These are multichoice corporate finance questions.

These are multichoice corporate finance questions.
FINC3 01-22S2 (C) Page 1 of 5 FINC301 Formulae for Test and Exam Warning: D may stand for Dividend or for Debt or Depreciation . From your study you should know the relevant usage. Also, in some instances you may need to manipulate a formula to get what you want. 1 0 S D P rg = ( ) S RF EQUITY M RFr r r r b = 1 0 S D rg P = 22 S DivY r CGY = EBIT TIE interest expense = ( ) 1 D C S DE WACC r t r D E D E = 1 bd= 1 1 NPAT d D N ´ = ( ) 11 EQUITY UNLEVERAGED FIRM C L D t E bb æö = ç÷ èø ( ) 11 EQUITY UNLEVERAGED FIRM C L D t E b b =æö ç÷èø jt MtRR a b e= ( ) 1 1 T tt t CF NPV Outlay r = = å NPAT ROE E = NPAT Sales TA ROE Sales TA E = ´ ´ ( ) %1 COST C PV TV x t = ´ ´ SD ED w and w D E D E == 0P PE EPS = NPAT EPS N = ( ) ( ) ( ) ( ) 1 0 1 1 2 0 1 11 1 11 T T TT D D g g rg P rg rr æö ç÷ éù èø = êú êúëû ( ) 1 b ROA IGR b ROA ´ = ´ ( ) COUPON MIN GAIN MIN TV r YTM PV YTM ´ = 1 ln t jt t P R P æö = ç÷ èø 1 ln t Mt t Index R Index æö = ç÷ èø ND d NPAT ´ = ( ) D RF D M RFr r r r b = 1 1 NPAT d D N ´ = End -of-year Examinations, 2020 FINC301 -20S2 (C) Page 2 of 5 ( ) 1 C CFAT EBIT t Depn = ( )( ) ( ) 1 CASH C C CFAT Sales Costs t Depn t = ( ) ( ) 1 1 1 1 T BOND T r FV PV C r r éù êú êú = êú êúëû ( ) ( ) 11 11 BOND TT FV PV C r r r r éù = êú êúëû ( ) 1 b ROE SGR b ROE ´ = ´ ( ) ( ) 11 11 CALLABLE BOND TT Call Price PV C r r r r éù = êú êúëû * Dr r IP DRP LP MRP = ( ) 0 RF ASSET M RF r r r r b = ( ) 1 t t tP P E R e = jt MtRR a b e= 1 1 11 ; jt jt tt jt Mt jt t PP INDEX INDEX RR P INDEX == 11 ln ; ln jt t jt Mt jt t P INDEX RR P INDEX æö æö == ç÷ ç÷ ç÷ èø èø ( )( ) 1 1 1 NOM REALr r infl = ( ) 11 L EQUITY C UNLEVERED FIRM D t E bb æö= ç÷èø g b ROE=´ ( ) jt jt jt AR R E R = LUVV = ( ) 00 SD D r r r r E = 0 EPS P NPVGO r = ( )( ) 00 1 S C D D r r t r r E æö = ç÷èø ( )( ) 1 EQUITY UNLEVERD FIRM C UNLEVERD FIRM DEBT D r r t r r E = 1 1 0 D DivY P = , ; Tr r T Tr NPV EAC A PVIFA A == EBIT SALES DOL EBIT SALES D =´ D ( ) 2 , DEBT MARKET Cov Debt Security Market b s = D RF D M RF rr rr b = ASSETS UNLEVERED FIRMbb = ( )( ) 1 EQUITY ASSET C ASSET DEBT L D t E b b b b æö = ç÷ èø ( ) ( ) 1 11 EQUITY C DEBT ASSET C D t E D t E bb b éù êúëû = æö éù ç÷ êúëû èø *B MAXIMUMOFFER V P N = End -of-year Examinations, 2020 FINC301 -20S2 (C) Page 3 of 5 10 1 0 PP CGY P = *B B B WITH MERGER V N P =´ ( ) , 1 1 1 T rT r PVIFA r éù æö êú ç÷ç÷ êú èø =êú êú êú ëû 1 