某公司理财课后题答案（英文版）.docx

Chapter 2: Accounting Statements and Cash Flow

2.10
Assets

Current assets

Cash
$ 4,000
Accounts receivable
8,000
Total current assets
$ 12,000
Fixed assets

Machinery
$ 34,000
Patents
82,000
Total fixed assets
$116,000
Total assets

$128,000
Liabilities and equity

Current liabilities

Accounts payable
$ 6,000
Taxes payable
2,000
Total current liabilities
$ 8,000
Long-term liabilities

Bonds payable
$7,000
Stockholders equity

Common stock ($100 par)
$ 88,000
Capital surplus
19,000
Retained earnings
6,000
Total stockholders equity
$113,000
Total liabilities and equity
$128,000

2.11

One year ago
Today
Long-term debt
$50,000,000
$50,000,000
Preferred stock
30,000,000
30,000,000
Common stock
100,000,000
110,000,000
Retained earnings
20,000,000
22,000,000
Total
$200,000,000
$212,000,000
2.12
Total Cash Flow of
the Stancil Company
Cash flows from the firm

Capital spending
$(1,000)
Additions to working capital
(4,000)
Total
$(5,000)
Cash flows to investors of the firm

Short-term debt
$(6,000)
Long-term debt
(20,000)
Equity (Dividend - Financing)
21,000
Total
$(5,000)
[Note: This table isn’t the Statement of Cash Flows, which is only covered in Appendix 2B, since the latter has the change in cash (on the balance sheet) as a final entry.]
2.13 a. The changes in net working capital can be computed from:

Sources of net working capital

Net income
$100
Depreciation
50
Increases in long-term debt
75
Total sources

$225
Uses of net working capital

Dividends
$50
Increases in fixed assets*
150
Total uses
$200
Additions to net working capital
$25
*Includes $50 of depreciation.
b.
Cash flow from the firm

Operating cash flow
$150
Capital spending
(150)
Additions to net working capital
(25)
Total
$(25)
Cash flow to the investors

Debt
$(75)
Equity
50
Total
$(25)

Chapter 3: Financial Markets and Net Present Value: First Principles of Finance (Advanced)

3.14 $120,000 - ($150,000 - $100,000) (1.1) = $65,000

3.15 $40,000 + ($50,000 - $20,000) (1.12) = $73,600

3.16 a. ($7 million + $3 million) (1.10) = $11.0 million
b.
i. They could spend $10 million by borrowing $5 million today.
ii. They will have to spend $5.5 million [= $11 million - ($5 million x 1.1)] at t=1.

Chapter 4: Net Present Value

4.12 a. $1,000 ´ 1.0510 = $1,628.89
b. $1,000 ´ 1.0710 = $1,967.15
c. $1,000 ´ 1.0520 = $2,653.30
d. Interest compounds on the interest already earned. Therefore, the interest earned in part c, $1,653.30, is more than double the amount earned in part a, $628.89.
4.13 Since this bond has no interim coupon payments, its present value is simply the present value of the $1,000 that will be received in 25 years. Note: As will be discussed in the next chapter, the present value of the payments associated with a bond is the price of that bond.
PV = $1,000 /1.125 = $92.30
4.14 PV = $1,500,000 / 1.0827 = $187,780.23

