Given the popularity of IRR, you have decided to use it to evaluate a project. The cashflows from the project will be $40k, $42k and $28k in years 1 through 3. After that the project will yield cashflows of $20k per year, forever. The project’s initial cost is $450k and the firm’s opportunity cost/hurdle rate is 7%. Write down the equation used to solve for the IRR (do not solve for the actual IRR). Does the project have conventional cashflows?

A founder owns 100% of their startup. They are offered an equity investment by a VC investor, accepts, and eventually, undergoes one more round of financing, with a new VC investor. The financing events are as follows: VC investor 1 steps in with $0.5 million at a pre-money value of $2 million; later, VC investor 2 contributes $3 million at a pre-money of $7 million; After the second round of investment, what is the worth in stock of the founder, of VC1, and of VC2? What percentage of the company does each own?

You have just started a new job and your employer has enrolled you in KiwiSaver.

This is the first time you have been enrolled in KiwiSaver and you decide not to “opt out”.

You are interested in estimating how much your KiwiSaver fund could be worth when you retire.

You make the following assumptions:

• You have just turned 30 and will retire in exactly 35 years when you are 65.

• Your salary is $50,000 this year and you expect this to increase by 3% every year.

• You can choose to contribute either 3% or 8% of your salary into your KiwiSaver fund each year. https://www.kiwisaver.govt.nz/already/contributions/you/amount/

• Your employer must contribute 3% of your pay into your KiwiSaver fund each year. https://www.kiwisaver.govt.nz/already/contributions/employers/ You can ignore any tax implications and assume your account receives the full 3%. (KIWI SAVER ACC)

• You will be entitled to the annual member tax credit of $521.43 which will be credited into your KiwiSaver fund at the end of every year. https://www.kiwisaver.govt.nz/new/benefits/mtc/

• Your KiwiSaver fund will invest in a diversified portfolio of assets to earn a return on your investment. Of course, there is uncertainty around the actual annual rate of return that your fund will earn over the 35 years but you decide that 6% and 12% represent a good range of potential rates of return to conduct your analysis on.

• Regardless of the return earned, the manager of your KiwiSaver fund will charge a management fee of 1.0% at the end of each year, based on the opening balance of your fund each year.

• You will make no withdrawals or additional contributions (other than those mentioned above) to your fund until you retire in 35 years.

• For simplicity, assume that all contributions to your KiwiSaver fund are made once per year, at the end of the year. The first lot of contributions will be made in one year from today.

Construct a spreadsheet that will allow you to answer the following questions on Canvas.

You and three friends have decided to jointly purchase a property to live in (it has four separate bedrooms and a communal bathroom, kitchen and living area). Your portion of the purchase price is $120,000. You have some money saved in your KiwiSaver account (see TASK 1) which you are able to withdraw to help finance the house purchase but you will still need to borrow $100,000.

Your local bank is willing to lend you $100,000 for a period of 10 years at an interest rate of 5%p.a. The loan must be repaid, over the 10-year period, by equal monthly instalments. The first payment will occur exactly one month after you borrow the money.

Construct a spreadsheet that will allow you to answer the following questions on Canvas.

What is the amount of each monthly instalment?

$1,060.66

$694.44

$416.67

$1,111,11

$1,000.00

$666.66

Suppose we are thinking about replacing an old computer with a new one. The old one cost us $1,580,000; the new one will cost, $1,897,000. The new machine will be depreciated straight-line to zero over its five-year life. It will probably be worth about $375,000 after five years. The old computer is being depreciated at a rate of $320,000 per year. It will be completely written off in three years. If we don’t replace it now, we will have to replace it in two years. We can sell it now for $513,000; in two years, it will probably be worth $147,000. The new machine will save us $326,000 per year in operating costs. The tax rate is 21 percent, and the discount rate is 8 percent. a-1. Calculate the EAC for the the old computer and the new computer. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) a-2. What is the NPV of the decision to replace the computer now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

On January 2, you sold short 1,000 shares of ABC stock at $27 per share. On March 2, a dividend of $1 per share was paid. On April 2, covered the short sale by buying the stock at a price of $25.75 per share. You paid $20 in commissions for the roundtrip ($10 to short, $10 to cover). Assuming you have no other positions, what is the value of your account on April 2? Present your answer rounded to the nearest cent in this format, $123.45

Develop a 5 year Financial Forecast

1. An investor buys a 3.8% annual payment bond with 8 years to maturity. The bond is priced at a yield-to-maturity of 5.6%. What is the bond’s Macaulay duration?

Here are simplified financial statements for Watervan Corporation:

The company’s cost of capital is 8%.

a. Calculate Watervan’s economic value added (EVA). (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

b. What is the company’s return on capital? (Use start-of-year rather than average capital.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c. What is its return on equity? (Use start-of-year rather than average equity.) (Enter your answer as a percent rounded to 2 decimal places.)

Suppose the prices of one-year, two-year, and three-year zero coupon bonds each with a par value of $100 are $90,$80, and $70, respectively. Determine the arbitrage-free price of the annuity

What kind of financial decision making models your company use in its capital budgeting process? Have these decisions contributed to the company’s success? Why or why not?

the company is WestJet

Cooperton Mining just announced it will cut its dividend from $ 4.14 to $ 2.27 per share and use the extra funds to expand. Prior to the​ announcement, Cooperton's dividends were expected to grow at a 3.2 % ​rate, and its share price was $ 48.86. With the planned​ expansion, Cooperton's dividends are expected to grow at a 4.7 % rate. What share price would you expect after the​ announcement? (Assume that the new expansion does not change​ Cooperton's risk.) Is the expansion a good​ investment?

The new price for​ Cooperton's stock will be ​[...]?