All Matches

Solution Library

Expert Answer

Textbooks

Search Textbook questions, tutors and Books

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Tutors
Study Help
Hire a Tutor
AI Study Help New

Search
Sign In
Register

study help
business
fundamentals of corporate finance

Questions and Answers of Fundamentals Of Corporate Finance

=+7. Can an asset have several values? Why?
=+10. Which method should be used for estimating the value of a company in decline?
=+11. When a company is bought, is there a control premium?
=+12. Name the types of companies for which cash flow value is much higher than net asset value.
=+13. Can the purchase of a company by venture capitalists create value?And by trade buyers?
=+14. Has a reduction in working capital of 1% the same impact on a DCF as a 1% improvement in the EBIT margin?
=+15. Why can we say that the mean or the median figure is the choice of an indecisive person?
=+16. What is the popular saying on which the cash flow fade method is founded?
=+18. Which lesson can you derive from the graph in this chapter showing EV/EBITDA of acquisitions and market prices?
=+1. Megabyte plc is a high-tech company experiencing transitional problems. To get through this difficult period, management has decided on a €120m recapitalisation. In five years’ time, the
=+2. The table below shows the forecasts for Management plc (in millions of €):Year 1 2 3 4 5 Sales 3960 4080 4200 4326 4458 Cost of goods sold 1782 1794 1806 1860 1917 Marketing costs 870 897 924
=+3. The mean multiple for the 2016 operating profits of comparable peers is 10, and the mean 2017 P/E is 15. Calculate the equity value of Pixi Spa. Key figures for the company are set out
=+4. You have to value Nestlé, the Swiss food group, using a peercomparable method. In 2015, Nestlé earned an operating income of CHF 12.4bn and had, as of 31/12/2015, a net financial debt of CHF
=+15.1bn. Nestlé owned 23.2% of L’Oréal, consolidated using the equity method and whose market cap as of 31/12/2015 was CHF 94bn. If the 2015 EBIT multiple of food groups was 18, what is your
=+3. What are the two risks incurred for a shareholder of an indebted company?
=+5. Explain what impact an increase in debt will have on the#x03B2; of shares.
=+11. What is the cost of the net debt of a company that has no more shareholders’ equity equal to? And the cost of capital?
=+1. 60% of Company A’s needs are equity-financed at a cost of 9%, and 40% are debt-financed at 5%. Excluding tax, what is the weighted average cost of capital of this company?
=+2. In a tax-free world, Companies B and C are similar in every respect, except for their capital structures. B has no debts while C has debts of 24 000 at 5%. The companies have been valued as
=+When will arbitrage cease? What will the P/E be for Companies B and C?
=+d. What is the β of the debt if the β of the capital employed is equal to the average β of the capital employed and the debt weighted by the relative share of debt and equity in financing the
=+4. Deutsche Telekom and Orange have a similar economic risk.The beta of Orange shares is 1.4, and it is 1.1 for Deutsche Telekom. If the no-risk cash rate is 3.5% and the risk premium is 6%, what
=+what is it for Deutsche Telekom, which has debts of 4%compared with 4.5% for Orange (imagine that this is a tax-free world)?
=+10. From 1990 to 2016, interest rates in Europe were generally revised downwards. If Modigliani and Miller’s 1963 theory was right, should debt levels of companies have increased or decreased?
=+4. Redo the table on page 608 for Italy and Morocco assuming two situations: no debt and 500 of debt at 7%. Assume the investor and the firm are taxed in the highest bracket of the tax scale.
=+14. Can an entrepreneur with an industrial strategy be opportunistic in his financing choices over time?
=+15. Why did European companies rid themselves of so much debt in 1980–1998? Why did they stop doing it in 1998–2002?
=+16. A hotel group will be able to finance itself more easily through debt than a high-tech company. Why?
=+17. A mineral water company will be able to finance itself through debt more easily than a pharmaceutical group. Why?
=+18. Can an airline company finance itself through debt despite its heavy fixed costs? Why?
=+If the cost of capital is 10%, the shareholder-required rate of return is 12% and the cost of debt is 5%, do you think this investment should be financed with equity or with debt? Isn’t there
=+1. On 10 January 2017, you observe the following data on Yahoo!Finance:Marks and Spencer share price: £3.24 Net dividend per share: £0.1870 Earnings per share: £0.2480 Calculate Marks and
=+2. What do you think of the dividend policies of the following companies?2011 2012 2013 2014 2015 2016 2017(A) EPS 100 115 131 150 160 165 167 DPS 20 23 26 30 35 41 60(B) EPS 350 402 458 524 559
=+d. In December 2016, the company’s market capitalisation has fallen to 90 million (still with the same number of shares in issue)and the estimated value of the share is 120. Rowak’s chairman
1===+1. What is important in a capital increase where each shareholder takes his proportionate share of the issue?1===+2. What is dilution of control?1===+3. When are there three different measures
