...SOLUTIONS TO END OF CHAPTER ASSIGNED PROBLEMS 3-2 NI = $3,000,000; EBIT = $6,000,000; T = 40%; Interest = ? Need to set up an income statement and work from the bottom up. EBIT $6,000,000 Interest 1,000,000 EBT $5,000,000 EBT = Taxes (40%) 2,000,000 NI $3,000,000 Interest = EBIT – EBT = $6,000,000 – $5,000,000 = $1,000,000. 3-3 EBITDA $7,500,000 (Given) Depreciation 2,500,000 Deprec. = EBITDA – EBIT = $7,500,000 – $5,000,000 EBIT $5,000,000 EBIT = EBT + Int = $3,000,000 + $2,000,000 Interest 2,000,000 (Given) EBT $3,000,000 Taxes (40%) 1,200,000 Taxes = EBT × Tax rate NI $1,800,000 (Given) 3-4 NI = $50,000,000; R/EY/E = $810,000,000; R/EB/Y = $780,000,000; Dividends = ? R/EB/Y + NI – Div = R/EY/E $780,000,000 + $50,000,000 – Div = $810,000,000 $830,000,000 – Div = $810,000,000 $20,000,000 = Div. 3-8 Statements b and d will decrease the amount of cash on a company’s balance sheet. Statement a will increase cash through the sale of common stock. Selling stock provides cash through financing activities. On one hand, Statement c would decrease cash; however, it is also possible that Statement c would increase cash, if the firm receives a tax refund for taxes paid in a prior year. 3-9 Ending R/E = Beg. R/E Net income Dividends $278,900,000 = $212,300,000 Net income $22,500...
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...interest rates: Nominal (or Quoted) rate, Periodic rate, and Effective (or Equivalent) Annual Rate; and properly choose between securities with different compounding periods. • Solve time value of money problems that involve fractional time periods. • Construct loan amortization schedules for both fully-amortized and partially-amortized loans. LECTURE SUGGESTIONS We regard Chapter 6 as the most important chapter in the book, so we spend a good bit of time on it. We approach time value in three ways. First, we try to get students to understand the basic concepts by use of time lines and simple logic. Second, we explain how the basic formulas follow the logic set forth in the time lines. Third, we show how financial calculators and spreadsheets can be used to solve various time value problems in an efficient manner. Once we have been through the basics, we have students work...
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...CHARTERED FINANCIAL ANALYST Texas BA II Calculator Workshop CHARTERED FINANCIAL ANALYST Setting up your BAII Calculator Workshop Setting up your calculator (BAII Plus) Decimal places &|F! Set to mathematical precedence &|"&! No. of payments per year &-K Clear time value calculations &0 Calculator Workshop Memory function The calculator can store numbers for you Example: You calculate the answer to 2 + 3.5 = 5.5 and then wish to store it Press D then K (5.5 has now been stored and assigned to button K Having cleared the screen (P), it is now possible to recall the number by pressing J then K It is always possible to recall the last answer from the calculator by pressing & and then x CHARTERED FINANCIAL ANALYST Nominal vs. Effective Interest Rates Calculator Workshop Calculating nominal and effective rates Periodic rate (r) Nominal/stated rate r x Annual no. of periods Effective Annual Rate (EAR) EAR = (1 + r)12/n – 1 Where n = number of months Example: Calculating nominal and effective rates Calculate the nominal rate from a 4% six-monthly periodic rate Calculate the EAR from a 4% six-monthly rate Calculate the EAR from a nominal rate of 8% paid quarterly Calculator Workshop Example: 8% paid 6-monthly is, in effect, 8.16% 8% paid quarterly is, in effect, 8.243% 0.08 FV = $100 1 + = $108.243 4 r Effective rate = 1 + − 1 n where r is the nominal rate n 4 Calculator Workshop ...
