...Initial public offerings Initial public offerings Keith Broomfield Jr Trident University FIN501 Strategic Corporate Finance Professor: John Halstead Summer 2013 Keith Broomfield Jr Trident University FIN501 Strategic Corporate Finance Professor: John Halstead Summer 2013 Module 1 Case Module 1 Case 1) What type of IPO should AVG use—a traditional IPO or an online auction? Based on your analysis and findings, what would you recommend to the executives of AVG? Explain your reasoning in detail. As I understand the formula/process. Most IPO's are underwritten by an investment banking organization that specializes in providing venture capital to launch an organization toward a public offering. Once the valuation of the company whose public offering is being considered is established then shares are created. These shares represent a certain value or stock domination as based on the company's worth through their product, service or manufacturing capability as identified by the Investment Banking Firm. In other words what current market share does the pending IPO company have, their current net worth and the future of their product and the market they currently affect, oh yes and do they have a proprietary product or patent and what's their competition about. This is a rather simplistic formula and for the sake of time will work for now. Those initial shares are first offered to large institutional investors. These institutions are capable of providing large capital...
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...Finance Course: Corporate Finance MBA−10 California College for Health Sciences MBA Program McGraw-Hill/Irwin abc McGraw−Hill Primis ISBN: 0−390−55204−6 Text: Harvard Business School Entrepreneurship Cases Corporate Finance, Seventh Edition Ross−Westerfield−Jaffe Harvard Business School Finance Cases This book was printed on recycled paper. Finance http://www.mhhe.com/primis/online/ Copyright ©2005 by The McGraw−Hill Companies, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher. This McGraw−Hill Primis text may include materials submitted to McGraw−Hill for publication by the instructor of this course. The instructor is solely responsible for the editorial content of such materials. 111 FINAGEN ISBN: 0−390−55204−6 Finance Contents Ross−Westerfield−Jaffe • Corporate Finance, Seventh Edition I. Overview 1 1 20 34 34 35 70 98 130 152 152 193 219 219 241 241 275 1. Introduction to Corporate Finance 2. Accounting Statements and Cash Flow II. Value and Capital Budgeting Introduction 4. Net Present Value 5. How to Value Bonds and Stocks 7. Net Present Value and Capital Budgeting 8. Risk Analysis, Real Options, and Capital Budgeting III: Risk 10. Return and Risk: The Capital−Asset−Pricing...
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...Program: (1) it is a general management program; (2) the program, through its frequent use of the case method of instruction, has a practical, pragmatic bias and a decision- orientation; and (3) the first-year program provides the basic training on which students can build in the second-year. Consistent with the first-year program, FMP aims to provide: 1. An Introduction. The course provides the basic framework necessary to pursue further study in finance in the second-year of the MBA program and on his or her own thereafter. This framework is an orientation towards valuation. 2. Basic Mastery. The course emphasizes essentials, the tools and concepts that every general manager, entrepreneur, or manager in other functional fields should know. 3. A Corporate Perspective. Because we seek to understand the problems of general managers, this is a corporate finance course, rather than a course in investments, banking, or personal finance. While elements of these related subjects must be brought to bear, our ultimate focus is corporate policy and tactics. 4. An Underpinning for Addressing Broad and Challenging...
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...Career in Finance and Mathematics An B. Nguyen Grantham University BA550, Finance October 27, 2015 Abstract There is many job opportunity for individual with the career in finance or mathematics background. According to Careers-in-Finance.com, the lowest entry level related to finance start from $35K-$50K annually in small firms and can reach as high as $260K-$390K for large firms. The income can variable depended on the level of education and experiences. Around the finance corporate, there are numerous positions ranging from a financial analyst, who utilize the active/inactive data to generate the forecast that might impact company's profit, or a tax/audit officer who monitors/manage all account business activities to ensure compliance with federal tax regulations. Career in Finance and Mathematics In today’s society, almost everything happens in the world is driven by money and everything is affected by its value. Every adult also has to deal with some form of finance in their personal life, and if not properly manage, it can lead to catastrophe, i.e. bounce-check, bankruptcy or foreclosure, etc. In business operation, finance is the key element that will drive corporate to think harder, work leaner to save more, thus help corporate to achieve /retain more profit. Therefore, there are many positions that are available for the people with a knowledge of finance such as, Chief Financial Officer (CFO) and all accountant related personnel and financial analytical...
