所屬科目：研究所、轉學考(插大)◆財務管理
(a) List and explain three basic questions addressed by a financial manager. (9%)
(b) The managers of a firm wish to expand the firm’s operations and are trying to determine the amount of debt financing the firm should obtain versus the amount of equity financing that should be raised. The managers have asked you to explain the effects that both of these forms of financing would have on the cash flows of the firm. (8%)
(c) Identify the four primary determinants of a firm’s growth and explain how each factor could either add to or limit the growth potential of a firm. (8%)
(a) You are considering two annuities, both of which pay a total of $40,000 over the life of the annuity. Annuity A pays $4,000 at the end of each year for the next 10 years. Annuity B pays $2,000 at the end of each year for the next 20 years. Which annuity has the greater value today? (9%)
(b) Why do corporations issue 100- year bonds, knowing interest rate risk is highest for very long-term bonds? How does the interest risk affect the issuers? (8%)
(c) Billy wants to purchase shares in Big Jones, Inc., but is torn between buying shares of common stock or shares of preferred stock. What should he consider before determining the type of share he should purchase? (8%)
(a) Estimate Mark’s share price just after the recapitalization is announced, but before the transaction occurs. (7%)
(b) Estimate Mark’s share price at the conclusion of the transaction. (7%)
(c) Suppose Mark’s existing debt was risk-free with a 4.25% expected return, and its new debt is risky with a 5% expected return. Estimate Mark’s equity cost of capital after the transaction. (6%)
(a) At what price will the new shares be issued in year 1? (8%)
(b) How many shares will the firm need to issue? (7%)
(c) What will be the expected dividend payments on these new shares, and what therefore will be paid out to the old shareholders after year 1? (8%)
(d) Show that the present value of the cash flows to current shareholders remains $20 million. (7%)
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