Finance Math Problems
ashley016
20161120193659finance_math_problems__1.xlsxCH 10 Beta Computation
| see instructions at row 30 | ||||||||
| DATE | Yahoo Stock Price | SP 500 Stock Price (SPY) | ||||||
| 31-Dec-03 | $23.00 | $104.00 | ||||||
| 31-Dec-04 | $47.00 | $116.00 | ||||||
| 31-Dec-05 | $39.00 | $124.50 | ||||||
| 31-Dec-06 | $28.00 | $141.62 | ||||||
| 31-Dec-07 | $25.00 | $147.30 | ||||||
| 31-Dec-08 | $13.00 | $92.96 | ||||||
| 31-Dec-09 | $16.00 | $114.57 | ||||||
| 31-Dec-10 | $17.00 | $125.75 | ||||||
| 31-Dec-11 | $16.00 | $125.50 | ||||||
| 31-Dec-12 | $20.00 | $140.03 | ||||||
| 31-Dec-13 | $40.00 | $183.85 | ||||||
| 31-Dec-14 | $50.00 | $205.43 | ||||||
| 31-Dec-15 | $35.00 | $190.00 | ||||||
| You show your work for partial credit. | ||||||||
| Above, you will find yearly stock prices for Yahoo Inc. and for the SP 500 Market Index. You compute Yahoo's beta using the above data. You include all the steps we went over with the Sales Force Example in class. Note, you have a different number of years worth of data here so you want to pay attention to this point when you compute your formulas for number of years. Also, you compute the geometrical returns showing up in cells b18 and c18 of the beta.xlsx example we went over in class. | ||||||||
Net Present Value & IRR
| Year | Cash Flows | ||||||||
| 0 | -$50,000,000 | ||||||||
| 1 | $7,000,000 | ||||||||
| 2 | $7,000,000 | ||||||||
| 3 | $7,000,000 | ||||||||
| 4 | $7,000,000 | ||||||||
| 5 | $10,000,000 | ||||||||
| 6 | $10,000,000 | ||||||||
| 7 | $10,000,000 | ||||||||
| 8 | $12,000,000 | ||||||||
| 9 | $12,000,000 | ||||||||
| 10 | $28,000,000 | ||||||||
| You show your work for partial credit. | |||||||||
| Above, I am including the projected cash flows for a long term capital project. The project has the following cash flows (negative numbers represent cash outflows and positive numbers represent cash inflows. Note: YR 10 = $12 Million inflow plus the company stops the projects and sells off the project for an additional $16 Million inflow. Thus, total inflows at year ten equals $28 Million. The company wishes to earn 12% on this project. You compute the NPV and IRR for the above project. | |||||||||
Cost of Capital
| You show your work for partial credit. | ||
| Here, we are dealing with cost of capital. You can use the same format as we used in the Cost of Capital slides and excel sheet we went over in class during week three. ZT Inc has $100 Million debt with a 5% interest charge. ZT pays taxes at 35%. ZT has $300 Million Market Value Equity on its balance sheet. ZT Inc has 1.5 Beta for its stock. The Risk Free Interest Rate is 3%. And, the Market premium for the stock market is 5% (8% Assumed Market Return Less 3% Risk Free Rate). Using the format, I used in the spreadsheet we went over in class, you can compute ZT’s cost of capital. | ||