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...® a practical guide for business calculations ALASTAIR L. DAY Alastair Day has worked in the finance industry for more than 25 years in treasury and marketing functions and was formerly a director of a vendor leasing company specializing in the IT and technology industries. After rapid growth, the directors sold the enterprise to a public company and he established Systematic Finance plc as a consultancy specializing in: • financial modelling – review, design, build and audit • training in financial modelling, corporate finance, leasing and credit analysis on an in-house and public basis • finance and operating lease structuring as a consultant and lessor Alastair is author of a number of books including three published by FT Prentice Hall: Mastering Financial Modelling, Mastering Risk Modelling and The Financial Director’s Guide to Purchase Leasing. Alastair has a degree in Economics and German from London University together with an MBA and is an associate lecturer of finance with the Open University Business School. Excel a practical guide for business calculations Tools enabling managers to carry out financial calculations have evolved in the last 20 years from tables through calculators to programs on PCs and personal organisers. Today, the majority of those in finance have Excel on their desks and increasingly on their laptops or pocket computers. Mastering Financial Mathematics in Microsoft ® Excel provides a comprehensive set of tools and ...
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...Finance Course: Health Care Finance Readings MBAHC−4 California College for Health Sciences MBA Health Care Program McGraw-Hill/Irwin abc McGraw−Hill Primis ISBN: 0−390−55313−1 Text: Advanced Financial Accounting, Sixth Edition Baker−Lembke−King Harvard Business School Accounting Cases Corporate Finance, Seventh Edition Ross−Westerfield−Jaffe Harvard Business Review General Management Articles Harvard Business School Finance Cases This book was printed on recycled paper. Finance http://www.mhhe.com/primis/online/ Copyright ©2005 by The McGraw−Hill Companies, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher. This McGraw−Hill Primis text may include materials submitted to McGraw−Hill for publication by the instructor of this course. The instructor is solely responsible for the editorial content of such materials. 111 FINAGEN ISBN: 0−390−55313−1 Finance Contents Ross−Westerfield−Jaffe • Corporate Finance, Seventh Edition I. Overview 1 1 20 34 34 69 97 129 151 151 192 192 214 214 248 1. Introduction to Corporate Finance 2. Accounting Statements and Cash Flow II. Value and Capital Budgeting 4. Net Present Value 5. How to Value Bonds and Stocks 7. Net Present Value and...
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...Corporate Finance, 9/e Stephen A. Ross, Massachussetts Institute of Technology Randolph W. Westerfield, University of Southern California Jeffrey F. Jaffe, University of Pennsylvania ISBN: 0073382337 Copyright year: 2010 Table of Contents PART I: Overview 1 Introduction to Corporate Finance 1 1.1 | What Is Corporate Finance? | 1 | | The Balance Sheet Model of the Firm | 1 | | The Financial Manager | 3 | 1.2 | The Corporate Firm | 4 | | The Sole Proprietorship | 4 | | The Partnership | 4 | | The Corporation | 5 | | A Corporation by Another Name . . . | 7 | 1.3 | The Importance of Cash Flows | 7 | 1.4 | The Goal of Financial Management | 10 | | Possible Goals | 11 | | The Goal of Financial Management | 11 | | A More General Goal | 12 | 1.5 | The Agency Problem and Control of the Corporation | 13 | | Agency Relationships | 13 | | Management Goals | 14 | | Do Managers Act in the Stockholders' Interests? | 14 | | Stakeholders | 15 | 1.6 | Regulation | 16 | | The Securities Act of 1933 and the Securities Exchange Act of 1934 | 16 | | Sarbanes-Oxley | 17 | | Summary and Conclusions | 18 | | Concept Questions | 18 | | S&P Problems | 19 | 2 Financial Statements and Cash Flow 20 2.1 | The Balance Sheet | 20 | | Liquidity | 21 | | Debt versus Equity | 22 | | Value versus Cost | 22 | 2.2 | The Income Statement | 23 | | Generally Accepted Accounting Principles | 24 | | Noncash Items | 25...
