...30/10/2014 EXERCISE 1 Chandler Oil has 5000 barrels of crude oil 1 and 10,000 barrels of crude oil 2 available. Chandler sells gasoline and heating oil. These products are produced by blending together the two crude oils. Each barrel of crude oil 1 has a “quality level” of 10 and each barrel of crude oil 2 has a quality level of 5. Gasoline must have an average quality level of at least 8, whereas heating oil must have an average quality level of at least 6. Gasoline sells for $25 per barrel, and heating oil sells for $20 per barrel. We assume that demand for heating oil and gasoline is unlimited, so that all of Chandler’s production can be sold. Chandler wants to maximize its revenue from selling gasoline and heating oil. EXERCISE 2 The Janders Company markets various business and engineering products. Currently, Janders is preparing to introduce two new calculators: one for the business market called the Financial Manager and one for the engineering market called the Technician. Each calculator has three components: a base, an electronic cartridge, and a faceplate or top. The same base is used for both calculators, but the cartridges and tops are different. All components can be manufactured by the company or purchased from outside suppliers. The manufacturing costs and purchase prices for the components are summarized in Table 2. Table 2. Manufacturing costs and purchase prices for Janders calculator components Company forecasters indicate that 3000 Financial Manager calculators...
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...YEAR COURSE OFFERED: 2015 SEMESTER COURSE OFFERED: Spring DEPARTMENT: ACCOUNTANCY AND TAXATION COURSE NUMBER: ACCT 3366 NAME OF COURSE: FINANCIAL REPORTING FRAMEWORKS NAME OF INSTRUCTOR: Vinita Ramaswamy, Ph.D Associate Dean, University of St.Thomas 713 525 6913 email: vram3368@yahoo.com (preferred) ****************************************************************************** The information contained in this class syllabus is subject to change without notice. Students are expected to be aware of any additional course policies presented by the instructor during the course. ****************************************************************************** Learning Objectives This course will utilize a “hands on” approach for the recording and reporting of economic transactions. This course will provide students with a thorough understanding of the accounting process and its application and introduce students to audit, tax and GAAP and IFRS standard setting processes. Prerequisites: ACCT 2231 and ACCT2232 (or concurrent enrollment in ACCT2332) Mission of the Department of Accountancy and Taxation Prepare accounting graduates for leadership roles in the accounting profession; Conduct research that advances the body of accounting knowledge, and inevitably has implications on accounting practice; Perform service that leads to the efficient and effective practice of accounting. Objectives of the Department of Accountancy and...
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...Principles of Corporate Finance How To Calculate Present Values Richard A. Brealey Stewart C. Myers Franklin Allen Slides by Matthew Will & A. Gledson de Carvalho McGraw Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved 3- 2 Topics Covered Valuing Long-Lived Assets PV Calculation Short Cuts Compound Interest Nominal and Real Rates of Interest (inflation) Examples McGraw Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved 3- 3 Present Value Present Value Value today of a future cash flow. Discount Rate Interest rate used to compute present values of future cash flows. Discount Factor Present value of a $1 future payment. McGraw Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved 3- 4 Present Value Present Value = PV PV = C1 (1 + r ) 1 = × C1 1+ r PV = discount factor × C 1 McGraw Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved 3- 5 Valuing an Office Building Step 1: Forecast cash flows Cost of building = C0 = 350 Sale price in Year 1 = C1 = 400 Step 2: Estimate opportunity cost of capital If equally risky investments offer a return of 7%, then Cost of capital = r = 7% McGraw Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved 3- 6 Valuing an Office Building Step 3: Discount future cash flows PV = (1C1 ) = (1400 ) = 374 +r +...
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... Christian Hsieh Phone: 422-3017 Office: 324 TNRB Office Hours: MW 2:00 - 3:00 p.m. Phone: 422-6835 e-mail: Office hours: forthcoming Home page: Course Description and Objectives This course introduces basic financial concepts all business managers should understand regardless of functional specialization. Topics include financial analysis and planning, time value of money, valuation, capital budgeting, risk/return trade-offs, cost of capital, and capital structure. The pedagogical approach used is a mixture of lectures and case examples. Cases are often used as a vehicle for discussing the complexities of real-world financial problems. To benefit most from this method of teaching, you will want to come prepared to discuss the cases in detail. By the end of the semester, students should be able to: (1) describe essential characteristics of the finance profession and institutions, (2) be conversant in basic financial jargon, (3) value paper assets (stocks and bonds) and tangible assets (capital budgeting) using the tools of time value of money, including NPV and IRR, (4) explain the various sources of financing, their associated costs, and their advantages and disadvantages, (5) calculate and use financial statements and ratios to analyze a business and create and use pro forma statements for planning and decision-making purposes, (6) appreciate the complexities international business, and (7) demonstrate team skills by actively participating...
