or the nature of data itself.
A ... Show more content on Helpwriting.net ...
Our team was in Global Top 100 (76th place) among the other School
Teams from all over the world.
Being a member of Enactus team (formerly SIFE) our Team successfully developed and
implemented different projects in the local community, as well as participating in competitions.
Advantage Sustainability 360 Project was created to help local business. Mountaineer Mixed
Martial
Arts (MMA) were behind two months on rent, and the owners were ready to liquidate their assets.
Using obtained knowledge our task was to increase revenues by 40%, increase brand awareness, cut
overhead by 15%, track financial records, and make partner self–sustainable. We have consulted the
owners, developed a marketing plan suitable for them and area, worked on accounting. As a result in
three months we were able to increase revenues by 220% in three months, our teams marketing
efforts reached over
30,000 people spread over three counties, decreased overhead cost by 20%, QuickBooks tracks
accounting records.
Next Project I have initiated was Ready to Work, which aimed to provide free tutoring and
counseling for students in finance and business related subjects, as well as help to prepare for the
job market. It helped not only to increase their GPA, but also they benefited from this knowledge in
life as well: to find a job, manage their own finances and family

Corporate Finance Programs
Corporate Finance Programs
Introduction
In a company's operational activities, it is essential induce financial management in its
organizational structure. All business operations center on the use of finances to incur profits that
benefit the company employees, shareholders and their nation's economic society. This context digs
into the conduction of both managerial and corporate finance. The executive finance deals with
managerial implication on financial techniques used alongside pecuniary decisions made by the
company besides other financial tools and analytical procedures through corporate finance. Among
the techniques used are corporate valuation, value–based management, corporate governance and
EPOS (Employees Stock Ownership) plans.
Corporate Valuation
This is the evaluation of firm value strategies by forecasting on past financial statements; presenting
values of cash flow stream strategies and choosing value maxima based on the appropriate strategic
plan. A firm's stock is valued through different methods such as through the discounted dividend
model.
Corporate valuation is channeled alongside the corporate valuation model. It is a substitute to stock
valuation. The model points out company's main operational and non–operational assets as well as
the total worth of firm value and growth (Ehrhardt and Brigham, 2008, pg 659). It is usually an
alternative to discounted dividend models in determining firm value of companies with no history in
dividend and its

Case 2 for Advanced Corporate Finance
Case: Tianjin Plastics
Vrije Universiteit Amsterdam
Course Advanced Corporate Finance
Students Fatin Azear
Jos Kusters
Maaike van der Steen
Case: Tianjin Plastics
This assignment considers the case of Tianjin Plastics. Pat Johnson, project finance analyst for
Maple Energy (U.S.–based international power plant developer), has to make a recommendation
regarding the financial viability of the Tianjin Plastics power plant project in China. The
recommendation would require a final evaluation of all financing options, as well as reaching
contract closure with his joint venture partners, Tianjin Plastics and Chinese Ministry of Power
Industry (MOPI). The joint venture would be split 49% Maple, 46% Tianjin Plastics, 5% MOPI,
with ... Show more content on Helpwriting.net ...
Also the tax holliday for the first 6 years and the free coal feedstock for the life of the power plant
lowers this risk. A very critical in this project is that the Chinese government does not allow
registered capital, the equity capital initially invested under the agreements of the project, to be
repatriated. This means that Maple can only return profits and dividend to the parent company. If
there aren't much profits to be expected, Maple faces the risk of not getting a healthy return. The
only potential source of earnings from the Tianjin Plastic project are the 49% share of the net profits
and dividends.quantifyen.
The expected return (IRR) of the project for Maple Energy is 22%.
Summary assumptions WACC
Maple 's cost of equity (hurdle rate)
18,00%
Equity
16,50
E+D
110,00
Debt
93,50
Rd (weighted cost of capital)
8,26%
Taxrate in first 6 years

0%
Taxrate after first 6 years
40%
WACC (first 6 years)
9,72%
WACC (after 6 years)
6,91%
Rd borrow locally
13,00%
WACC borrow locally (first 6 years)
13,75%
WACC borrow locally (after 6 years)
9,33%
Scenario base case:
Since the government restricted the registered capital, Maple would not be able to get the equity
capital initially invested under the agreement of the project to be repatriated. Since Maple had
always been able to repatriate a large part if not all of its capital invested in a power plant project,
they started looking for a solution.
The

Corporate Finance: Cost of Capital
Chapter 10
The Cost of Capital
LEARNING OBJECTIVES
After reading this chapter, students should be able to:
Explain what is meant by a firm's weighted average cost of capital.
Define and calculate the component costs of debt and preferred stock.
Explain why retained earnings are not free and use three approaches to estimate the component cost
of retained earnings.
Briefly explain why the cost of new equity is higher than the cost of retained earnings, calculate the
cost of new equity, and calculate the retained earnings breakpoint––which is the point where new
equity would have to be issued.
Briefly explain the two alternative approaches that can be used to account for flotation costs.
Calculate ... Show more content on Helpwriting.net ...
+ + +
10–2 Beta (market) risk refers to the project's effect on the corporate beta coefficient. Within–firm
(corporate) risk refers to the project's effect on the stability of the firm's earnings. Stand–alone risk
refers to the inherent riskiness of the project's expected returns when viewed alone. Theoretically,
beta (market) risk is the most relevant measure because of its effect on stock prices.
[pic]
10–3 The cost of capital for average–risk projects would be the firm's cost of capital, 10 percent. A
somewhat higher cost would be used for more risky projects, and a lower cost would be used for
less risky ones. For example, we might use 12 percent for more risky projects and 9 percent for less
risky projects. These choices are arbitrary.
10–4 Each firm has an optimal capital structure, defined as that mix of debt, preferred, and common

equity that causes its stock price to be maximized. A value–maximizing firm will determine its
optimal capital structure, use it as a target, and then raise new capital in a manner designed to keep
the actual capital structure on target over time. The target proportions of debt, preferred stock, and
common equity, along with the costs of those components, are used to calculate the firm's weighted
average cost of capital, WACC. The weights could be based either on the accounting values shown
on the firm's balance sheet (book values) or on the market values of the different

Brief Introduction Overview of McGraw Hill's 9th Edition...
Book Review
Fundamentals of Corporate Finance – Ross, Westerfield, Jordan McGraw Hill Education (India),
2012, 878 Pp 9th edition ISBN: 13:978–1–25–9027628
Kumar Ratnesh*
About Authors
Stephen A. Ross is the Franco Modigliant Professor of Finance Economics at the Sloan School of
management, Massachusetts Institute of Technology.
Randolph W. Westerfield is Dean Emeritus of the University of Southern California's Marshall
school of Business.
Bradford D. Jordan is Professor of Finance Holder of the Richard W.and Janis H. Furst Endowed
chair in Finance at the University of Kentucky.
With maintaining many of the features , the ninth edition of Fundamental of Corporate Finance
brings into clear focus the designed and developed explicit for course in business for both finance
major and non–majors alike. The role of corporate finance manager as decision maker and stress for
managerial input and judgment. Today finance manager assume to avoid block box approach to
finance and where appropriate, the approximate pragmatic nature of financial analysis is made
explicit, possible pitfalls are described.
Now a day, many functions that may have been done by corporate managers in the past are now
done in collaboration with all relevant managers and department. To ensure effectiveness, corporate
manager must be placed into that motion in which managers can use effectively in their day to day
business expectations of these global competitive crises.
The different sections of this

The Between Corporate Strategy And Finance

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