Please be detailed in your answers and provide good examples. Thank you :)

INSTRUCTIONS: When writing out equations, use the Equation Editor, which can be found under the Insert Tab in Microsoft Word. If you believe a question is unanswerable, explain why and make any necessary assumption(s) and answer the question. Make these assumptions at the beginning of your answer and highlight these assumptions in yellow. If you believe a question has incorrect information, you are to make explicit reference to the incorrect information, provide corrected information, and answer the question. Make these corrections at the beginning of your answer and highlight your corrections in yellow. Time Value of Money Template INPUTS N OUTPUTS P/Y = I/YR PV PMT FV Exam Questions All questions are equally weighted 1. Assume that a public corporation has 10,000,000 shares outstanding and faces a marginal tax rate of 35%. Also, assume that this corporation plows-back 100% of its net income. First, you are to create the necessary Balance Sheets and Income Statement and then calculate the annual Cash Flow from Assets (aka: CFFA or Free Cash Flows (FCF)) using only (and explaining) the Cash Flow Identity. A constraint here, however, is that your CFFA must range between $16,000,000 and $19,000,000 annually. Second, after calculating CFFA via the Cash Flow Identity, you are to assume that this corporation is a constant-growth perpetuity and estimate its present value (aka: intrinsic value). Assume the market determined risk adjusted required rate of return (aka: the appropriate discount rate, WACC) is 6.375% for this corporation. Said another way, you are to replicate and explain the relevant parts of the textbook, notes, and lectures associated with this question. Teach me the concepts. 2. We know that both bonds selling at a discount and bonds selling at a premium converge back towards their PAR values as time elapses. Teach me this concept taking care to explain the intuition behind this convergence to PAR value. Said another way, you are to replicate and explain the relevant parts of the textbook, notes, and lectures associated with this question. Teach me the concepts. CF CF is simply a special case of PV = . r rg That is algebraically show that the present value of a no-growth perpetuity is simply a special case of the present value of a constant growth perpetuity. Second, what does this tell us about growth in CF? Said another way, you are to replicate and explain the relevant parts of the textbook, notes, and lectures associated with this question. Teach me the concepts. 3. First, algebraically show that PV = 4. We discussed how to value the stock of a publicly traded corporation with supernormal growth. Teach me this concept taking care to provide the mathematical formulation and providing an example. Said another way, you are to replicate and explain the relevant parts of the textbook, notes, and lectures associated with this question. Teach me the concepts