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...FINANCIAL ACCOUNTING Fall 2012 Yvonne Hinson Work: 704-365-4710 Home: 704-765-9782 Cell: 336-407-0161 Email: hinsonyl@wfu.edu Course Description and Requirements The purpose of this course is to introduce you to the concepts, vocabulary and uses of Financial Accounting. As we proceed, we will adopt several different points of view. ← We will take the perspective of preparers of financial information. Preparers include accountants who work for companies that must produce Financial Statements on a regular basis and file them with the various regulatory authorities, such as the Securities and Exchange Commission (SEC). These accountants may include the Chief Financial Officer, who, along with the Chief Executive Officer, is responsible for the Financial Statements. We will learn procedures and rules about how financial events are recognized and disclosed. ← We will take the perspective of independent auditors and regulators, who oversee the financial information that companies disseminate. Independent auditors work for an accounting firm and are hired to audit financial statements before these reports are filed with the SEC. Audit firms include PricewaterhouseCoopers, KPMG, Ernst and Young, and Deloitte and Touche (which collectively are called the “Big 4”) and a host of smaller, regional firms. All firms with stock that is traded on an exchange, such as the New York Stock Exchange, must have their statements audited by an independent audit firm...
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...Chapter 1 An Overview of Financial Management Learning Objectives After reading this chapter, students should be able to: ◆ Explain the role of finance, and the different types of jobs in finance. ◆ Identify the advantages and disadvantages of different forms of business organization. ◆ Explain the links between stock price, intrinsic value, and executive compensation. ◆ Discuss the importance of business ethics and the consequences of unethical behavior. ◆ Identify the potential conflicts that arise within the firm between stockholders and managers and between stockholders and bondholders and discuss the techniques that firms can use to mitigate these potential conflicts. Lecture Suggestions Chapter 1 covers some important concepts, and discussing them in class can be interesting. However, students can read the chapter on their own, so it can be assigned but not covered in class. We spend the first day going over the syllabus and discussing grading and other mechanics relating to the course. To the extent that time permits, we talk about the topics that will be covered in the course and the structure of the book. We also discuss briefly the fact that it is assumed that managers try to maximize stock prices, but that they may have other goals, hence that it is useful to tie executive compensation to stockholder-oriented performance measures. If time permits, we think it’s worthwhile to spend at least a full day on the chapter. If not, we ask students...
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... 2.3 Summarize ledger | | √ | 3. Prepare trial balance | 3.1 List account titles and transfer from the balance | √ | | 3.2 Summarize trial balance | √ | | 4. Prepare Financial Reports | 4.1 Prepare financial statements | √ | | 4.2 Analyze financial statements | √ | | 5. Review internal control system | 5.1 Check policy compliance | √ | | 5.2 Prepare policy compliance report | √ | | Evidences/Proof of Current Competencies Evidences of Current Competencies acquired related Job/Occupation Current Competencies | Proof/Evidence | Means of Validating | 1. Journalize Transactions | * Demonstration * Certificate of Employment | * Assessment * Authenticity | 1.1 Prepare chart of accounts | | | 1.2 Analyze documents | | | 1.3 Prepare journal entries | | | 3. Prepare trial balance | * Demonstration * Certificate of Employment | * Assessment * Authenticity | 1. List account titles and transfer from the balance | | | 2. Summarize trial balance | | | 4. Prepare Financial Reports | * Demonstration * Certificate of Employment | * Assessment * Authenticity | 4.1 Prepare financial statements | | | 4.2...
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...Australian School of Business Banking and Finance FINS5513 INVESTMENTS AND PORTFOLIO SELECTION This Version: 12 July 2013 Course Outline Semester 2, 2013 Part A: Course-Specific Information Please consult Part B for key information on ASB policies (including those on plagiarism and special consideration), student responsibilities and student support services. Table of Contents PART A: COURSE-SPECIFIC INFORMATION 1 2 2.1 2.2 2.3 2.4 2.5 3 STAFF CONTACT DETAILS COURSE DETAILS Teaching Times and Locations Units of Credit Summary of Course Course Aims and Relationship to Other Courses Student Learning Outcomes LEARNING AND TEACHING ACTIVITIES 1 1 1 1 1 1 2 2 4 4 4 4 4 4 5 5 6 7 8 8 3.1 Approach to Learning and Teaching in the Course 3.2 Learning Activities and Teaching Strategies 4 4.1 4.2 4.3 4.4 4.5 5 6 7 ASSESSMENT Formal Requirements Assessment Details Assessment Format Assignment Submission Procedure Late Submission COURSE RESOURCES COURSE EVALUATION AND DEVELOPMENT COURSE SCHEDULE FINS5513 Investments and Portfolio Selection PART A: COURSE-SPECIFIC INFORMATION 1 STAFF CONTACT DETAILS Lecturer Ning Ding Ah Boon Sim Thuy To Office ASB 302 ASB 331 ASB359B Phone 9385-7864 9385-5868 9385-5865 Consultation Hours Thursday 4-6pm Thursday 4-6pm Wednesday 2-4pm E-mail n.ding@unsw.edu.au a.sim@unsw.edu.au td.to@unsw.edu.au Associate Professor Ah Boon Sim is the course lecturer-in-charge (LIC). Consultation hours will be held by lecturers during their teaching...
