# These are corporate finance questions. All multichoice. I’ve given the formula sheets.

These are corporate finance questions. All multichoice. I’ve given the formula sheets.

These are corporate finance questions. All multichoice. I’ve given the formula sheets.
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  = + − 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   = + −   ( ) 11 EQUITY UNLEVERAGED FIRM C L D t E   = +−  jt MtRR   = + + ( ) 1 1 T tt t CF NPV Outlay r = =− +  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 +    ++ −  = − +  − ++  ( ) 1 b ROA IGR b ROA  = − ( ) COUPON MIN GAIN MIN TV r YTM PV YTM − = 1 ln t jt t P R P−  =   1 ln t Mt t Index R Index −  =   ND d NPAT  = ( ) D RF D M RFr r r r  = + − 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  −  +  =+  +  ( ) ( ) 11 11 BOND TT FV PV C r r r r  = − +  ++  ( ) 1 b ROE SGR b ROE  = − ( ) ( ) 11 11 CALLABLE BOND TT Call Price PV C r r r r  = − +  ++  * Dr r IP DRP LP MRP = + + + + ( ) 0 RF ASSET M RF r r r r  = + − ( ) 1 t t tP P E R  − = + + jt MtRR   = + + 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 −−   ==      ( )( ) 1 1 1 NOM REALr r infl = + + − ( ) 11 L EQUITY C UNLEVERED FIRM D t E  = + − 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  = + − −  ( )( ) 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  =  ( ) 2 , DEBT MARKET Cov Debt Security Market   = D RF D M RF rr rr  − = − ASSETS UNLEVERED FIRM = ( )( ) 1 EQUITY ASSET C ASSET DEBT L D t E      = + − −   ( ) ( ) 1 11 EQUITY C DEBT ASSET C D t E D t E   +− =  +−    *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    − +   =    1 T jt t jt T AR average CAR N = −   =   1 1 NPAT d D N  = ( ) 1 g d ROE=− 11 m NOMr EAR m = + − NPAT ROA TA = ( ) D RF D M RFr r r r  = + − ( ) 0 RF ASSET M RF r r r r  = + − ( ) ( ) ( ) 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 = − +   = + − ++  ( )( ) 00 1 S C D D r r t r r E  = + − −  ( ) 2 , DEBT MARKET Cov Debt Market   = ( ) ( ) ( ) 1 1 CUM EX S CG P P t Dt −− = − ( ) 11 L EQUITY C UNLEVERED D t E  = + − 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  = + + ( ) 0 1 C U EBIT t V r − = ( )( ) ( ) 11 1 1 CS LU D tt V V D t  −− = + −  −  ( ) 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 − + + =  =t tt r UCF APV L U CV V t D =+       − − + =  = borrowed Amount investment Initial ) 1(1t tS t r LCF FTE investment Initial ) 1(1 − + =  =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 =  = +  ( ) 5 1 0 1 t UNLEVERED t PROJECT t UCF PV r = = +  *BBV V V = +  *B NPV V cash cost =− ( ) * AB A BV V V cash cost = + − () () 1 11 1 DOMESTIC DDDOMESTIC FOREIGN FOREIGN Ei rr Ei  + = + −    +   ‘ ˆ B B s DEBT B B VV P N − = *B B B B P V EPS N E =   ( ) . 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     = −    +      NEW BN N Exchange Ratio = AB AB A NEW V P NN = + AB A BV V V Synergy = + + B NPV V Synergy Cost = + − / ˆ ˆ 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  + = + −    +   ( ) () ( ) () ( ) / / 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   = Jt J MtRR   = + + ( ) ( ) ( ) ( ) ( ) % 1 1 CC Cost of refunding Value Outstanding Call Premi um t Transactions Costs t =   − +  −

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