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...How to use Microsoft Excel for financial calculations? Microsoft Office Excel is a great computer program that is widely used throughout the financial industry. Excel is an invaluable tool in Finance and Accounting. Of course professionals also use special financial calculators. But a financial calculator can be expensive for students. It is not intuitive to use and unless they become investment bankers or realtors, most students will never use it after finishing the financial course. Fortunately, it is very easy to create a financial calculator for free if you have Excel on your computer. In fact, an Excel calculator can do much more than a dedicated financial calculator. Another advantage is the fact that if you learned how to use financial functions of Excel you will be able also to use a special financial calculator should the need arise. Below is a short introduction of how to start using MS Excel for financial calculations. Inserting Functions Excel comes with a wide array of functions that can easily be inserted into a spreadsheet. Adding a function is as easy as clicking on the "Insert Function" button on the top tool bar. Insert Function Button If you don't see the "Insert Function" button on your tool bar, you can easily add it by clicking: Tools > Customize > Commands > Find and click on Insert in the left-hand scroll-down menu. Then, find "Insert Function" in the right-hand scroll-down menu and click and drag it to your tool bar. Clicking on the "Insert...
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...| 5.53482 | | $44,279 | Present value of salvage value | | 8 | | 20,000 | | 0.50187 | | 10,037 | | | | | | | | | 54,316 | Capital investment | | | | | | | | 48,000 | Net present value | | | | | | | | $6,316 | Using financial calculator: CF0=-48,000; C01=8,000; F01=7; C02 = 28,000; F02 = 1; I = 9; CPT NPV = 6,315.88 (b) In order to meet the cash payback criteria, the project would have to have a cash payback period of less than 5.6 years (8 × 70%). It does not meet the criteria. However, the net present value is positive, suggesting the project should be accepted. The reason for the difference is that the project’s high estimated salvage value increases the present value of the project. The net present value is a better indicator of the project’s worth. E13-16 (5 points): Project A: | | Time Period | | CashFlows | × | 10% DiscountFactor | = | PresentValue | Present value of net annual cash flows | | 1–8 | | $20,000 | | 5.33493 | | $106,699 | Present value of salvage value | | 8 | | — | | — | | — | | | | | | | | | $106,699 | Capital investment | | | | | | | | 98,000 | Net present value | | | | | | | | $8,699 | Using financial calculator: CF0=-98,000; C01=20,000; F01=8; I = 10; CPT NPV = 8,698.52 Total PV of net cash flows = NPV + Initial Investment =...
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... Sponsored Shop for accounting calculator on Google Texas Instruments B... $34.99 Staples HP 10bII+ Financial Cal... $29.99 HP Direct Texas Instruments B... $39.99 toysrus.com Texas Instruments B... $42.14 Walmart Hewlett‑Pack... 12C Financia... $85.99 Overstock.... Shop by brand:HP Texas Instruments Search Results Online Accounting Calculator - Equations, Formulas, and Ratios www.a-systems.net/calculator/10+ items – Accounting Calculator. Calculate accounting ratios and ... Name Equation Asset Turnover Net Sales / Total Assets Average Collection Period Accounts Receivable / (Annual Credit Sales / 365) Net Profit, Net Income, Income - Gross Profit Margin - Receivables Turnover Ratio Accounting Calculator - Android Apps on Google Play https://play.google.com/store/apps/details?id=jp.gr...hl... 69 votes - Free - Android Aug 27, 2012 – This application is an accounting calculator with many functions. *Calculating due to 12 figures *Digit grouping separators *Four arithmetic ... Images for accounting calculator - Report images Accounting - TCalc online financial calculators - TimeValue Software tcalc.timevalue.com/accounting.aspxSuite of financial calculators for the CPA industry. Add these calculators to your existing cpa accounting website. Free accounting online line calculator calculator.utilstudio.com/Free accounting online line calculator. ... Free accounting online line calculator. Not only for accountants. Show details...
