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HI can you help me with this paper in International Finance. NAME COURSE: International Corporate Finance Final Exam Instructor: Dan Sevall Sections Corporate Valuation Working
HI can you help me with this paper in International Finance.
NAME COURSE: International Corporate Finance Final Exam Instructor: Dan Sevall Sections Corporate Valuation Working Capital Management Multinational Financial Management Options Pricing Risk Management (Hedging) Real Options Total 10% 15% 15% 10% 30% * Essentially serves as extra credit, as this was the last topic 25% 105% Corporate Valuation Jeanne and Amanda Corp has never paid a dividend. Free cash flow is projected to follow the timeline below. After the third year, FCF is expected to grow at 7% annually. The WACC is 10%. $M Year 1 -15 2 40 3 70 1. What is Jeanne and Amanda's Terminal Value? 2. What is the current value of operations? 3. Suppose Jeanne and Amanda has $10M in marketable securities, $100M in liabilities, and 10M shares of stock. What is Jeanne and Amanda's share price? Carmen and Vanessa's Corporation wants to determine the effect of its inventory and receivables management on its cash flow cycle. Carmen and Vanessa's sales last year (all on credit) was $200,000, and earned a net profit % of 10%. Inventory Turnover was 12, Days Sales Outstanding was 45, and Days Payable Outstanding were 30. Cost of Goods Sold was $120,000, and Fixed Assets were $50,000. a. Please calculate Carmen and Vanessa's cash conversion cycle (preferably using my methodology, not the text's ) b. Assume Carmen and Vanessa has no cash, no marketable securities and no other Long Term Assets. What is Carmen and Vanessa's Total Asset Turnover and ROA? c. If Carmen and Vanessa improves Inventory Turnover to 15, what is the new cash conversion cycle, Total Asset Turnover and ROA? Multinational Financial Management Youna is the CFO of Cool Company, headquartered in Silicon Valley. All of the shareholders live in the United States. Recently, Cool Company received the following loan in millions of Korean Won: 1,000 M This was to finance a new factory in South Korea. At the time the loan was received, the exchange rate between the USD was 1 USD for 1200 South Korean Won. Due to the stronger US economy, the USD appreciated in value to 1 USD for 1400 SKW. How much has Cool Company made on the loan (either in a loss or as a gain) due to the rising USD? Option Pricing Call Option Price Stock Price 30 35 40 45 50 55 4 8.5 13 17.5 22 26.5 Frederick and Sunny's Company call option has a $30 strike price. The above table contains historical values for this option at different stock prices. Create a table that shows the stock price, strike price, exercise value, call option price and time value. Risk Management--Hedging It is now June, and the current cost of debt for Ganbat and Mo Corporation is 10%. Ganbat and Mo plans to issue $10M in 20-year bonds, with coupons paid semi-annually. However, Ganbat and Mo is concerned that interest rates may rise. The following data on Treasury Bonds futures are below: Futures Prices on Treasury Bonds Delivery Month Open High Low Settle Change Jun 94.87500 95.40625 94.6875 95.15625 0.21875 Sep 96.09375 96.09375 95.40625 95.78125 0.25 Dec 96.09375 96.53125 96.09375 96.40625 0.25 a. What is the implied rate on the December T-bond contract? Please assume that the semiannual interest payment for a hypothetical T-bond is $30. b. Construct a hedge for Ganbat and Mo. (Namely, how many T-bond contracts should Ganbat and Mo BUY or SELL?) c. Assume that all interest rates rise by 1%. What is the dollar value of Ganbat and Mo's bonds? What effect would the hedge (in part b) do for this rise in interest rates? What is the net overall gain or loss? Real Options To capture the momenturm of the Stanford Cardinal, Ming Hsu and Wei's Hilarious Headgear is considering selling bright-red headgear for Stanford football games. The purchase cost for a franchise (lasting two years) is $30K. If Stanford football continues to do well, this will drive higher demand. There is a 35% probability for higher demand, and there would be net cash flows of $50K per year for two years. If Stanford chokes, then demand will be bad (65% probability) and then cash flows will be only $10K per year for two years. Ming Hsu and Wei's cost of capital is 10%. a. What is the expected NPV of the franchise? Ming Hsu and Wei has the option to renew the franchise license for an additional two years. The renewal fee would be for $30K and would be paid at the end of year 2. If he were to renew, then he would expect similar cash flows (35% probability of getting $50K in years 3 and 4); (65% probability of getting $10K in years 3 and 4). With an option, Ming Hsu and Wei doesn't actually have to execute the franchise license--he has the option to buy or to decline it. What is the maximum amount that Ming Hsu and Wei should pay for an option for the rights to a franchise at the end of year 2? Hint: Use Decision Tree analysis similar to part a. Remember that we don't have to pay for a franchise, if we think the bad scenario will occurStep by Step Solution
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