T jt t jt T AR average CAR N = æö ç÷ ç÷= ç÷ç÷èø å 1 1 NPAT d D N ´ = ( ) 1 g d ROE= 11 m NOMr EAR m æö= ç÷èø NPAT ROA TA = ( ) D RF D M RFr r r r b = ( ) 0 RF ASSET M RF r r r r b = ( ) ( ) ( ) 1 2 3 13 1 1 1 1 J J J JPERIODS to CAR AR AR AR = ´ ´ 1 2 3 13 J J J JPERIODS to CAR AR AR AR = ( ) ( ) ( ) 1 1 11 T C t T PROJECT tT t Salvage t NWC CFAT NPV Outlay rr = D éùëû = å ( )( ) 00 1 S C D D r r t r r E æö = ç÷èø ( ) 2 , DEBT MARKET Cov Debt Market b s = ( ) ( ) ( ) 1 1 CUM EX S CG P P t Dt = ( ) 11 L EQUITY C UNLEVERED D t E bb æö= ç÷èø V D E = ( ) Jt Jt Jt AR R E R = ( ) ( ) ( ) %1 C Cost of refunding Value Outstanding x t = ´ ´ ( ) S RF L FOREIGN DOMESTICDOMESTIC DOMESTIC r r RP RP b = ( ) 0 1 C U EBIT t V r = ( )( ) ( ) 11 1 1 CS LU D tt V V D t éù = êú êúëû ( ) 1 CD D t r D NPVF Proceeds r = U V V NPVF = Volatility of Equity Relative Volatility of Equity Volatility of Debt = End -of-year Examinations, 2020 FINC301 -20S2 (C) Page 4 of 5 investment Initial debt of effects Additional ) 1(1 0 =å ¥ =t tt r UCF APV L U CV V t D = ÷÷ ø ö çç è æ =å ¥ = borrowed Amount investment Initial ) 1(1t tS t r LCF FTE investment Initial ) 1(1 =å ¥ =t t W ACC t W ACC r UCF NPV ( ) 0 0 1 NO MERGER S NO MERGER Dg rg P = AB A BV V V > ( ) ( ) 0 X DUE Y ORDINARY NAL PV CF PVIFA CF PVIFA = = ± ´ ± ´ ( ) 1 1 T tt t CF Synergy r = D = å ( ) 5 1 0 1 t UNLEVERED t PROJECT t UCF PV r = = å *BBV V V = D *B NPV V cash cost = ( ) * AB A BV V V cash cost = () () 1 11 1 DOMESTIC DDDOMESTIC FOREIGN FOREIGN Ei rr Ei æö æö= ç÷ ç÷ ç÷ èø èø ‘ Æ B B s DEBT B B VV P N = *B B B B P V EPS N E éù= ´ ´ëû ( ) . AB AB AB NPAT NPAT EPS N N Exch ratio = ´ ( ) A A MERGER AB A N P NPV P N ´ = ( ) B B PER SHARE B Premium N Cost P = ´ RP Default Spread RelativeVolatility of Equit y =´ Total E Div NPAT Capital DE Budget éù æö æöêú ç÷ = ´ ç÷êú ç÷ èø ç÷ êú èø ëû NEW BN N Exchange Ratio =´ AB AB A NEW V P NN = AB A BV V V Synergy = B NPV V Synergy Cost = / Æ Æ B BA A P Exchange Ratio P = NEW NEW A N X NN = End -of-year Examinations, 2020 FINC301 -20S2 (C) Page 5 of 5 () () 1 11 1 FOREIGN SSFOREIGN DOMESTIC DOMESTIC Ei rr Ei æö æö= ç÷ ç÷ ç÷ èø èø ( ) () ( ) () ( ) / / 1 1 t t US US FOREIGN t US FOREIGN FOREIGN Ei E Spot Spot Ei = ( ) *B NEW MERGED NPV V N P = ´ ( ) SYNERGY WITH MERGER NO MERGER WITH MERGER NO MERGER V V V V N P = = ´ ,2JM J M Cov b s = Jt J MtRR a b e= ( ) ( ) ( ) ( ) ( ) % 1 1 CC Cost of refunding Value Outstanding Call Premi um t Transactions Costs t = ´ ´ ´