4.15 a. At a discount rate of zero, the future value and present value are always the same. Remember, FV = PV (1 + r) t. If r = 0, then the formula reduces to FV = PV. Therefore, the values of the options are $10,000 and $20,000, respectively. You should choose the second option.
b. Option one: $10,000 / 1.1 = $9,090.91
Option two: $20,000 / 1.15 = $12,418.43
Choose the second option.
c. Option one: $10,000 / 1.2 = $8,333.33
Option two: $20,000 / 1.25 = $8,037.55
Choose the first option.
d. You are indifferent at the rate that equates the PVs of the two alternatives. You know that rate must fall between 10% and 20% because the option you would choose differs at these rates. Let r be the discount rate that makes you indifferent between the options.
$10,000 / (1 + r) = $20,000 / (1 + r)5
(1 + r)4 = $20,000 / $10,000 = 2
1 + r = 1.18921
r = 0.18921 = 18.921%
4.16 The $1,000 that you place in the account at the end of the first year will earn interest for six years. The $1,000 that you place in the account at the end of the second year will earn interest for five years, etc. Thus, the account will have a balance of
$1,000 (1.12)6 + $1,000 (1.12)5 + $1,000 (1.12)4 + $1,000 (1.12)3
= $6,714.61
4.17 PV = $5,000,000 / 1.1210 = $1,609,866.18
4.18 a. $1.000 (1.08)3 = $1,259.71
b. $1,000 [1 + (0.08 / 2)]2 ´ 3 = $1,000 (1.04)6 = $1,265.32
c. $1,000 [1 + (0.08 / 12)]12 ´ 3 = $1,000 (1.00667)36 = $1,270.24
d. $1,000 e0.08 ´ 3 = $1,271.25
e. The future value increases because of the compounding. The account is earning interest on interest. Essentially, the interest is added to the account balance at the end of every compounding period. During the next period, the account earns interest on the new balance. When the compounding period shortens, the balance that earns interest is rising faster.
4.19 The price of the consol bond is the present value of the coupon payments. Apply the perpetuity formula to find the present value. PV = $120 / 0.15 = $800
4.20 a. $1,000 / 0.1 = $10,000
b. $500 / 0.1 = $5,000 is the value one year from now of the perpetual stream. Thus, the value of the perpetuity is $5,000 / 1.1 = $4,545.45.
c. $2,420 / 0.1 = $24,200 is the value two years from now of the perpetual stream. Thus, the value of the perpetuity is $24,200 / 1.12 = $20,000.
4.21 Apply the NPV technique. Since the inflows are an annuity you can use the present value of an annuity factor.
NPV = -$6,200 + $1,200
= -$6,200 + $1,200 (5.3349)
= $201.88
Yes, you should buy the asset.
4.22 Use an annuity factor to compute the value two years from today of the twenty payments. Remember, the annuity formula gives you the value of the stream one year before the first payment. Hence, the annuity factor will give you the value at the end of year two of the stream of payments.
Value at the end of year two = $2,000 = $2,000 (9.8181)
= $19,636.20
The present value is simply that amount discounted back two years.
PV = $19,636.20 / 1.082 = $16,834.88

4.23 The easiest way to do this problem is to use the annuity factor. The annuity factor must be equal to $12,800 / $2,000 = 6.4; remember PV =C ATr. The annuity factors are in the appendix to the text. To use the factor table to solve this problem, scan across the row labeled 10 years until you find 6.4. It is close to the factor for 9%, 6.4177. Thus, the rate you will receive on this note is slightly more than 9%.
You can find a more precise answer by interpolating between nine and ten percent.

[ 10% ù [6.1446 ù
a é r ú b c é6.4 ï d
ë 9%û ë6.4177 û

By interpolating, you are presuming that the ratio of a to b is equal to the ratio of c to d.
(9 - r ) / (9 - 10) = (6.4177 - 6.4 ) / (6.4177 - 6.1446)
r = 9.0648%

The exact value could be obtained by solving the annuity formula for the interest rate. Sophisticated calculators can compute the rate directly as 9.0626%.
[Note: A standard financial calculator’s TVM keys can solve for this rate. With annuity flows, the IRR key on “advanced” financial calculators is unnecessary.]
4.24 a. The annuity amount can be computed by first calculating the PV of the $25,000 which you need in five years. That amount is $17,824.65 [= $25,000 / 1.075]. Next compute the annuity which has the same present value.
$17,824.65 = C
$17,824.65 = C (4.1002)
C = $4,347.26
Thus, putting $4,347.26 into the 7% account each year will provide $25,000 five years from today.
b. The lump sum payment must be the present value of the $25,000, i.e., $25,000 / 1.075 = $17,824.65
The formula for future value of any annuity can be used to solve the problem (see footnote 11 of the text).

