Dividends/stock

1) All else being equal, which of the following factors are likely to cause an increase in the firms per-share dividend? a. An increase in its net income. b. The company increases the proportion of equity financing in its target capital structure. c. An increase in the number of profitable projects that it w ...continues

Preparation of a Cash Budget

To avoid any uncertainty regarding his business’ financing needs at the time when such needs may arise, Cyrus Brown wants to develop a Cash Budget for his latest venture- Cyrus Brown Manufacturing (CBM). He has estimated the following sales forecast for CBM over the next nine months: March 2004 $250,000 April 275,000 M ...continues

Venture Capital Funding

What are some of the sources companies can turn to for venture capital funding? What analytical questions will be at the top of VC’s due diligence list prior to offering capital to early-stage firms? How will VC’s realize their return on investment over the life of an investment in a firm?

WACC, Cost of Capital, Capital Structure: Which portion of the WACC calculation is impacted by taxes? How can a company reduce its cost of capital? How is WACC used in financial planning to optimize capital structure?

Which portion of the WACC calculation is impacted by taxes? How can a company reduce its cost of capital? How is WACC used in financial planning to optimize capital structure?

Calculating Interest Rate

Find the interest rate implied by the following combinations of present and future values: Present Value Years Future Value $400 11 $684 $183 4 $249 $300 7 $300

Present Value / Future Values

1. Present Values. Compute the present value of a $100 cash flow for the following combinations of discount rates and times: a. r = 8 percent. t = 10 years. b. r = 8 percent. t = 20 years. c. r = 4 percent. t = 10 years. d. r = 4 percent. t = 20 years. 2. Future Values. Compute the future value of a $100 cash flow for th ...continues

How can I hedge the bet even if the franc plummets?

You are an arbitrageur in London. Swiss francs are presently selling in London for U.S. $0.67. You anticipate that they will increase in value and be selling for U.S. $0.70 in 30 days. You purchase $1 million worth of francs on the spot market. Is there anything that you can do to hedge your bet? That is, is there some way to en ...continues

Financial Planning

Looking at the planning model, I have to run out the projections to 2007. What would happen if the firm would continue to expand at 10% and relied on new issues of debt to make up any required external financing. Would the standard measures of leverage, such has the debt ratio and the interest cover start to spin out of control? ...continues

Financial Economics

1. You know that someone invested $1,500 in the Ec140 mutual fund ten years ago (and they reinvested all dividend and capital gains distributions). You now learn that their balance in the fund has grown to $9,245. (a) What has the geometric rate of return been for the Ec140 fund for the last ten years? (b) What do you know ab ...continues

Financial Economics

You know that there is a 40% probability that Microsoft will be selling for $22.50 three months from now and a 60% probability that it will be selling for $42.50. Microsoft does not pay a dividend. Currently, Microsoft is selling for $30. You are thinking of either buying 100 shares or selling short 100 shares. If you go lon ...continues