Introduction to Finance Essay

Words: 2763
Pages: 12
Open Document
Question 1
(5 points) In a world with no frictions (i.e., taxes, etc.), having debt is always better because it increases the value of the firm/projet. Your Answer | Score | Explanation | False | 5.00 | Correct. You understand the irrelevance of financing. | Total | 5.00/5.00 | | Question Explanation | | | Fundamental question about value creation. |
Question 2
(5) the return of equity is equal to the return on debt of a project/firm Your Answer | Score | Explanation | Never true | 5.00 | Correct. Equity is always riskier. | Total | 5.00/5.00 | | Question Explanation | | | Financing`s effects on equity. |
Question 3
(10 points) Suppose the expected returns on equity of two firms, Macrosoft and Microsoft, that …show more content…
You are evaluating a new energy company that is going to use wind and will have two divisions: an electricity production unit and a Sales unit. [Transportation of the electricity will be outsourced.] Your CEO and you are arguing about whether projects that emerge in the two units should have the same cost of capital (WACC), or whether the discount rates should be different. If different, what should be the relative magnitudes of the discount rates, that is, which unit Production or Sales should have the higher discount rate. Assume the discount rates of the two units are labeled as P and S, for the production and Sales units, respectively. What do you think? Your Answer | Score | Explanation | S>P | 15.00 | | Total | 15.00/15.00 | | Question Explanation | | | This is a crucial issue; much misunderstood in the real world (except by real value creators). |
Question 10
(15 points) NorthSouth Airlines has been granted permission to fly passengers between major U.S. cities. The new company faces competition from four airlines that operate between the major cities. The betas of the equity of the four major competitors (A, B, C, D) are 2.25, 2.50, 2.75, and 3.00; and the debt-to-equity ratios of these four companies (in the same order: A, B, C, D) are 0.21, 0.42, 0.63, 0.83. Although these D/E ratios vary, all airline debt is rated the same. Suppose the yield on airline debt is 7%, the risk-free rate is 3%
Show More

Related Documents: Introduction to Finance Essay

Introduction To Accounting And Finance

PowerPoint® slides to accompany Chapter 1 Introduction to accounting and finance Compiled by N. C. McGuigan and T. Kern © 2011 Pearson Learning objectives 1. Define accounting 2. Discuss the role of accounting information 3. List the main user groups for a business entity 4. Summarise the different uses that can be made of accounting information 5. Explain the different procedures involved in the accounting information system 6. State the key characteristics of accounting information © 2011…

Words 1786 - Pages 8

International Finance Introduction Essay

Chapter 7 Foreign exchange market The purpose of the foreign exchange market is to permit transfers of purchasing power denominated in one currency to another.Most currency transactions are channeled trough the worldwide interbank market,the wholesale market in which major banks trade with one another.This market ,which account for about 95% of foreign exchange transactions,is normally referred to as the foreign exchange market.IT is dominated by 20 major banks.In the spot market(account for 30%)…

Words 639 - Pages 3

intermediate accounting 2 test bank Essay

tising and Promotion An Integrated Marketing Communications Perspective Belch 8 Advertising Principles And Practice Wells 7 Advertising Promotion and Other Aspects of Integrated Marketing Communications Shimp 8 Aging and The Life Course An Introduction to Social Gerontology Quadagno 4 Alternative Dispute Resolution A Conflict Diagnosis Approach Coltri 2 American Destiny Narrative of a Nation, Concise Edition, Combined Volume Carnes 3 American Destiny Narrative of a Nation, Concise Edition…

Words 8328 - Pages 34

Personal Finance Course Analysis

source to use is an online course called, “Foundations in Personal Finance,” which is constructed to help you with your finance and life skills. I believe that all high school students should be required to complete the Dave Ramsey Personal Finance Course because there are many chapters that include: Introduction to Personal Finance, Saving, and Budgeting. The first chapter of this course, begins with the introduction to personal finance which explores the development of the american credit industry…

Words 492 - Pages 2

Ebooks Solution Manuals and Test Banks for Text Books Essay

Dear all, If u need anything from the list, do contact us anytime, we provide competitive prices and fast delivery after payment done. We are assisting students by providing them quality services regarding Solutions and Test Bank for courses. We hope that you people will like our service and get better grades. Please Contact us @ : solvedanswers@gmail.com solvedanswers@gmail.com Use CTRL + F to search the titles you looking for , if the title you searching is not in the list, do not…

Words 19224 - Pages 77

Importance Of Commerce In Commerce

Knowledge of the subject is however not harmful at all and you can basic tricks and skills regarding mathematics. Here is a list of subjects for 10+2 commerce: • Accountancy • Economics • Mathematics • Business • Finance • Business economics • Cost accounting • Income tax • Auditing • Business finance • Marketing • Business law As a 12th class student you must be aware of the basic concepts of economics, accountancy, mathematics and business studies. Commerce…

Words 958 - Pages 4

financial managment Essay

1. INTRODUCTION STRATEGIC FINANCIAL MANAGEMENT http://www.itilnews.com/financial_management.html 1. INTRODUCTION "Financial management is concerned with raising financial resources and their effective utilization towards achieving the organizational goals." Dr. S.N Maheshwari "Financial management is the process of putting the available funds to the best advantage from the long term point of view of business objectives." Richard A. Brealey 1.1: Scope of Financial Management…

Words 917 - Pages 4

What Is The Importance Of Organising Workplace Information

06 2013 Report 7 Ahreum Ra Content 1.0 Introduction 1 2.0 The importance of organising workplace information 1 3.0 Eat Central Virtual Enterprise 1 4.0 Information systems used as Eat Central 2 5.0 Information collected and stored at Eat Central Virtual Enterprise 2 6.0 Assessing information 3 7.0 Future information needs 3 8.0 Conclusion 4 9.0 Recommendations 4 10.0References 4 11.0 Appendix 4 1.0 Introduction The purpose of this report is investigate the information…

Words 756 - Pages 4

Saliu Research Essays

and Financial Regulatory Framework on Public Expenditure Management and Control in Sierra Leone” is the original work of the candidate, and that it is accepted in partial fulfillment of the requirements for the award of the degree of MASTER OF FINANCE AND ACCOUNTING ……………………………. ………………………………… ……………………. Supervisor Signature Date ………………………………

Words 1598 - Pages 7

Finance and Single Honours Essay

BSc (Hons) Accounting and Finance Single Honours or Combined Honours with either Business Studies or Marketing •  pend a year in industry with an optional third year of a four year degree in a full-time, S paid work placement •  ain the internationally recognised Chartered Institute of Securities and Investment G (CISI) Diploma in Investment Advice FACT FILE • Accredited by the Association of Chartered Certified Accountants •  vailable as BSc single honours or A BSc combined…

Words 565 - Pages 3