Finc 355 and 430 week 7
barkersbaseball
homework_7.14.14.docxFinc 355:
Discussion Question:
Please choose one aspect of this project you found interesting or difficult and how you are approaching it (of might tackle the challenge) and share it with the class. Do not include any personal details if you don't want (make general or hypothetical)
Quiz 7 is separate attachment
Discussion Question:
When discussing the stock market we muct first understand what is a market. Let's discuss the differences between the NYSE and Over-the-counter-market.
Homework:
1. How is capital budgeting similar to security valuation? How is it different?
2. Why is the NPV the primary capital budgeting decision criterion?
3. Explain briefly how a sensitivity analysis is done and what the analysis is designed to show.
4. Explain operating leverage.
5. Calculate the operating breakeven for the following Plans:
Plan A. Fixed cost of $40,000. Variable cost per unit is $4.00 and fixed cost is $2.00 per unit.
Plan B. Fixed cost of $120,000, Variable cost of $3.00 per unit and fixed cost of $1.50 per unit.
6. Calculate the Weighter Average Cost of Capital:
Source of Capital Amount of funds Percent of Total
Bonds $1,750,000 35%
Preferred stock $250,000 5%
Common stock $3,000,000 60%
7. Explain the ideas behind the dividend irrelevance theory?
8. Why is the declaration date importnat to share holders when dividends are being paid out?
9. How can a company reward shareholders, when the capital appreciation is non-existence?
10. What are the two ways shareholders benefit from owning stocks?