=+What is the IRR before and after the founders exercise their options? And if the sale price were €3.73? State your views. How can this be remedied?
=+5. A company issues 1 000 000 shares at €1 of which 200 000 are for the founders and 800 000 are for the investors. The investors grant the founders call options with an exercise price of €1 on
=+1. An investor proposes to contribute €1m to a start-up and to obtain 20% of its capital. What is the pre-money and postmoney valuation of this company?
=+1. How should an internet-of-things start-up be financed? And a pizza chain?
=+c. On what condition could the bearers of the January 2009-8.25% bond agree to exchange it for the October 2010-4%bond?
=+a. In October 2010, was the Saint-Gobain January 2009-8.25% bond listed above, below or at a par? Why?
=+11. A treasurer has to invest cash, but over a period of two years.Should he opt for a fixed or a floating rate? Why?
=+c. Calculate the share that new shareholders will hold in the capital and the shareholders’ equity of Deutsche Bank.
=+a. Compare consolidated shareholders’ equity (€55bn) with the amount of the capital increase, the amount of the latter to market capitalisation before the operation. What do you conclude?
=+2. Case study: Deutsche Bank share issue in June 2014.Issue of 299.8m new shares, or 5 new for every 18 shares held, with pre-emptive subscription rights:Number of shares before the capital
=+12. Why are share issues a complex decision to take for family-owned companies?
=+11. What can happen if rights trade significantly below their theoretical price? What is the limit?
=+2. Use the figures provided in Section I (Chapters 4 and 9) and calculate the EVA and the MVA of ArcelorMittal in 2015. The weighted average cost of capital of ArcelorMittal is 10% and it has a
=+1. Show that in the example on page 499, C’s EPS drops by 7% after the company merges with D.
=+10. Is a drop in ROCE synonymous with value destruction? Why?
=+12. Should an investment have a higher expected rate of return than the required rate of return? Generally, will value always be created?
=+6. Analyse the following financial decisions. Do they send out positive, negative or neutral signals?Signal + − =Sale of company by managing shareholder Sale of company by non-managing
=+4. When is value created:in the choice of investment;in the choice of financing?
=+c. If you own 9000 Le Furibard shares, what should you do before and after the capital increase so that your portfolio remains more or less as it is?
=+1. In February 2017, Le Furibard carried out an issue of shares with subscription rights. Two new shares were to be issued at a price of A$0.28 for nine existing shares. Before the capital
=+12. A bank providing an underwriting for an equity issue requests a specific fee to do so. Using the option theory, how can this be analysed?
1. Describe the contents and uses of a financial plan.
2. Construct a simple financial planning model.
3. Estimate the effect of growth on the need for external financing.
18.1 Required external financing = growth rate X assets - reinvested earnings
18.2 Internal growth rate = plowback ratio x return on equity
18.3 Sustainable growth rate = plowback ratio X return on equity equity assets
2. Financial Models. What are the dangers and disadvantages of using a financial model? Discuss. (LOI)
3. Using Financial Plans. Corporate financial plans are often used as a basis for judging subse- quent performance. What can be learned from such comparisons? What problems might arise and how might
4. Growth Rates. Find the sustainable and internal growth rates for a firm with the following ratios: asset turnover = 1.40; profit margin = 5%; payout ratio = 25%; equity/assets = .60. (LO3)
6. Relationships among Variables. Comebaq Computers is aiming to increase its market share by slashing the price of its new range of personal computers. Are costs and assets likely to increase or
7. Balancing Items. What are the possible choices of balancing items when using a financial plan- ning model? Discuss whether some are generally preferable to others. (LO2)
8. Financial Targets. Managers sometimes state a target growth rate for sales or earnings per share. Do you think that either makes sense as a corporate goal? If not, why do you think that managers
9. Percentage of Sales Models. Here are the abbreviated financial statements for Planners Peanuts:If sales increase by 20% in 2010 and the company uses a strict percentage of sales planning model
10. Required External Financing. If the dividend payout ratio in Practice Problem 9 is fixed at 50%, calculate the required total external financing for growth rates in 2010 of 15%, 20%, and 25%.
11. Feasible Growth Rates. What is the maximum possible growth rate for Planners Peanuts (see Practice Problem 9) if the payout ratio remains at 50% anda. no external debt or equity is to be issued.
12. Using Percentage of Sales. Eagle Sports Supply has the following financial statements. Assume that Eagle's assets are proportional to its sales. (LO2)a. Find Eagle's required external funds if it
13. Feasible Growth Rates. (LO3)a. What is the internal growth rate of Eagle Sports (see Practice Problem 12) if the dividend payout ratio is fixed at 70% and the equity-to-asset ratio is fixed at
