PENN FOSTER Corporate FInance P「octo「ed Fln81 EJcβmin8t]0∩ 剛A; Answer ea⊂h of the剛owhg que剣ons ln one to three senitenCeS' and perfom calcule。ons as 「equested. Eo⊂h 8nSWer Is wortIl 12 poInts. 1. When...

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PENN FOSTER Corporate FInance P「octo「ed Fln81 EJcβmin8t]0∩ 剛A; Answer ea⊂h of the剛owhg que剣ons ln one to three senitenCeS' and perfom calcule。ons as 「equested. Eo⊂h 8nSWer Is wortIl 12 poInts. 1. When determining the cash frow to assets. we St∂n W-th net 'nCOme’add back dep「eciation・ add the change in net wo「king caPitaI・ and subtract any CaPital expenditures to net income. Why are these ch∂ngeS made lo net income? 2. Ybu h∂Ve tWO f「iends who want tO 「aise c∂Pital for a b「ewery. They.ve Spent their savi=gS develop一 一ng the idea. but they need a large ∂mOunt Oinew c∂Pita一‘o oPen 8 StO「efro=t and buy equipment. B8nks have 「epealedly denied their app-ications fo。a「ge Ioans. They.ve apPrOaChed wealthy family membe「s and f「iends with very little luck. Why ∂「en・t banks ∂CCeP冊g their 10an aPPIicatlons紺 they・「e w冊ng to p∂y a high r∂te Of 「et両o「 funds‘ What.s anOthe「 OPtion you can SUggeSt? 3. Assuming typical discount 「ateS Of -ess than 3O pe「cent' r∂nk the fo-Iowing from highest to Iowest p「esent vaIue, and then briefly expl∂i= eaCh one (H値Ybu shou-dn・t h∂Ve tO make ∂ny CaIcuIations to dete「m活e the answe「: think o白he de面nitions of each・) ● An o「dinary annuity of five paymentS Of $50 ● An an…fty due of斤ve payments of $50 ● A pe「petuity of $50 4. Assume th∂t a P「Qject has an inte「na一子ate of retu「n of 21 percent and a discount rate Of2O pe「Cent. wouId you expect the NPV of the p「qject to be positive o…egative? ShouId the firm accept the pro手 ect? Discuss the 「esu-ting NPV when the IRR is be10W the discount 「ate and when the lRR Is equaI to the discount 「ate. (Cα)伽(修d on記ゆISe欽定) 5003051 Proctored Flnal巳xamination 5. ReealI the th「ee different investment criterion: the payback period・ net P「eSent Value (NPV). ∂nd intemal rate or 「etum 0RR). Compe「e and contrast these t∝hniques. How do we know when to accept o「 reject an investment? Discuss §Ome advantages and disadvantages印aPPlicable) to eaCh. 恥rt B: A隊5Wer eeeh of the fctlowtng questlons ln a compos憎On Of ot‘e to tWO peragraPhs. and perform ∽書脚部o脂鵡「印叫喚轟く鵡.瞳にh a陶〃er瞳wo柵之〇両競S・ 6. Ybu would like to bo「row $1O.OOO at ∂n ime「est 「ate Of 8 percent per year for five years. Ybu agree to make inteleSt and principal paymentS tOtaling $2.401.49 at the end of e8Ch year. Prep8「e a loan amortization schedule fo’eaCh of the `ive ye8rs' Showing the beginning p血cipaI bal@nCe. the total payment of $2.4Ol・49. ‘he intere§t COmPOnent Of the paymen…e p「incipal comp{menl of the pay- 爪e爪しend伽e end活g p血cipel balance・ ∂. Fi旧n個e blank spaces in the foliowing table to cOmPlete you「 answer: LOAN AMORTl乙ATlON SCHEDULE !　　　　ForaLoanof$1O.OOO8t896lntefestOve「5¥fears　　　　l 　　　　　　　　　　　　　　　　　　　　　　　　( lねar �Be9肌高調9 �1もめI �l青terest �P青農cIp種l �とれdln9　! BaIance �Pきγ観e鵬 �青さId �P種ld �B8-ance　圭 き　l �$10.○○b.○○ �$2.401.49 �? �? �つ　! 　　! 圭　2 �? �$2.001.49 �つ �了 �?　主 　! i3 �了 �$2,401.49 �? �? �つ　　　　　　と 4 �? �$2.401.49 �? �? �つ　き 　! 雪5 巨o職し �つ �皇皇室⊆塑塑 �了 �? �㌃__」 $1之.○○745 �つ �$10.〇〇〇 �.∴二「 ヽ--、一一〇‾‾○○‾‾.‾∴ � b. Explain what hapPenS tO the amount Paid towa「d interest and principaI over the life of the 10an・ 7 What.s the WACC? What.s the fo「mula for determining the welghted average COSt Of capital? Dis⊂uSS how to caIculate or find each variable. (Fo「 examp-e..The 「eturn on debt ca両e meaSU「ed by the _ On the firm's Iong-term bonds." and so on.) Discuss botll methods of dete「mining FinaIly how ca…aking changes to the ⊂aPital structure maXimize the value of the firm? (H姉How does the capital st「ucture 'e-ate to the WACC. and how does the WACC relate to the discount rate used in a net preSent Value (NPV) computation?) Procto「ed円nal Examinatlon 雷