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... Exercise 5.1 5-1 Bond Valuation with Annual Payments Data: M = Par Value = $1,000 C = Maturity value. We can assume that it is the same as the par Value = $1,000 r = Coupon rate = 0.08 i = Effective interest rate per coupon = 0.09 n =Number of coupon payments remaining = 12 Calculations In order to calculate the current market price of these bonds, I will use the formula for the bond price on the date of a coupon payment. The bond price on the date of a coupon payment is the PV of all coupons + the PV of the maturity value *. means multiplication The present value of all coupons = M * r* [1-(1+i)-n]/i The present value of the maturity date = C * [(1+i)-n] The current market price of these bonds is M * r* [1-(1+i)-n]/i + C * (1+i)-n] = = 1,000 * 0.08 * [1-(1+0.09)-12]/0.09 + 1,000 * (1+0.09)-12] = = 80 *(1-0.355)/0.09 + 1,000 * 0.355 = $572.858+ $355.534 = $928.3927 Answer: The current market price of these bonds is $ 928.39 Exercise 5.2 5-2 YTM for Annual Payments Data: M = Par Value = $1,000 Current Price (PV) = 850 r = Coupon Rate = 10% = 0.1 PMT = $100, because (0.1 * 1,000) N =Years to maturity = 12 Calculations In order to calculate the Yield to Maturity (YTM), I will use the following formula: |850 = |[pic] | The best way to calculate the rd is to use the financial calculator or the Excel Toolkit...
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...1. | Question : | (TCO C) Brammer Corp.'s projected capital budget is $1,000,000, its target capital structure is 60 percent debt and 40 percent equity, and its forecasted net income is $550,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out? (a) $122,176 (b) $128,606 (c) $135,375 (d) $142,500 (e) $150,000 | | | Student Answer: | | Answer (e) Equity capital budget=1,000,000X0.4=400,000 Projected max dividend=550,000-400,000=$150,000 | | Instructor Explanation: | E is correct. Instructor Explanation: (From Chapter 14 - Section 14.7 of text, pp. 570-572) Residual Dividend Model Capital budget$1,000,000 % Equity 40% Net income (NI)$550,000 Dividends paid = NI - [% Equity(Capital budget)] $150,000 | | | | Points Received: | 0 of 1 | | Comments: | | | | 2. | Question : | (TCO F) Orient Airlines' common stock currently sells for $33, and its eight percent convertible debentures (issued at par, or $1,000) sell for $850. Each debenture can be converted into 25 shares of common stock at any time before 2019. What is the conversion value of the bond? (a) $707.33 (b) $744.56 (c) $783.75 (d) $825.00 (e) $866.25 | | | Student Answer: | | Answer (d) Coversion value=33x25=$825 | | Instructor Explanation: | D is correct. Instructor Explanation: Convertible Bonds (from Chapter 19 - Section 3, pp. 770 - 774) Stock price: $33.00 Coupon rate: 8.00% Bond price: $850...
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...Chalmers University LBT431 Financial Management Workshop Synopsis AIM OF WORKSHOP The aim of the workshop is that the student shall have a good understanding of the techniques used for the financial control and management of a project. The aim is also that the student shall have the ability to participate in a professional way in a project team situation. CONTENT The workshop covers the activities that are related to planning, allocating and coordinating resources, preparing a budget and applying earned value analysis for the purpose of financially managing a project. The workshop includes: * Subject introduction lectures and exercises * Preparation of a network (CPM) and Gantt chart and resource allocation * Preparation of a budget * Performance evaluation based upon Earned Value Analysis * Risk Management and managing stakeholders * Working as a project team. LEARNING OUTCOMES On successful completion of the workshop students will be able to: * Understand the purpose of project financial management control systems and how control is implemented * understand how budgets are established and how earned value is monitored; * apply, through an integrative and interactive team exercise, the knowledge they have gained: * work in a project team situation. LEARNING, TEACHING AND ASSESSEMENT STRAEGY The workshop will be delivered through a mixture of lectures, exercises and a project simulation. Lectures will be used provide information...
