Finance Homework

homeworkfin.xlsx

8

Using CAPM					1.) Using CAPM, calculate the expected returns for Stock A and Stock B. In your
	Risk-free	Stock A	Market	Stock B	opinion, which stock is more desireable?
Beta	0.00	0.25	1.00	2.00
Expected Return	3.00%		10.00%
Bob's Food Truck Stock Valuation					2.) Using the Constant Growth Model, calculate the value of Bob's Food Truck Stock.
Earnings per Share	1.40
Next Year's Dividend	0.49
ROE	15.00%
Required Return	11.00%
Retention Ratio	65.00%
Growth Rate	7.50%
Constant Growth DDM Value

Bond Valuation		1.) Calculate the value of this bond, given the following details.
Time to Maturity (Years)	15
Coupon Rate	6.50%
Required Return	12.00%
Frequency	1
Face Value	$ 1,000
Value
Bond Valuation		2.) Calculate the Bond's Yield to Maturity.
Settlement Date	2/15/15
Maturity Date	2/15/35
Coupon Rate	8.00%
Face Value	$1,000
Frequency	1
Basis	0
Value	$ 875.00
Yield to Maturity

Source	Price	Units	Total Market Value	% of Total	After-tax Cost	1.) Find the Weighted Average Cost of Capital for the given mix of funding
Debt	$ 875.00	400				between Debt, Preferred Stock, and Common Stock.
Preferred	100.00	1,000
Common	65.00	10,000				a.)	Find the weights for each of the funding instruments.
Totals						b.)	Find the After-tax cost for each of the three.
						c.)	Find the WACC
Additional Bond Data		Additional Preferred Data		Additional Common Data
Tax Rate	35%	Dividend	$ 10.00	Dividend 0	$ 3.50
Coupon Rate	8%			Growth Rate	7%
Face Value	$ 1,000.00
Maturity	20

Period	Project A	Project B	1.) Find the Net Present Value of the two projects based on the various Required
0	-1000	-1000	Rates of Return.
1	0	400
2	100	400
3	500	400
4	400	400
5	950	0
Rate	NPVA	NPVB
0%
3%
6%
9%
12%
15%
18%
21%
24%
27%
30%
33%
36%
39%

Sales Manager	Sales Associate	Bags of Coffee Sold	Lemon Bars Sold	Breakfast Burritos Sold	1.) On the next tab, "Pivot Table", provide a table summarizing the results
Susan B Anthony	Jerry Jeff Walker	5	1	5	of Susan B Anthony's sales by product line.
Captain Rex	David Alan Coe	10	4	1015
Susan B Anthony	Julia Child	100	67	1034	2.) What are the average results by product line for Hondo Crouch?
Captain Rex	Stevie Ray Vaughn	50	45	67
Susan B Anthony	Rachel Ray	2	89	876
Captain Rex	Austin Powers	1	123	9
Susan B Anthony	Julia Roberts	0	321	1
Jethro Tull	Jyn Erso	78	456	2
Susan B Anthony	Nigel Powers	1000	789	3
Jar Jar Binks	Rod Stewart	500	90	4
Susan B Anthony	Han Solo	250	124	77
Hondo Crouch	Shirley Temple	1200	5	79
Susan B Anthony	Leia Organa	756	1	456
Jar Jar Binks	Spock	345	7	765
Susan B Anthony	Rey	6	0	999
Susan B Anthony	Holly Fairbanks	4	44	222
Jethro Tull	Jolene Johnson	70	57	432
Hondo Crouch	Jonathan Strange	4	98	654
Hondo Crouch	Chewbacca	55	98	12456

1.) Where does my wife teach?

2.) What movie did my kids see on Election Day?

3.)In your professor's opinion, what is the most important item to learn from this class?

4.) What kind of bourbon does your professor prefer?

5.) Did you attend the Career Fair?