FIN335 SP 20123
Phase 3 Exam Review
Chapters 11 - 14, 17
Supplementary Materials on
Bankruptcy, M&A
45 Questions: MC, TF, CBA
Chapters 11, 12
1.
Investment Decision Rules
a.
b.
c.
2.
Net Present Value (NPV)
Internal Rate of return (IRR)
Payback Period (PBP)
Determine
a.
•
•
•
b.
c.
d.
e.
Initial Outlay (I0 or CFo)
Impact of sale of old asset on I0
Impact of sale of new asset at end of investment project
Tax consequences on net cash flow from sale of asset
Annual Depreciation Expense (ADE)
Complete an After-Tax cash Flow Table
Compute NPV and IRR
Apply Decision Rule
Chapter 13
Leverage and Capital Structure
1. What is the essence of Modigliani & Miller
Proposition 1?
2. How do taxes affect the cost of debt?
3. How does financial leverage differ from
operating leverage?
4. What is the breakeven point and how is it
calculated? (P)
5. What is the objective of capital structure
startegy?
Chapter 14
Dividends and Dividend Policy
1. What are the 4 important dates regarding
the payment of dividends?
2. What does it mean when a stock goes exdividend? (P)
3. How do stock splits affect shareholder
wealth? (P)
4. How do dividends relate to stock prices?
5. What are dividend clienteles?
Chapter 17
International Financial Management
1. How does a direct exchange differ from
an indirect exchange? (P)
2. How can we compute a cross rate for a
third given two cross rates? (P)
3. How does a spot trade differ from a
forward?
4. How do floating rates differ from
Managed rates? Which is more popular?
5. What are Eurodollar deposits?
Supplementary Material
1. Bankruptcy and Reorganization
(Supplementary Notes)
a.
b.
c.
What are the various definitions of financial
distress?
What does it mean to reorganize a firm in
bankruptcy?
How does the Rule of Absolute Priority work?
Supplementary Material
1. Mergers and Acquisitions
a. What is synergy in a merger/acquisition?
b. What is an LBO?
c. What is a white knight defense?