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...ACCTG 331 – INTEGRATIVE ACCOUNTING TOPICS I FINANCIAL REPORTING MODULE FALL 2014 INSTRUCTORS: Amy Barry EMAIL: abarry@welkgroup.com or abarry@mail.sdsu.edu CLASS TIMES: W; 7:00PM – 9:40PM; SSW 2501 OFFICE: Student Services East Building (SSE) 2419 OFFICE HRS: Wednesdays: 4:00PM – 5:30PM (If students cannot make these above times, students can always make an appointment to come see me in my office.) PREREQUISITES: Admission to Accountancy major, minor, or certificate. Minimum grade of C in both ACCTG 201 and 202. Completion of General Education requirement in Communication and Critical Thinking. Proof of completion of prerequisites required: Copy of transcript. TEXTBOOKS: Intermediate Accounting, 7th Edition (with Connect access card); Spiceland, Sepe, Nelson and Tomassini (REQUIRED) Financial Accounting Exam Questions & Explanations 18TH W/ A/C Test Prep Software – Gleim (Optional) ADDITIONAL: We will be using the red Parscore forms (F-289) for ALL EXAMS AND QUIZZES. STUDENT LEARNING OUTCOMES FOR THIS MODULE: The purpose of this module of ACCT 331 is to enhance and expand your current understanding of corporate financial reporting for the subject areas covered in the module. More specifically, we will take an in-depth look at the mechanics of financial accounting and the theory behind U.S. GAAP as presented in the statement of operations (i.e., income statement) and the statement of financial position (i.e., balance sheet). We will...
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...and by appointment COURSE PREREQUISITES You must have junior standing and have passed ACCT 3368 with a minimum grade of C to be enrolled in this class. In addition, you are expected to have a working knowledge of computer spreadsheets, such as Lotus or Excel, as taught in DISC 2373. REQUIRED TEXTS Advanced Accounting, 5th Edition, by Debra C. Jeter and Paul K. Chaney, John Wiley & Sons, Inc., 2012. Intermediate Accounting any current text. Green Scantrons to be used for taking examinations. OPTIONAL TEXTS Objective Questions and Explanations. Gleim and Collins, Gleim Publications, Inc., Most Recent Edition. (This text will also be beneficial for preparing for the CPA examination.) COURSE REQUIREMENTS: Exercises and problems assigned for each chapter are recommended for you to do on your own. Additional problems will be done in class to illustrate the concepts. The first two exams are cumulative due to the nature of the material covered and the content of the course and thus will count 50% of your grade, and a third (final comprehensive) exam will count 35%. Special assignments, including the FARS project, will count 15%. Exam coverage is as follows: Exam 1 Chapters 1-5 Exam 2 Chapters 6,7,8, 9 (pages 508-522) Exam 3 Chapters 11,12,13,15,16 and selected information from Exams 1 and 2 GRADES Your grade will be determined in the following manner: FARS Project 5% Special Assignments 10% Mid-term Exam...
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...model for European options is likely to change the price of a call option. A derivative is a financial instrument that has a value determined by the price of something else, such as options. The crucial idea behind the derivation was to hedge perfectly the option by buying and selling the underlying asset in just the right way and consequently "eliminate risk" (Ray, 2012). The derivative asset we will be most interested in is a European call option. A call option gives the holder of the option the right to buy the underlying asset by a certain date for a certain price, but a put option gives the holder the right to sell the underlying asset by a certain date for a certain price. The date in the contract is known as the expiration date or maturity date; the price in the contract is known as the exercise price or strike price. The market price of the underlying asset on the valuation date is spot price or stock price. Intrinsic value is the difference between the current stock market price and the exercise price or simply higher of zero. American options can be exercised at any time up to the expiration date. European options can be exercised only on the expiration date itself. (Hull, 2012). For example, consider a July European call option contract on XYZ with strike price $70. When the contract expires in July, if the price of XYZ stock is $75 the owner will exercise the option and realize a profit of $5. He will buy the stock for $70 from the seller of the option...
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...model for European options is likely to change the price of a call option. A derivative is a financial instrument that has a value determined by the price of something else, such as options. The crucial idea behind the derivation was to hedge perfectly the option by buying and selling the underlying asset in just the right way and consequently "eliminate risk" (Ray, 2012). The derivative asset we will be most interested in is a European call option. A call option gives the holder of the option the right to buy the underlying asset by a certain date for a certain price, but a put option gives the holder the right to sell the underlying asset by a certain date for a certain price. The date in the contract is known as the expiration date or maturity date; the price in the contract is known as the exercise price or strike price. The market price of the underlying asset on the valuation date is spot price or stock price. Intrinsic value is the difference between the current stock market price and the exercise price or simply higher of zero. American options can be exercised at any time up to the expiration date. European options can be exercised only on the expiration date itself. (Hull, 2012). For example, consider a July European call option contract on XYZ with strike price $70. When the contract expires in July, if the price of XYZ stock is $75 the owner will exercise the option and realize a profit of $5. He will buy the stock for $70 from the seller of the option...
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