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...Chapter 2 Time Value of Money MINI CASE Assume that you are nearing graduation and that you have applied for a job with a local bank. As part of the bank's evaluation process, you have been asked to take an examination which covers several financial analysis techniques. The first section of the test addresses discounted cash flow analysis. See how you would do by answering the following questions. a. Draw time lines for (a) a $100 lump sum cash flow at the end of year 2, (b) an ordinary annuity of $100 per year for 3 years, and (c) an uneven cash flow stream of -$50, $100, $75, and $50 at the end of years 0 through 3. Answer: (Begin by discussing basic discounted cash flow concepts, terminology, and solution methods.) A time line is a graphical representation which is used to show the timing of cash flows. The tick marks represent end of periods (often years), so time 0 is today; time 1 is the end of the first year, or 1 year from today; and so on. 0 1 2 year | | | lump sum 100 cash flow 0 1 2 3 | | | | annuity 100 100 100 0 1 2 3 | | | | uneven...
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...hp 12c financial calculator user's guide H Edition 4 HP Part Number 0012C-90001 File name: hp 12c_user's guide_English_HDPMBF12E44 Printed Date: 2005/7/29 Page: 1 of 209 Dimension: 14.8 cm x 21 cm Notice REGISTER YOUR PRODUCT AT: www.register.hp.com THIS MANUAL AND ANY EXAMPLES CONTAINED HEREIN ARE PROVIDED “AS IS” AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. HEWLETT-PACKARD COMPANY MAKES NO WARRANTY OF ANY KIND WITH REGARD TO THIS MANUAL, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE. HEWLETT-PACKARD CO. SHALL NOT BE LIABLE FOR ANY ERRORS OR FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH THE FURNISHING, PERFORMANCE, OR USE OF THIS MANUAL OR THE EXAMPLES CONTAINED HEREIN. © Copyright 1981, 2004 Hewlett-Packard Development Company, L.P. Reproduction, adaptation, or translation of this manual is prohibited without prior written permission of Hewlett-Packard Company, except as allowed under the copyright laws. Hewlett-Packard Company 4995 Murphy Canyon Rd, Suite 301 San Diego, CA 92123 Printing History Edition 4 August 2004 2 File name: hp 12c_user's guide_English_HDPMBF12E44 Printered Date: 2005/7/29 Page: 2 of 209 Dimension: 14.8 cm x 21 cm Introduction About This Handbook This hp 12c user's guide is intended to help you get the most out of your investment in your hp 12c Programmable Financial Calculator. Although the excitement of acquiring this powerful...
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...Solutions to Chapter 4 The Time Value of Money 1. a. b. c. d. $100/(1.08)10 = $46.32 $100/(1.08)20 = $21.45 $100/(1.04)10 = $67.56 $100/(1.04)20 = $45.64 $100 × (1.08)10 = $215.89 $100 × (1.08)20 = $466.10 $100 × (1.04)10 = $148.02 $100 × (1.04)20 = $219.11 2. a. b. c. d. 3. $100 × (1.04)113 = $8,409.45 $100 × (1.08)113 = $598,252.29 4. With simple interest, you earn 4% of $1,000 or $40 each year. There is no interest on interest. After 10 years, you earn total interest of $400, and your account accumulates to $1,400. With compound interest, your account grows to: $1,000 × (1.04)10 = $1480.24 Therefore $80.24 is interest on interest. PV = $700/(1.05)5 = $548.47 5. 4-1 6. Present Value a. $400 Years 11 Future Value $684 Interest Rate ⎡ 684 ⎤ ⎢ 400 ⎥ ⎣ ⎦ ⎡ 249 ⎤ ⎢ 183 ⎥ ⎦ ⎣ (1 / 11) − 1 = 5.00% (1 / 4 ) b. $183 4 $249 − 1 = 8.00% (1 / 7 ) c. $300 7 $300 ⎡ 300 ⎤ ⎢ 300 ⎥ ⎣ ⎦ − 1 = 0% To find the interest rate, we rearrange the basic future value equation as follows: ⎡ FV ⎤ FV = PV × (1 + r) ⇒ r = ⎢ ⎣ PV ⎥ ⎦ t (1 / t ) −1 7. You should compare the present values of the two annuities. a. ⎡ 1 ⎤ 1 − PV = $1,000 × ⎢ = $7,721.73 10 ⎥ ⎣ 0.05 0.05 × (1.05) ⎦ ⎡ 1 ⎤ 1 − PV = $800 × ⎢ = $8,303.73 15 ⎥ ⎣ 0.05 0.05 × (1.05) ⎦ b. ⎡ 1 ⎤ 1 − = $4,192.47 PV = $1,000 × ⎢ 10 ⎥ ⎣ 0.20 0.20 × (1.20) ⎦ ⎡ 1 ⎤ 1 − PV = $800 × ⎢ = $3,740.38 15 ⎥ ⎣ 0.20 0.20 × (1.20) ⎦ c. When the interest rate is low, as...
