Corporate Finance

Running head: CORPORATE FINANCE
Corporate Finance
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1CORPORATE FINANCE
Table of Contents
Answer 1..........................................................................................................................................2
A..................................................................................................................................................2
B...................................................................................................................................................2
C...................................................................................................................................................2
Answer 2..........................................................................................................................................3
Project A..........................................................................................................................................3
Project B......................................................................................................................................4
c) What about if these two projects are two mutually exclusive ones......................................4
d) Will IRR and NPV always give you the same results?.....................................................4
Answer 3..........................................................................................................................................5
How do you find whether a stock is undervalued or overvalued? Give one example and
explain..........................................................................................................................................5
The difference of fundamental analysis vs. technical analysis................................................6
Reference:........................................................................................................................................8
Appendix:........................................................................................................................................9

2CORPORATE FINANCE
Answer 1
A
Time in months and years 24 12
monthly Receipt
$
3,600.00
Rate 12%
Semi-annually rate 6%
value of annuity as per tables per 6%, 24
months 12.51
PV
$
45,018
B
Simple Interest
amount of interest $ 432.00
Amount of interest after 12 years $ 5,184.00
Total Balance $ 8,784.00
Compounded Annually
Future value $ 14,025.51
Amount of Interest if compounded $ 5,241.51
C
Particulars
Percen
t
Cost$ in
million
Rat
e
Market
Value$ in
million
Common Equity 35.5 12% 46.6
Long term Debt 31.9 8% 35
Preferred Equity 10.3 10% 10.3
Tax 30%
Total Market Value 91.9
WACC 27.66

3CORPORATE FINANCE