Fundamentals of Financial ManagementEleventh Edition.docx

1、Fundamentals of Financial Management Eleventh EditionFundamentals of Financial Management Eleventh EditionSOLUTIONS TO PROBLEMSCONTENTSCHAPTER4 The Valuation of Long-Term SecuritiesCHAPTER5 Risk and ReturnCHAPTER8 Overview of Working Capital ManagementCHAPTER9 Cash and Marketable Securities Manageme

2、ntCHAPTER10 Accounts Receivable CHAPTER11 Short-Term FinancingCHAPTER15 Required Returns and the Cost of Capital CHAPTER16 Operating and Financial LeverageCHAPTER17 Capital Structure Determination CHAPTER18 Dividend PolicyCHAPTER19 The Capital Market CHAPTER20 Long-Term Debt, Preferred Stock, and Co

3、mmon StockCHAPTER41. Price per bond $907.102. Price per bond $904.303. Current price: p0=$80.00 Later price: p0=$66.67 The price drops by $13.334. Rate of return = 20%5. Present value of stock V=$22.636. a) $37.5 b) $30.00 c) $37.50Either the present strategy (a) or strategy (c) both result in the s

4、ame market price per share.7. a) 8 percent b) YTC= 9.64 percent we solve for YTC by computer8. V=$759. V=$689.4110. a) g = 0.05 b) expected dividend yield = 0.07 c) expected capital gains yield =g= 0.0511. a) semiannual yield = 0.0402 b) 0.0804 c) effective annual yield = 0.082012. a) trying a 4 per

5、cent semiannual YTM as a starting point for a trial-and-error approach, we get P0 = $ 1,067.55 Since $1,067.55 is less than $1,120, we need to try a lower discount rate, say 3 percent P0 = $ 1,223.47 To approximate the actual discount rate, we interpolate between 3 and 4 percent, X =0.0066 In additi

6、on, semiannual YTM= 0.03 +0.0066 = 0.0366, or 3.66 percent. (The use of a computer provides a precise semiannual YTM figure of 3.64 percent.) b) semiannual YTM * 2 = nominal YTM nominal YTM = 0.0732 C) effective annual YTM = 0.075413. a) old Chicagos 12-year bonds should show a greater price change

7、than Red Frogs bonds. With everything, the same except for maturity, the longer the maturity, the greater the price fluctuation associated with a given change in market required return. The closer in time that you are to the relatively large maturity value being realized, the less important are inte

8、rest payments in determining the market price, and the less important is a change in market required return on the market price of the security. b) Red Frog: P0 = $1,041 Old Chicago: P0 = $1,086.14 Old Chicagos price per bond changes by ($1,086.14-$1,000=$86.14, while Red Frogs price per bond change

9、s by less than half that amount, or ($1,041-$1,000) =$4114. a) $36.67 b) $31.14 c) $44.40CHAPTER 51. a) The standard deviation is 11.36% b) There is a 30 percent probability that the actual return will be zero (prob. E(R) =0 Is 20%) or less (prob. E(R) f?YesYesYesNo The company should adopt credit p

10、olicy C because incremental profitability exceeds the increased carrying costs for policies A, B, C, but not for policy D.2.Credit PolicyABCDa. Incremental sales$ 28,800,000$1,800,000$1,200,000$600,000b. Percent default3%6%10%15%b.Incremental bad-debt losses$84,000108,000120,00090,000d. opportunity

11、cost94,50081,00081,00064,800e. Total costs178,500189,000201,000154,800b.Incremental profitability280,000180,000120,00060,000g. fe?YesNoNoNo Adopt credit policy A. it is the only one where incremental profitability exceeds opportunity costs plus bad-debt losses.3.Credit PolicyABCDa. Incremental sales

12、$ 28,800,000$1,800,000$1,200,000$600,000b. Percent default1.5%3%5%7.5%b.Incremental bad-debt losses$42,00054,00060,00045,000d. opportunity cost94,50081,00081,00064,800e. Total costs136,500135,000141,000109,800b.Incremental profitability280,000180,000120,00060,000g. fe?YesyesNoNo Credit policy B now would be best. Any more liberal credit policy beyond this point would only result in more incremental costs than bene