Study Guide, Final Exam, Modules 8, 11-15
Exam Day and Time: Dec 11, 8:00 – 10:30 p.m.
Go Through all of the homework and review the posted answers. Identify select problems at the back of
the chapters that cover these topics. Make sure you can work though them. Go through all the power
point slides. Exam will be combination of multiple choice and short fill in the blank / short answer.
Expect 90 minutes to complete. Closed book. 25 questions. About 5-6 short answer. The rest are
multiple choice. Fin calculator only (no excel on the exam).
Module 8, Shareholders Equity
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Why might a company repurchase stock?
What are the key components of Contributed Capital?
Stock Issuance, accounting entries on the balance sheet
Estimating Retained Earnings, Net Income, or Dividends Paid if given all of the other information
Estimate average price shares were repurchased at (in the Treasury Stock account).
Calculate the number of shares outstanding
Module 11, Forecasting Financial Statements
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Understand the correct order of fin statement forecasting (which statements and in what order)
Forecasting Revenue, and use this to Forecast the Income Statement.
Forecasting balance sheet items (A/R, Inventory, A/P, etc…)
Forecasting NOPAT
Module 12, WACC and Dividend Discount model
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Estimate PV of an annuity, PV of a future lump sum (you can use excel)
Calculate Cost of Equity using the CAPM equation
Calculate cost of Debt. Calculate after-tax Cost of Debt.
Compute the weights to be used on equity and debt.
Calculate the WACC using weights and cost of underlying stock, bond, preferred cost of capital
Compute intrinsic value using dividend discount models
What is the advantage of using a dividend discount model? Disadvantages?
Module 13 – FCF Valuation
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What methods can firms do to increase their free cash flow?
What are the pros and cons of using a FCF valuation model (versus other methods)?
Calculate and forecast NOPAT and NOA if given certain data on revenue, NOPM, NOA, and NOAT
Calculate a DCF valuation by discounting back FCF, and discounting back a terminal value
Calculate value per share by accounting for NNO, NCI and share outstanding
Module 14 - ROPI
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Calculate ROPI
Calculate a ROPI valuation by discounting back ROPI, discounting back a terminal value,
summing, adding the beginning NOA, and accounting for NNO.
Module 15, Valuation Multiples
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Use industry multiples (P/B, P/E, etc…) to calculate intrinsic value of a company
Understand the strength and weakness of this approach