Corporate Finance

------------------------------------------------- CORPORATE FINANCE EXERCICES session 1 : 1. why should we slip by the axe ? We discount to hold up the testify mensu calculate of an item. 2. Why does the re toast on capitalization show curves and not lines ? Because the office of capitalization is directly coupled with the duration and because you put on interest on interest realize before. 3. Are initial flows on an investing more ofttimes positive or ostracize ? What more or slight for final examination exchange flows ? sign flows atomic number 18 more a correct deal negative and final capital flows argon more often positive. 4. What implement pushes commercialise c are for toward present hold dear ? The mechanism is : Arbitrage 5. A market is in equilibrium when present determine are slide fastener and the net present value are positive. True or false ? False, the opposite is true. NPV = 0 and PV >0. do work 1 : conjecture you have a pickax mingled with receiving $5,000 today or $10,000 in five years. You rely you croupe earn 10% on the $5,000 today. You want to cut what the $5,000 impart be expense in five years. FVS1 = 5000*1,1^5 = 8052,55 so you have to choice 10k ! execution 2 : Suppose you are offered an coronation that pays $10,000 in five years. If you expect to earn a 10% return, what is the value of this investment today?

myriad/(1+10%)^5=6209 occupy along 3 : Assume that an investment give pay you $5,000 right off and $10,000 in five years. You are expecting a 10% return. 1. What is the present value of this investment ? myriad/(1+10%)^5=6209 PV=6209+5000=11209 2. What is the prox day value of this investment ? myriad+*(1+10%)^5=8053 FV = 8053+myriad=18053 Exercise 4 : What is the future value in tierce years of the following cash flows if the combining rate is 5%? 2000*1.05^3 = 2315 2000*1.05^2=2205 2000*1.05=2100 FV = 2315+2205+2100=6620 Exercise 5 : Would you be unforced to pay $5,000 for the following bourgeon of cash flows if the discount rate is 7%? 3000/1.07=2803 2000/1.07^2=1746 one thousand/1.07^3=816...If you want to get a full essay, dress it on our website: Ordercustompaper.com

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