Advanced Corporate Finance Essay examples - 927 Words

Advanced Corporate Finance I SS 2012 Problem Set 1 Valuing Cash Flows Problem Set 1 Valuing Cash Flows Exercise 1 (Ex. 11.2 - 11.6 GT): Assume that Marriott’s restaurant division has the following joint distribution with the market return: Market Scenario Bad Good Great .25 .50 .25 Probability Market Return (%) -15 5 25 YR 1. Cash Flow Forecast $40 million $50 million $60 million Assume also that the CAPM holds. 11.2 Compute the expected year 1 restaurant cash ï ¬â€šow for Marriott. 11.3 Find the covariance of the cash ï ¬â€šow with the market return and its cash ï ¬â€šow beta. 11.4 Assuming that historical data suggests that the market risk premium is 8.4 percent per year and the market standard deviation is 40 percent per year, ï ¬ nd the†¦show more content†¦Hint: Use equation (13.7) to obtain ÃŽ ²U A from ÃŽ ²E . 13.2 Compute ÃŽ ²U A , the beta of the unlevered assets of the Hughes acquisition, by taking the average of the betas of the unlevered assets of Lockheed and Northrop. 13.3 Compute the ÃŽ ²E for the Hughes acquisition at the target debt level. 13.4 Compute the WACC for the Hughes acquisition. 13.5 Compute the value of Hughes with the WACC from exercise 13.4. 13.6 Compute the value of Hughes if the WACC of GM at its existing leverage ratio is used instead of the WACC computed from the comparison ï ¬ rms (see Ex. 13.4). 2 Advanced Corporate Finance I SS 2012 Problem Set 1 Valuing Cash Flows Exercise 3 (Ex. 13.14 GT): SL, Inc., is currently an all equity-ï ¬ rm with a beta of equity of 1. The risk-free rate is 5 percent and the market risk premium is 8 percent. Assume the CAPM is true and that there are no taxes. 1. What is the company’s weighted average cost of capital? 2. If management levers the company at a debt to equity ratio of 5 to 1, using perpetual riskless debt, what will the WACC become? 3. How would your WACC answer change if the government raises the tax rate from zero to 30 percent? 3 Advanced Corporate Finance I SS 2012 Problem Set 1 Valuing CashShow MoreRelatedAdvanced Corporate Finance4303 Words   |  18 PagesUniversity of Puget Sound School of Business and Leadership BUS 434 Advanced Corporate Finance Professor Alva Wright Butcher Tues-Thurs 11:00-12:20 McIntyre 107 Spring Semester 2012 Office: McIntyre 111 I Phone: 253-879-3349 FAX: 253-879-3156 Office Hours: T-Th: 1:00-1:50 Wed: 9:30-10:30 And by appointment Note that I am always willing to schedule additional office hours by appointment. I check email frequently, so that is also a goodRead MoreCase 2 for Advanced Corporate Finance1474 Words   |  6 Pagesï » ¿ â€Å"Case: Tianjin Plastics† Vrije Universiteit Amsterdam Course Advanced Corporate Finance Students Fatin Azear Jos Kusters Maaike van der Steen Case: Tianjin Plastics This assignment considers the case of Tianjin Plastics. Pat Johnson, project finance analyst for Maple Energy (U.S.-based international power plant developer), has to make a recommendation regarding the financial viability of the Tianjin Plastics power plant project in China. The recommendation would require a final evaluationRead MoreJet Blue Ipo Advanced Corporate Finance1654 Words   |  7 Pagesnominal terms, is imperative in understanding consumer demand over the longevity of the company’s existence. Alongside this, is analyzing a company with respect to its industry peers; which involves taking a profound look at revenue, EBITDA and corporate expenses (Kelly, 2009). The EBITDA multiple involves two primary components. First, the EV or the Enterprise valuation which is a function of summing the market value of common equity, the market value of preferred stock, the market value of debtRead MoreArticles Relating to Capital Structure-Essay1658 Words   |  7 PagesIntrodu ction on Capital Structure†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..5 Summary and Evaluation of Articles†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦6 Conclusion†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..8 References/Bibliography†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.9 â€Æ' Introduction On Capital Structure :- In the field of finance capital structure means a way an organization or firms finances their assets by the way of some mix and match of Equity, Debt or Hybrid Securities. The modern thinking on capital structure is based on the Modigliani-Miller theorem given by Franco Modigliani and Merton Miller. TheRead MoreFinancial Management: Theory and Practice1399 Words   |  6 PagesTarik Driouchi - tarik.driouchi@kcl.ac.uk Senior Lecturer- Financial Mgt. studies Office Hours [WBW4.15]: Thursdays 4-6pm A few words on the AAFM MSc†¦ Themes: Accounting Theory, Financial Accounting, Valuation, Corporate Governance, Financial Management Markets, Behavioural Finance Structure: Taught modules (term 1 2) + Dissertation (term 3) KCL Keats, KCL e-resources and QAs 2 Learning Objectives †¢ Main objectives – To develop robust foundations in financial management theory andRead MoreInvestment Banking : My Preferred Career Goal Ever Since I Entered The University895 Words   |  4 PagesInvestment banking was my preferred career goal ever since I entered the university. I enjoy reading the financial news on foreign websites. This summer, when I studied Finance as an exchange student at the Imperial College Business School, I was totally obsessed by the dancing figures and logical charts that we used in the International Finance and Derivative Markets classes. During that time, the crash of Chinese Stock Market provoked heated discussions in my class among students and professors from differentRead MoreCorporate Finance, Investment Banking And Risk Management1676 Words   |  7 PagesHaving a great interest in Corporate Finance, International Financial Markets and Institutions, Advanced Financial Management, Small Business Finance, Investment Banking and Risk Management, I have decided to devote my academic and future professional career to this field. Classes in Econometrics, Advanced Mathematics, and Quantitative Methods in Economics, taken at UWED, strengthened my numerical, research and analytical skills, as well as proficiency in using econometric software, such as MapleRead MoreFinancial Capital Structure Essays1549 Words   |  7 PagesContents : Introduction on Capital Structure Summary and Evaluation of Articles Conclusion References/Bibliography Introduction On Capital Structure :- In the field of finance capital structure means a way an organization or firms finances their assets by the way of some mix and match of Equity, Debt or Hybrid Securities. The modern thinking on capital structure is based on the Modigliani-Miller theorem given by Franco Modigliani and Merton Miller. The theorem suggests that in a perfectRead MoreChoosing A Long Term Career Essay1255 Words   |  6 Pagescareer in management within Finance. With 15 years of experience in Finance it makes considerable sense to continue my career in this field. This provides a significant amount of available career options. Career options include management of a small department within Finance such as Payables, Receivables, or Tax. Additionally, managing on an executive level is comprised of positions such as Company Controller, Director of Finance, as well as Chief Financial Officer. Finance managers act as the responsibleRead MoreFinance Is The Field That Deals With Investing Money And Studying Cash Flow Data944 Words   |  4 PagesI am a junior at Missouri State and majoring in Finance. Finance is the field that deals with investing money and studying cash flow data. Finance majors generally end up working for a company studying the amount of risk involved in a project and calculating the return that can will be gained from taking on the risk associated with each project. People who work in this field are considered to be part of corporate finance. There is also the opportunity to become a consultant and help outside persons