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...hp 12c financial calculator user's guide H Edition 4 HP Part Number 0012C-90001 File name: hp 12c_user's guide_English_HDPMBF12E44 Page: 1 of 209 Printed Date: 2005/7/29 Dimension: 14.8 cm x 21 cm Notice REGISTER YOUR PRODUCT AT: www.register.hp.com THIS MANUAL AND ANY EXAMPLES CONTAINED HEREIN ARE PROVIDED “AS IS” AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. HEWLETT-PACKARD COMPANY MAKES NO WARRANTY OF ANY KIND WITH REGARD TO THIS MANUAL, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE. HEWLETT-PACKARD CO. SHALL NOT BE LIABLE FOR ANY ERRORS OR FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH THE FURNISHING, PERFORMANCE, OR USE OF THIS MANUAL OR THE EXAMPLES CONTAINED HEREIN. © Copyright 1981, 2004 Hewlett-Packard Development Company, L.P. Reproduction, adaptation, or translation of this manual is prohibited without prior written permission of Hewlett-Packard Company, except as allowed under the copyright laws. Hewlett-Packard Company 4995 Murphy Canyon Rd, Suite 301 San Diego, CA 92123 Printing History Edition 4 August 2004 2 File name: hp 12c_user's guide_English_HDPMBF12E44 Printered Date: 2005/7/29 Page: 2 of 209 Dimension: 14.8 cm x 21 cm I ntroduction A bout This Handbook This hp 12c user's guide is intended to help you get the most out of your investment in your hp 12c Programmable Financial Calculator. Although the ...
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...The Measure of Risk - Stock Beta Stock Beta Calculator http://spreadsheetml.com/finance/stockbetacalculatorspreadsheet.shtml Copyright (c) 2008-2009, ConnectCode Pte Ltd. All Rights Reserved. ConnectCode accepts no responsibility for any adverse affect that may result from undertaking our training. No statements in this document should be construed or thought to represent investment advice of any type since the sole purpose of the explanation is to illustrate the technique. Microsoft and Microsoft Excel are registered trademarks of Microsoft Corporation. All other product names are trademarks, registered trademarks, or service marks of their respective owners Table of Contents 1. 2. Stock Beta .............................................................................................................................. 1-1 Stock Beta Calculator ........................................................................................................... 2-2 2.1 Inputs ......................................................................................................................... 2-2 2.2 Outputs ....................................................................................................................... 2-2 Advance Stock Beta Calculator ........................................................................................... 3-3 Customizing the Stock Beta Calculator .............................................................................. 4-4...
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...Chapter 2 Time Value of Money MINI CASE Assume that you are nearing graduation and that you have applied for a job with a local bank. As part of the bank's evaluation process, you have been asked to take an examination which covers several financial analysis techniques. The first section of the test addresses discounted cash flow analysis. See how you would do by answering the following questions. a. Draw time lines for (a) a $100 lump sum cash flow at the end of year 2, (b) an ordinary annuity of $100 per year for 3 years, and (c) an uneven cash flow stream of -$50, $100, $75, and $50 at the end of years 0 through 3. Answer: (Begin by discussing basic discounted cash flow concepts, terminology, and solution methods.) A time line is a graphical representation which is used to show the timing of cash flows. The tick marks represent end of periods (often years), so time 0 is today; time 1 is the end of the first year, or 1 year from today; and so on. 0 | i% 1 2 | | year lump sum 100 0 cash flow i% 1 2 3 | | | 100 | 100 100 1 2 3 | | | 75 50 annuity 0 | i% uneven cash flow stream -50 100 A lump sum is a single flow; for example, a $100 inflow in year 2, as shown in the top time line. An annuity is a series of equal cash flows occurring over equal intervals, as illustrated in the middle time line. An uneven cash flow stream is an irregular series of cash flows...
