Assignment help-BUS ADM 446/646: Advanced Corporation Finance
Extra-credit problem (30 Points)
Instructions – Solve the following problems using Microsoft Excel, and submit your Excel File in D2L’s Dropbox .
Show your work in Excel. That is, computation has to be done in Excel and Excel functions that are used to complete the necessary output has to stay (saved) in Excel.
1. You are provided with the following cash flows on a project (15 Points).
Year Cash Flow to Firm 0 -6,000,000 1 3,000,000 2 2,500,000 3 3,250,000 4 1,000,000
a. Compute and plot the NPV profile for this project at discount rates ranging from 0% to 50%, at incremental rate of 2.5%.
b. What is the IRR of the project? Show the IRR for the project in the Excel file.
c. What is the modified IRR (MIRR) for the project if the cost of capital is 10%?
2. You are provided with the following cash flows for two projects (15 Points).
Year Project A Project A 0 -4,000,000 -4,000,000 1 2,000,000 1,000,000 2 1,500,000 1,500,000 3 1,250,000 1,700,000 4 1,000,000 2,400,000
a. Compute and plot the NPV profile for each project at discount rates ranging from 0% to 50%, at incremental rate of 2.5%.
b. Find the IRR of each project.
c. At discount rate of 10% which project would you choose?
d. What is a cross-over rate?
e. At a discount rate that is less than cross-over rate, which project would you choose? f. At a discount rate that is greater than the cross-over rate, which project would you choose?
Assignment help-BUS ADM 446/646: Advanced Corporation Finance
Assignment 1: Case Study
Introduction to Financial Accounting
- Solving Present Value and Future Value Problems
You are the CFO (Chief Financial Officer) of ABC Golf Equipment Corporation, a small company that sells golf equipment. Mr. Hillbrandt, the new CEO (Chief Executive Officer) has a marketing background and is trying to learn more about the financial side of running a business. He wants your help and asks for an introduction to the concept of time value of money.
The value of a typical corporate bond is the present value of an annuity plus the present value of a lump sum. Thus, if an individual does not understand how to calculate the present value of a lump sum or the present value of an annuity, it is difficult to determine the value of a typical corporate bond. Thus, in this case assignment, you will work through a variety of time value of money problems to illustrate the idea to the CEO.
- The following websites include a number of formulae and financial calculators, including Present Value, Future Value, and Annuity:
- Financial calculators. (2015).Calculator Soup. Retrieved fromhttp://www.calculatorsoup.com/calculators/financial/
- Carther, S. (2015). Calculating the present and future value of annuities. Retrieved from http://www.investopedia.com/articles/03/101503.asp
- Compute and show your work for the following scenarios:
- Calculate the present value of the following lump sums:
- $100,000 to be received five years from now with a 5% annual interest rate
- $200,000 to be received 10 years from now with a 10% annual interest rate
- Calculate the future value of the following lump sums:
- $100,000 if invested for five years at a 5% annual interest rate
- $200,000 if invested for 10 years at a 10% annual interest rate
- Calculate the present value of these ordinary annuities:
- $100,000 to be received each year for five years with a 5% annual interest rate
- $200,000 to be received each year for 10 years with a 10% annual interest rate
- Calculate the future value of these ordinary annuities:
- $100,000 if invested each year for five years at a 5% annual interest rate
- $200,000 if invested each year for 10 years at a 10% annual interest rate
- Calculate the present value of these perpetuities:
- $100,000 to be received each year forever with a 5% annual interest rate
- $200,000 to be received each year forever with a 10% annual interest rate
Computations (use Excel).
- Show the computations as required above.
- Summarize the results in an easy to read table at the top of the spreadsheet or on a clearly labeled separate tab.
- Memo (use Word).
Interpret the results from the computations and explain how the information is useful. Write one page with four paragraph memo to the CEO. Start with an introduction and end with a conclusion or recommendation. Each of the four paragraphs should have a heading.
- Short Essay (use Word).
Do a research and write a short essay to comment on the use of bonds by public corporations. The emphasis of the essay the use of bonds in different industries.
Start with an introduction and end with a summary or conclusion. Use headings. Don’t forget to reference your sources. Maximum length of two pages.
Should include two files: (1) An Excel file; and (2) A Word document. The Word document shows the memo first and short essay last. Assume a knowledgeable business audience and use required format and length. Individuals in business are busy and want information presented in an organized and concise manner.
Assignment 2: Session Project: Conducting Financial Ratio Analysis
Coca-Cola is a publicly traded U.S. company that has paid a dividend. Use last three years report and conduct a financial ratio analysis of the following;
- Calculate all the following ratios for the company for the past three years and compare them to the appropriate industry benchmarks: (use Excel)
A: Liquidity ratios: B: Asset Management ratios: C: Debt Management ratios:
Current Inventory turnover EBITDA coverage
Quick Total assets turnover Times-interest-earned
Fixed assets turnover Total debt to total assets
Days sales outstanding
D: Profitability ratios: E: Market Value ratios:
Return on common equity Market/book
Return on total assets Price/earnings
Basic earning power Price/cash flow
Profit margin on sales
- Create a table that contains the ratios for the various years. Then analyze the information. Look at the trends in the ratios and comment on how they compare to the industry benchmarks and answer following questions; (use Word)
- Which ratios are strong?
- Which ratios need improvement?
- If you were a stock investor, would you buy the company’s common stock? Why or why not?
- If you were a bond investor, would you buy the company’s bonds? Why or why not?
Describe the purpose of the report and provide a conclusion. An introduction and a conclusion are important because many busy individuals in the business environment may only read the first and the last paragraph. If those paragraphs are not interesting, they never read the body of the paper.
Answer the SLP Assignment question(s) clearly and provide necessary details.
Write clearly and correctly—that is, no poor sentence structure, no spelling and grammar mistakes, and no run-on sentences.
Provide citations to support your argument and references on a separate page. (All the sources that you listed in the references section must be cited in the paper.) Use APA format to provide citations and references.
Whenever appropriate, please use Excel to show supporting computations in an appendix, present financial information in tables, and use the data computed to answer follow-up questions. In finance, in addition to being able to write well, it’s important to present information in a professional manner and to analyze financial information. This is part of the assignment expectations and will be considered for grading purposes.
Always include the name of the organization(s), time period covered, and source of information. It is important to answer the questions as posed above. The document should be a two pages and written in a clear and concise manner. Do not forget to include tables as required. Support your discussion and tables with references in APA format. You will be use Excel or other compatible spreadsheet when computations are involved.
Assignment 3: The Course Discussions
The Euro zone has some countries with severe debt problems: Portugal, Ireland, Italy, Greece and Spain … sometimes known as PIIGS. These Euro countries are looking for and have been assured of a “bail-out” process so that no one defaults on their debt. What do you now think is likely to happen to the relative value of the euro? ( one page and also provide citations and references)
- Please note that in course you must show and demonstrate your ability to provide reasoning for your response to discussion questions.
- Provide citations to support your argument and references on a separate page. (All the sources that you listed in the references section must be cited in the paper.) Use APA format to provide citations and references.