4.25 Option one: This cash flow is an annuity due. To value it, you must use the after-tax amounts. The after-tax payment is $160,000 (1 - 0.28) = $115,200. Value all except the first payment using the standard annuity formula, then add back the first payment of $115,200 to obtain the value of this option.
Value = $115,200 + $115,200
= $115,200 + $115,200 (9.4269)
= $1,201,178.88

Option two: This option is valued similarly. You are able to have $446,000 now; this is already on an after-tax basis. You will receive an annuity of $101,055 for each of the next thirty years. Those payments are taxable when you receive them, so your after-tax payment is $72,759.60 [= $101,055 (1 - 0.28)].
Value = $446,000 + $72,759.60
= $446,000 + $72,759.60 (9.4269)
= $1,131,897.47
Since option one has a higher PV, you should choose it.

4.26 Let r be the rate of interest you must earn.
$10,000(1 + r)12 = $80,000
(1 + r)12 = 8
r = 0.18921 = 18.921%

4.27 First compute the present value of all the payments you must make for your children’s education. The value as of one year before matriculation of one child’s education is
$21,000 = $21,000 (2.8550) = $59,955.
This is the value of the elder child’s education fourteen years from now. It is the value of the younger child’s education sixteen years from today. The present value of these is
PV = $59,955 / 1.1514 + $59,955 / 1.1516
= $14,880.44
You want to make fifteen equal payments into an account that yields 15% so that the present value of the equal payments is $14,880.44.
Payment = $14,880.44 / = $14,880.44 / 5.8474 = $2,544.80

4.28 This problem applies the growing annuity formula. The first payment is
$50,000(1.04)2(0.02) = $1,081.60.
PV = $1,081.60 [1 / (0.08 - 0.04) - {1 / (0.08 - 0.04)}{1.04 / 1.08}40]
= $21,064.28
This is the present value of the payments, so the value forty years from today is
$21,064.28 (1.0840) = $457,611.46

4.29 Use the discount factors to discount the individual cash flows. Then compute the NPV of the project. Notice that the four $1,000 cash flows form an annuity. You can still use the factor tables to compute their PV. Essentially, they form cash flows that are a six year annuity less a two year annuity. Thus, the appropriate annuity factor to use with them is 2.6198 (= 4.3553 - 1.7355).
Year
Cash Flow

Factor
PV
1
$700

0.9091
$636.37
2
900

0.8264
743.76
3
1,000
ù

4
1,000
ú
2.6198
2,619.80
5
1,000
ú

6
1,000
û

7
1,250

0.5132
641.50
8
1,375

0.4665
641.44

Total
$5,282.87

NPV = -$5,000 + $5,282.87
= $282.87
Purchase the machine.

Chapter 5: How to Value Bonds and Stocks

5.9 The amount of the semi-annual interest payment is $40 (=$1,000 ´ 0.08 / 2). There are a total of 40 periods; i.e., two half years in each of the twenty years in the term to maturity. The annuity factor tables can be used to price these bonds. The appropriate discount rate to use is the semi-annual rate. That rate is simply the annual rate divided by two. Thus, for part b the rate to be used is 5% and for part c is it 3%. PV=C+F/(1+r)40

a. $40 (19.7928) + $1,000 / 1.0440 = $1,000
Notice that whenever the coupon rate and the market rate are the same, the bond is priced at par.
b. $40 (17.1591) + $1,000 / 1.0540 = $828.41
Notice that whenever the coupon rate is below the market rate, the bond is priced below par.
c. $40 (23.1148) + $1,000 / 1.0340 = $1,231.15
Notice that whenever the coupon rate is above the market rate, the bond is priced above par.
5.10 a. The semi-annual interest rate is $60 / $1,000 = 0.06. Thus, the effective annual rate is 1.062 - 1 = 0.1236 = 12.36%.
b. Price = $30 + $1,000 / 1.0612
= $748.48
c. Price = $30 + $1,000 / 1.0412
= $906.15

Note: In parts b and c we are implicitly assuming that the yield curve is flat. That is, the yield in year 5 applies for year 6 as well.