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...1.0 Introduction Capital markets are a major source of finance for large companies engaging in investment projects. Successful investment projects can bring tremendous returns to shareholders in the form of dividend payment and increased share value. However, the source of finance affects a company’s overall cost of capital and by extension its dividends to shareholders. This report addresses the importance of the capital market and the efficient market hypothesis theories. The various source of finance available to large companies and the related cost. As well as the importance of the dividend decision and its possible affect on the company’s share price. [pic] 2.0 The role and importance of capital markets and efficient market hypothesis (EMH) [pic] The Role and Importance of Capital Markets A capital market is a market for the trading of long term securities such as, but not limited to debt and equity securities. A capital market which includes bond markets and stock exchanges serves two major functions. Firstly, it acts as a primary market for issuing new equity and debt capital. This means that companies[1] who want to raise new financing for investment projects or business expansion can source funding via this market. Secondly, it also acts as a secondary market for trading (that is to say buying and selling) of existing securities. The secondary market also serves as a source of pricing information for the primary market. Capital markets provide important...
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...A Study on Leverage and Firm Investment: Chinese Evidence Master of Science Thesis Huijie Bao Program Economics of Innovation and Growth Royal Institute of Technology (KTH) June 2010 Supervisor: Börje Johansson ABSTRACT This thesis focuses on the relationship between financial leverage and investment in Chinese listed firms. There are two novel aspects embraced here. One is choosing a marginal version of Tobin’s q instead of average q with Chinese data. Another one is taking the financial sector in to consideration. The research covers all sectors in the Chinese stock market. Main outcomes are listed below. Leverage imposes negative effects on investment, especially on non-state owned firms. Like Financials, Manufacturing and other highly regulated sectors, the inverse impacts of debt are week as well. However, marginal q fails in proof under the specific environment of the Chinese capital market which is still immature. High-leveraged firms experienced reverse influences of marginal q on investment. To sum up, over-debt financing indeed blocks the sustained investment. Relatively speaking, state owned firms in China suffer less since they are supported by the government and have fewer restrictions. Key words: financial leverage, marginal q, gross investment and state owned firms 2 ACKNOWLEDGMENTS Firstly, I would like to express my strong gratitude to my supervisor, Prof. Börje Johansson, whose profound knowledge, guidance and patience, greatly enhanced...
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...Financial decision making Contents Introduction: 1 Task: 1 1 (a) Ratio analysis on the basis of AstraZeneca Annual Report and Form 20-F Information 2012: 1 (b) Business structure and financial structure (comparison and relative advantages of the chosen organization) 5 (c) Compare and comment on the finances of business: 7 (d)Recommend potential investor for the investment decision: 8 (e)All possible Sources of finance for 500000 and best source 8 (f) Management of working capital: 10 Task 2: 11 (a)Preparations of a cash flow forecast and comment on budget and cash flow: 11 (b)Recommendation for managing cash flow: 12 Task 3: 12 (a)Assessment of projects by financial techniques: 12 (b) Recommendation from the above calculations and reason behind the choice: 13 Conclusions: 14 Reference: 15 Introduction: Finance is the paramount part of every organization. Whatever the size of the company, financing plays a vital role in the business organization. Ratio analysis is an important tool for the business decision as well as for the interpretation of the financial statements. We have selected AstraZeneca Annual Report & form 20-F information 2012. All the ratio analysis and decision in respect of the business structure as well as financial structure are based on this particular company. Investment appraisal techniques like- NPV, internal rate of return, payback period, accounting rate of return are based on the given data. This report suggests appropriate decision...
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...Equivalence of the different discounted cash flow valuation methods. Different alternatives for determining the discounted value of tax shields and their implications for the valuation∗ Pablo Fernández PricewaterhouseCoopers Professor of Corporate Finance IESE Business School, University of Navarra Camino del Cerro del Aguila 3. 28023 Madrid, Spain. E-mail: fernandezpa@iese.edu Abstract This paper addresses the valuation of firms by cash flow discounting. The first part shows that the four most commonly used discounted cash flow valuation methods (free cash flow discounted at the WACC; cash flow for equityholders discounted at the required return on the equity flows; capital cash flow discounted at the WACC before taxes; and Adjusted Present Value) always give the same value. The disagreements in the various theories on the valuation of the firm arise from the calculation of the discounted value of tax shields (VTS). The paper shows and analyses 7 different theories on the calculation of the VTS: Modigliani and Miller (1963), Myers (1974), Miller (1977), Miles and Ezzell (1980), Harris and Pringle (1985), Ruback (1995), Damodaran (1994), and Practitioners method. The paper also shows the changes that take place in the valuation formulas when the debt's market value does not match its book value. JEL Classification: G12, G31, M21 October 16, 2008 (First version: July 2, 1999) Another version of this paper may be found in chapters 17, 18, 19 and 21 of the author's book...
