CHAPTER 1 INTRODUCTION AND OVERVIEW Learning Objectives The subject matter of economics and finance • The general role of the financial system in a modern economy • The major functions of financial markets and financial intermediaries • What saving is and its uses • How the financial system channels funds from lenders to borrowers • The role of the Federal Reserve and its regulatory and monetary policy responsibilities Lectures Notes I. Economic and financial analysis of
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* PV(CF) = CF/(1+r)t AKA PV = FV/(1+r)t * NPV = PV(CFs) – Investment = -C0 +C1/(1+r)+C2/(1+r)2+C3/(1+r)3+… = ∑(Expected CFt)/(1+r)t – Investment * Perpetuity – pays a fixed amount C per period forever * P(C,r) = C/r requires cash flow to begin NEXT period. If begin now, then PV = C + C/r * Annuity – fixed stream of cash flows that has a final period t * A(C,r,t) = C/r [1-1/(1+r)t] * Growing Perpetuity – G(C,r,g) = C/(r-g) C is initial cash flow, r is discount rate
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HAWAWINI – CHAP11. Managers need to make two major decisions: A – What investments to take; B – How to finance it; A company that decide to finance its projects with external funds, maybe fi nd itself in difficult situation to pay its debts (excessive borrowing). Managers will be under pressure to make decisions that may not be in the best interest of shareholders – example: sell of value –creating assets; Conversely, a firm with too little debt may pass up the opportunity to reduce its tax
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Chapter 15 Corporate Valuation, Value-Based Management, and Corporate Governance MINI CASE You have been hired as a consultant to Kulpa Fishing Supplies (KFS), a company that is seeking to increase its value. KFS has asked you to estimate the value of two privately held companies that KFS is considering acquiring. But first, the senior management of KFS would like for you to explain how to value companies that don’t pay any dividends. You have structured your presentation around the following
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New Heritage Doll Company: Capital Budgeting Case The key issue in the case is which of one of the two projects recommended by the Production Division should the company pursue (if any). Below is the summary of the NPV analysis done for both the Match My Doll Clothing (MMDC) and Design Your Own Doll (DYOD) As seen above the NPV for the MMDC project is $9.587 million and the NPV for the DYOD is $4.833 million. Analysis: Even though the NPV for the DYOD is lower than MMDC, it may be advisable
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NTRODUCTION Over the past a few decades, executive pay has risen dramatically in the United States. As of 1960, the average CEO at a large corporation made approximately $190,000 (equivalent to approximately $1.3 million today). The 1990s saw one of the greatest wealth transfers in history, as CEO pay skyrocketed. S&P companies CEO pay went from 1993 average of $3.7 to $17.4 million in 2000 [1]. In 2010 the highest paid CEO was Viacom's Philippe P. Dauman at $84.5 million in 9 months [2]. Motorola
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Question 1 10 points Save Macomb Corporation is a U.S. firm that invoices some of its exports in Japanese yen. If it expects the yen to weaken, it could ____ to hedge the exchange rate risk on those exports. sell yen put options buy yen call options buy futures contracts on yen sell futures contracts on yen Question 2 10 points Save A U.S. corporation has purchased currency put options to hedge a 100,000 Canadian dollar (C$) receivable
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Peter DeVito Ed Travaglianti Cameron McNeil Corporate Finance Homework #1 1. 6 month | 1 year | Investment | C1 = 10,000 | C2 = 20,000 | 26,000 | r1 = 0.03 | r2 = spot rate = s | | 100 = 31+0.03+ 1031+s where 3 is the coupon payment based on a 6% yield s= 6.09% NPV = -C0+ C1(1+r1)+ C2(1+r2) NPV = -26,000+ 10,000(1+0.03)+ 20,000(1+0.0609) NPV = 2560.66 with positive NPV, YES, we should invest 2. Based on the Annuity Formula and assuming the same
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Unit 1 – AO1 – Investigate the roles and responsibilities of two contrasting public services and describe their purpose AO2 – Investigate the internal structure and functional areas for two chosen public services The two public services I am going to speak about are the prison service and the army. The reason is because both have a very important part of the keeping Britain safe. The prisons vision is to provide the very best prison service as possible and to help secure the following points
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XVIII AIRBORNE CORPS AND FORT BRAGG DFAC SCHEDULE SNAPSHOT NOVEMBER 2014 XVIII AIRBORNE CORPS & FORT BRAGG DINING FACILITY OPEN/CLOSE SCHEDULE November 2014 1-2 CLOSED POPE AAF Weekday 8-11 CLOSED 15-16 OPEN 22-23 CLOSED 27-30 82ND CAB CLOSED 1 Phone# 396-9993/ 7685 DINING FACILITY Location Goldberg Street Weekend Br: 0930-1300 Sup: 1600-1730 Find Your Location Bldg# M-5530 SMOKE BOMB CLOSED CLOSED CLOSED CLOSED CLOSED 2 Phone# 396-2592 /0103 Essayons
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