5.11 Price = $2 (0.72) / 1.15 + $4 (0.72) / 1.152 + $50 / 1.153
= $36.31
The number of shares you own = $100,000 / $36.31 = 2,754 shares

5.12 Price = $1.15 (1.18) / 1.12 + $1.15 (1.182) / 1.122 + $1.152 (1.182) / 1.123
+ {$1.152 (1.182) (1.06) / (0.12 - 0.06)} / 1.123
= $26.95
5.13 [Insert before last sentence of question: Assume that dividends are a fixed proportion of earnings.]
Dividend one year from now = $5 (1 - 0.10) = $4.50
Price = $5 + $4.50 / {0.14 - (-0.10)}
= $23.75
Since the current $5 dividend has not yet been paid, it is still included in the stock price.
Chapter 6: Some Alternative Investment Rules

6.10 a. Payback period of Project A = 1 + ($7,500 - $4,000) / $3,500 = 2 years
Payback period of Project B = 2 + ($5,000 - $2,500 -$1,200) / $3,000 = 2.43 years
Project A should be chosen.
b. NPVA = -$7,500 + $4,000 / 1.15 + $3,500 / 1.152 + $1,500 / 1.153 = -$388.96
NPVB = -$5,000 + $2,500 / 1.15 + $1,200 / 1.152 + $3,000 / 1.153 = $53.83
Project B should be chosen.

6.11 a. Average Investment:
($16,000 + $12,000 + $8,000 + $4,000 + 0) / 5 = $8,000
Average accounting return:
$4,500 / $8,000 = 0.5625 = 56.25%
b. 1. AAR does not consider the timing of the cash flows, hence it does not consider the time value of money.
2. AAR uses an arbitrary firm standard as the decision rule.
3. AAR uses accounting data rather than net cash flows.

6.12 a
Average Investment = (8000 + 4000 + 1500 + 0)/4 = 3375.00
Average Net Income = 2000(1-0.75) = 1500
=> AAR = 1500/3375=44.44%
6.13 a. Solve x by trial and error:
-$8,000 + $4,000 / (1 + x) + $3000 / (1 + x)2 + $2,000 / (1 + x)3 = 0
x = 6.93%
b. No, since the IRR (6.93%) is less than the discount rate of 8%.
Alternatively, the NPV @ a discount rate of 0.08 = -$136.62.

6.14 a. Solve r in the equation:
$5,000 - $2,500 / (1 + r) - $2,000 / (1 + r)2 - $1,000 / (1 + r)3
- $1,000 / (1 + r)4 = 0
By trial and error,
IRR = r = 13.99%
b. Since this problem is the case of financing, accept the project if the IRR is less than the required rate of return.
IRR = 13.99% > 10%
Reject the offer.
c. IRR = 13.99% < 20%
Accept the offer.
d. When r = 10%:
NPV = $5,000 - $2,500 / 1.1 - $2,000 / 1.12 - $1,000 / 1.13 - $1,000 / 1.14
= -$359.95
When r = 20%:
NPV = $5,000 - $2,500 / 1.2 - $2,000 / 1.22 - $1,000 / 1.23 - $1,000 / 1.24
= $466.82
Yes, they are consistent with the choices of the IRR rule since the signs of the cash flows change only once.

6.15 PI = $40,000 / $160,000 = 1.04
Since the PI exceeds one accept the project.
Chapter 7: Net Present Value and Capital Budgeting

7.9 Since there is uncertainty surrounding the bonus payments, which McRae might receive, you must use the expected value of McRae’s bonuses in the computation of the PV of his contract. McRae’s salary plus the expected value of his bonuses in years on