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...Midland Energy Resources Inc.: Cost Of Capital Introduction Midland Energy Resources have a senior vice president, Janet Mortension, of project finance. She was preparing her annual cost of capital for midland as well as for each of its following three divisions: * Exploration & production (E&P) * Refining & Marketing (R&M) * Petrochemicals Midland was a global company with operations in oil and gas. Midland corporate treasury had began analysis and preparation of annual cost of capital for the corporation as a whole and for each divisions as part of annual capital budgeting process but this estimates were often criticized, and Midland division presidents and controllers sometimes challenged specific assumptions and inputs. The case uses comparable companies to estimate asset and beta for each individual division, and must comply the capital asset pricing model for calculating the cost of capital. Midland was conservative compared to some of its large competitors, but it has a group of trader in- house who actively managed currency. Interest rate and commodity risks within a set of guideline approved by the Board. Midland Energy Resources ha d been incorporated more than 120 years previously and in 2007 had more than 80,000 employees. Midland’s financial strategy in 2007 was founded on the following four pillars: * Oversees Growth * Value- Creating Investment * Optimal capital structure * Stock Repurchases Oversees Growth: Oversees investment were the main engine...
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...conservative approach, I have rather added 2% to the rate: The cost of debt for Amazon.com therefore is: KD= RF + spread KD= 0.561% + 2% KD = 2.561% For Amazon.com, the interest rate is the function of LIBOR rate so the book value approximately equals the market value. The estimated fair value of long-term debt is $9.981 billion ($9.1 billion for notes and $881 million for other long-term debt) as stated in the note 6 to the financial statements. Cost of equity The method preferred for calculating the cost of equity for Amazon.com is by applying CAPM model. The beta for 2014 has been determined by using the daily returns of market index i.e. S&P 500 and the stock (Finance, 2014). The results were as shown in the table below: Covariance | 0.000069 | Variance | 0.000050 | Beta | 1.380 | Formula used for beta is: Beta=...
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...in an efficient market, the value of a firm is unaffected by how the firm is financed. Whether the firm’s capital is raised by issuing stock or selling debt does not affect the value of the firm. This theory is also referred to as the capital structure irrelevance principle, which we have already looked at in previous seminar discussions. There are two propositions which were discussed by Modigliani and Miller. The first proposition states that the value if a firm does not depend on its capital structure. An example would be if two firms with the same business operations and similar kind of assets, where to be assessed after using either stocks or debt to finance the firm of s. On the left side their balance sheets, these firms will look the same, only difference being the right side, i.e. the liabilities and how they finance business activities. M&M proposition 1 therefore says that how the debt and equity is structured in a corporation is irrelevant as the value of the firm is determined by real assets and not its capital structure. Implications of this proposition firstly revolve around the issue of changing capital structure. Assuming that the three conditions identified by M&M apply and considering a company which is financed entirely with equity. The annual cash flows of R100, which are expected to continue forever, if an appropriate discount rate is 10%, we can calculate the value of the firm to perpetuity as PVA=100/0.1= R1000. Since the firm is financed entirely...
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...CORPORATE FINANCE T H IRD E DIT ION JONATHAN BERK STANFORD UNIVERSITY PETER D E MARZO STANFORD UNIVERSITY Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo To Rebecca, Natasha, and Hannah, for the love and for being there —J. B. To Kaui, Pono, Koa, and Kai, for all the love and laughter —P. D. Editor in Chief: Donna Battista Acquisitions Editor: Katie Rowland Executive Development Editor: Rebecca Ferris-Caruso Editorial Project Manager: Emily Biberger Managing Editor: Jeff Holcomb Senior Production Project Manager: Nancy Freihofer Senior Manufacturing Buyer: Carol Melville Cover Designer: Jonathan Boylan Cover Photo: Nikreates/Alamy Media Director: Susan Schoenberg Content Lead, MyFinanceLab: Miguel Leonarte Executive Media Producer: Melissa Honig Project Management and Text Design: Gillian Hall, The Aardvark Group Composition and Artwork: Laserwords Printer/Binder: R.R. Donnelley/Jefferson City Cover Printer: Lehigh Phoenix Text Font: Adobe Garamond Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text and on this copyright page. Credits: Cover: Sculpture in photo: Detail of Flamingo (1973), Alexander Calder. Installed in Federal Plaza, Chicago. Sheet metal and paint, 1615.4 x 1828.8 x 731...
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