Corporate Finance Information 2022

Running Head: CORPORATE FINANCE 1
CORPORATE FINANCE

Running Head: CORPORATE FINANCE
Table of Contents
1 Investment Decision.....................................................................................................................3
Shareholder’s net worth...............................................................................................................3
Reasoning.....................................................................................................................................3
2) Fundamental financial concepts..................................................................................................4
Concept of agency relationship....................................................................................................4
Concept of Market Efficiency......................................................................................................5
Concept of Assert pricing............................................................................................................6
3) Debt Financing............................................................................................................................6
4) Bond Valuations..........................................................................................................................6
A...................................................................................................................................................6
B...................................................................................................................................................6
C...................................................................................................................................................6
D...................................................................................................................................................6
E...................................................................................................................................................7
5) Bond Duration.............................................................................................................................7
A...................................................................................................................................................7
B...................................................................................................................................................7
C...................................................................................................................................................8
References......................................................................................................................................10

Running Head: CORPORATE FINANCE
1 Investment Decision
Year Project A discount @ 12% Present value
0 -235000 1.000 -235000
1 120000 0.893 107143
2 100000 0.797 79719
3 60000 0.712 42707
4 20000 0.636 12710
5 10000 0.567 5674
NPV 12954
IRR 15%
Year Project B discount @ 12% Present value
0 -235000 1.000 -235000
1 10000 0.893 8929
2 50000 0.797 39860
3 60000 0.712 42707
4 100000 0.636 63552
5 120000 0.567 68091
NPV -11862
IRR 10%
Shareholder’s net worth
The two projects are being analyzed in position of the finance manager of a technology
company. These are two mutually exclusive projects and they are required to be invested in the
business to find out the potential benefits. The projects require the initial investment of $235000,
however Project A is the right choice of the firm and it will maximize the shareholder’s wealth
of the company (Bora, 2015).
Reasoning
The relevant advantage while using the net present worth strategy is that it considers the
fundamental thought that a future dollar is worth not exactly a dollar today. In each period, the
money streams are limited by another time of capital expense. The NPV technique likewise