14. Building Financial Models. How would Executive Fruit's financial model change if the divi- dend payout ratio were cut to ? Use the revised model to generate a new financial plan for 2009 assuming
15. Required External Financing. Executive Fruit's financial manager believes that sales in 2009 could rise by as much as 20% or by as little as 5%. (LO3)a. Recalculate the first-stage pro forma
16. Building Financial Models. The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net
17. Sustainable Growth. Plank's Plants had net income of $2,000 on sales of $50,000 last year. The firm paid a dividend of $500. Total assets were $100,000, of which $40,000 was financed by debt.
18. Sustainable Growth. A firm has decided that its optimal capital structure is 100% equity financed. It perceives its optimal dividend policy to be a 40% payout ratio. Asset turnover is
19. Internal Growth. Go Go Industries is growing at 30% per year. It is all-equity-financed and has total assets of $1 million. Its return on equity is 25%. Its plowback ratio is 40%. (LO3)a. What is
20. Sustainable Growth. A firm's profit margin is 10%, and its asset turnover ratio is .6. It has no debt, has net income of $10 per share, and pays dividends of $4 per share. What is the sustain-
21. Internal Growth. An all-equity-financed firm plans to grow at an annual rate of at least 10%. Its return on equity is 18%. What is the maximum possible dividend payout rate the firm can maintain
22. Internal Growth. Suppose the firm in the previous question has a debt-equity ratio of 1/3. What is the maximum dividend payout ratio it can maintain without resorting to any external financ- ing?
23. Internal Growth. A firm has an asset turnover ratio of 2.0. Its plowback ratio is 50%, and it is all-equity-financed. What must its profit margin be if it wishes to finance 10% growth using only
24. Internal Growth. If the profit margin of the firm in the previous problem is 6%, what is the maximum payout ratio that will allow it to grow at 8% without resorting to external financing? (LO3)
25. Internal Growth. If the profit margin of the firm in Practice Problem 23 is 6%, what is the maximum possible growth rate that can be sustained without external financing? (LO3) 26. Using
26. Using Percentage of Sales. The 2009 financial statements for Growth Industries are presented below. Sales and costs in 2010 are projected to be 20% higher than in 2009. Both current assets and
proportion to sales. The firm is currently operating at full capacity, so it plans to increase fixed assets in proportion to sales. What external financing will be required by the firm? Interest
27. Capacity Use and External Financing. Now suppose that the fixed assets of Growth Indus- tries (from the previous problem) are operating at only 75% of capacity. What is required exter- nal
28. Capacity Use and External Financing. If Growth Industries from Practice Problem 26 is operating at only 75% of capacity, how much can sales grow before the firm will need to raise any external
29. Internal Growth. We will see in Chapter 19 that for many firms, cash and inventory needs may grow less than proportionally with sales. When we recognize this fact, will the firm's internal growth
30. Spreadsheet Problem. Use a spreadsheet like that in Figure 18-2 to answer the following questions about Executive Fruit: (LO2)a. What would be required external financing if the growth rate is
1. Go to Market Insight at www.mhhe.com/edumarketinsight. Calculate and compare Wendy's International (WEN) and McDonald's (MCD) internal growth rates and sustainable growth rates by using recent
2. Go to Market Insight at www.mhhe.com/edumarketinsight. Find the (annual) balance sheet and income statement for American Electric Power (AEP). Suppose the company plans on 4% revenue growth over
18.1 Total assets will rise to $2,200. The debt-equity ratio is to be maintained at . Therefore, debt rises by $80 to $880, and equity rises by $120 to $1,320. Net income will be $220. (See Table
18.2a. The total amount of external financing is unchanged, since the dividend payout is unchanged. The $100,000 increase in total assets will now be financed by a mixture of debt and equity. If the
18.3a. The company currently runs at 75% of capacity given the current level of fixed assets. Sales can increase until the company is at 100% of capacity; therefore, sales can increase to $60 million
18.4a. This question is answered by the planning model. Given assumptions for asset growth, the model will show the need for external financing, and this value can be compared to the firm's plans for
18.5a. The equity-to-asset ratio is .8. If the payout ratio were reduced to 25%, the maximum growth rate assuming no external financing would be .75 x 18% X.8 = 10.8%.b. If the firm also can issue
1. Understand why the firm needs to invest in net working capital.
2. Show how long-term financing policy affects short-term financ- ing requirements.

Showing 900 - 1000 of 6343

First
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Last

Services

Sitemap
Fun
Definitions
Become Tutor
Study Help Categories
Recent Questions
Expert Questions

Company Info

Security
Copyrights
Privacy Policy
Terms & Conditions
SolutionInn Fee
Scholarship

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Campus Ambassador

Secure Payment

Download Our App

© 2024 SolutionInn. All Rights Reserved