Week 3 - Bannister Legal Services generated $2 million in sales
during 2010, and its year-end total assets were $1.5 million. Also, at year-end
2010, current liabilities were $500k, consisting of $200k in notes payable,
$200k in accounts payable and $100k in accruals. Looking ahead at 2011, the
company estimates that its assets must increase at the same rate as sales, its
spontaneous liabilities will increase at the same rate as sales, its profit
margin will be 5% and its payout ratio will be 60%. How large a sales increase
can the company achieve without having to raise funds externally; that is, what
is its self-supporting growth rate?
Week 4 - Ethics are an
important aspect of corporate culture. The tone at the top is part of what sets
expectations for employees. Describe the tone at the top of your organization.
If you were in charge, what would you do differently?
Week 5 - Discounted cash flow techniques are capital
budgeting techniques that take into account both the time value of money and
the estimated net cash flow from an investment. These techniques take into
account the fact that cash flows that occur early in the life of an investment
will be worth more than those that occur later. The primary discounted cash
flow technique is called net present value. Describe this method. How is the
NPV calculated and what is the decision rule?
Week 6 - Read the “Global Economic Crisis” story
on p. 197. Discuss the credit default swaps and the effects it had on the
Week 7 - Suppose you owned a portfolio consisting of $250,000 of U.S.
government bonds with a maturity date of 30 years. Would your portfolio be
riskless? What if your portfolio consisted of $250,000 of 30-day Treasury
bills? Every 30 days your bills mature, and you reinvest the principle
($250,000) in a new batch of bills. Assume that you live on the investment
income from your portfolio and that you want to maintain a constant standard of
living. Is your portfolio truly riskless? Can you think of any asset that would
be completely riskless? What security comes closest to being riskless? Explain.
Week 8 - We have talked about a lot of various financial topics throughout
the course. Please choose two things that you felt were most relevant to you
and discuss. If you were to provide the next set of students a set of “must
do’s” for the course, what would you recommend?