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...11/9/2015 Untimed Quiz 4: FI301ZA Financial Management Untimed Quiz 4 Due Nov 10 at 11:59pm Allowed Attempts 2 Points 25 Questions 25 Available Nov 6 at 12:10pm Nov 10 at 11:59pm 4 days Time Limit None Take the Quiz Again Attempt History Attempt Time Score LATEST Attempt 1 26 minutes 9 out of 25 Correct answers will be available on Nov 11 at 8am. Score for this attempt: 9 out of 25 Submitted Nov 9 at 8:02pm This attempt took 26 minutes. 1 / 1 pts Question 1 Financial Calculator Section The following question(s) may require the use of a financial calculator. A $1,000 par value bond sells for $1,216. It matures in 20 years, has a 14 percent coupon, pays interest semiannually, and can be called in 5 years at a price of $1,100. What is the bond's YTM? 6.05% 10.00% 10.06% 8.59% 11.26% Rationale: Cash flow time line: Financial calculator solution: Inputs: N = 40; PV = −1,216; PMT = 70; FV = 1,000 Output: I = 5.6307 ≈ 5.63% = rd/2. YTM 5.63% × 2 = 11.26% Question 2 1 / 1 pts A bond's value will increase as interest rates rise over time. True https://canvas.emporia.edu/courses/10748/quizzes/14500 1/10 11/9/2015 Untimed Quiz 4: FI301ZA Financial Management False Incorrect Question 3 0 / 1 pts A bond with a $100 annual interest payment and $1,000 face value with five years to maturity (not expected to default) would sell for a pr...
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...Financial Management Lecture 1 Corporate Finance/Financial Decisions: Three important steps. * The Investment Decision: Expand, selling and so on. Decisions to spend or earn money. Capital budgeting. Capital budgeting is the planning and managing of a firms investment in non-current assets. The main thing is the cash flow. Evaluating; * Size of future cash flows * Timing of future cash flows * Risk to future cash flows. Cash flow timing is when a dollar today is worth more than a dollar at some future date. There is a trade-off between the size(amount) of an investements cash flow, and when the cash flow is recieved. So a dollar today, is more worth than a dollar a yeat from now. * The Finance Decision: How to found the fund to replace a machine for example. Capital structure decision. We are talking about firms that is listed. Capital structure is the specific mix of debt and equity maintained by the firm. Debt is loaned money and equity is the money in the firm, the own money. Decisions need to be made on both the financing mix, and how and where to raise the money. * The Dividend Decision: How to distribute the decision to expand for example. Involves the decision of wether to pay a dividend to shareholders or maintain the funds within the firm for internal growth. Factors important to this decision include growth opportunities, taxation and shareholders’ preferences. The top financial manager within a firm is usually the...
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...Chapter 1, we saw that the primary objective of financial management is to maximize the intrinsic value of a firm’s stock. We also saw that stock values depend on the timing of the cash flows investors expect from an investment—a dollar expected sooner is worth more than a dollar expected further in the future. Therefore, it is essential for financial managers to understand the time value of money and its impact on stock prices. In this chapter we will explain exactly how the timing of cash flows affects asset values and rates of return. The principles of time value analysis have many applications, including retirement planning, loan payment schedules, and decisions to invest (or not) in new equipment. In fact, of all the concepts used in finance, none is more important than the time value of money (TVM), also called discounted cash flow (DCF) analysis. Time value concepts are used throughout the remainder of the book, so it is vital that you understand the material in this chapter and be able to work the chapter’s problems before you move on to other topics.1 There are no Beginning-of-Chapter Questions for this chapter. 1. The problems can be worked with either a calculator or an Excel spreadsheet. Calculator manuals tend to be long and complicated, partly because they cover a number of topics that aren’t used in the basic finance course. Therefore, on this textbook’s Web site we provide tutorials for the most commonly used calculators. The tutorials are keyed to this chapter, and...
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