3)Attempting to remedy the situation, the firm cut its dividend in 1974 and 1975 and drastically reduced its working capital investment they turned to debt financing. Du Pont's debt-to-equity ratio rose from a conservative 7% in 1972 to 27% in 1975 while the interest coverage ratio fell from 38 to 4.6. The increased debt ratio shows that they were moving towards a higher leveraged position and aggressively financing growth with debt. The reduced interest coverage indicates that Du Pont was now
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SEAT NUMBER: ……….… ROOM: .………………. FAMILY NAME.………….....…………………………. This question paper must be returned. Candidates are not permitted to remove any part of it from the examination room. OTHER NAMES…………….…………………..…….. STUDENT NUMBER………….………..…………….. MID-YEAR EXAMINATIONS 2011 Unit: ACCG252: Applied Financial Analysis and Management Date: Tuesday 14th June 2011 at 8:50am Time Allowed: 3 hours plus 10 minutes reading time. Total Number of Questions: 30 Multiple Choice Questions plus 9 full response
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Acquisition Valuation Aswath Damodaran Aswath Damodaran 1 Issues in Acquisition Valuation I Acquisition valuations are complex, because the valuation often involved issues like synergy and control, which go beyond just valuing a target firm. It is important on the right sequence, including • When should you consider synergy? • Where does the method of payment enter the process. I I Can synergy be valued, and if so, how? What is the value of control? How can you estimate the value
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for its fundamental value. How did HP use this cash flow? HP invested for the future by making over $11 billion in acquisitions. Other companies also generated large cash flows from operations in 2008, but they used the money differently. For example, Walgreens generated over $3 billion from its operations and used over $2 billion for capital expenditures, much of it on new stores and the purchase of worksite health centers. Procter & Gamble generated $15.8 billion. P&G made relatively
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MULTINATIONAL COST OF CAPITAL AND CAPITAL STRUCTURE LEARNING OBJECTIVES The specific objectives of this chapter are to: l explain how corporate and country characteristics influence an MNC’s cost of capital, explain why there are differences in the costs of capital among countries, and explain how corporate and country characteristics are considered by an MNC when it establishes its capital structure. l l An MNC finances its operations by using a mixture of fixed interest borrowing and equity
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Talya Meyhanecioglu Company Analysis The Coca Cola Co, The Coca-Cola Company (known as KO in the stock exchange, common stock) is a non-alcoholic beverage company that serves more than 500 non alcoholic brands in cosumer goods industry. Coca-Cola Company has operations in more than 200 countries and employs more than 150,000 people. It owns and markets sparkling beverage brands, including Diet Coke, Fanta and Sprite. In addition, Coca-Cola manufactures, markets and sells beverage concentrates
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a market value of 50 million, and $500,000 bonds outstanding, each with face value $1,000 and selling at 97% of par value. The cost of equity is 15%, the cost of preferred is 12% and the cost of debt is 8.50%. If PNB’s tax rate is 40%, what is the WACC? Ans – 9.47% 3. A 2 – year Treasury security currently earns 5.13%. Over the next 2 years, the real interest rate is expected to be 2.15% per year and the inflation premium is expected to be 1.75% per year. Calculate the maturity risk premium
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MBA Program Course: Financial Analysis and Decision Making MBA730 Instructor: Marlena L. Akhbari Wright State University Finance and Financial Services McGraw-Hill/Irwin =>? McGraw−Hill Primis ISBN: 0−390−42334−3 Text: Case Studies in Finance: Managing for Corporate Value Creation, 4/e Bruner This book was printed on recycled paper. MBA Program http://www.mhhe.com/primis/online/ Copyright ©2003 by The McGraw−Hill Companies, Inc. All rights reserved. Printed in the United States
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Part A: PROBLEM-SOLVING QUESTIONS (Answer all FOUR questions). This assignment is 20% of the total mark. 1. Suppose a 10-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading for a price of $1034.74. (10 Marks) a. What is the bond’s yield to maturity (expressed as an APR with semiannual compounding)? CPN = PMT = $40 = 1000/2*0.08 P = $1034, 74 N = 20 FV = $1000 Using Therefore y = 3,75 And APR = 7.5% b. If the bond’s yield to maturity changes to 9% APR
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ADMS 3530 Review Session - Notes and Examples Ch.4: TVM PV & FV: SINGLE CASH FLOWS Future Value: FV = PV × (1 + r)n Present Value: PV = Future Value (1 + r)n PV & FV: MULTIPLE CASH FLOWS Example 1: Multiple Cash Flows In two years from today, the following cash flows will have a future value of $3032.32: $200 today, $Y at the end of one year, and $2,400 at the end of two years. The annual interest rate is 4%. What is Y? A) $330.00 B) $400.00 C) $416.00 D) $432.64 E) $167.55 PERPETUITIES & ANNUITIES
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