Investments practice test - ASAP

srniq6
timer Asked: Dec 12th, 2018

Question Description

I need these 2 papers to be filled out and please provide the formula, I need to see how you got the answers for all the questions above.

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Exam 3 FIN 345 Spring 2017 drover each question on a separate sheet of paper, tosing the front side only. Make sure you follow all directions Please try to keep your answers in order. To ease the grading process, please write only on the front side of each page. Remember that your answers have to be read in order for them to be graded. thus it is very important that you write as neatly as possible in order to receive credit for your work. When you finish bring your exam paper, formula sheet, and your work to the front of the room and turn them in to the proctor. 1. (25 points) Island Expeditions, Inc., a privately held company, is interested in knowing the value of their stock on a per share basis. It currently has 50 million shares outstanding. The firm also has $850 million in debt outstanding and a marginal tax rate of 40%. It estimates it has a WACC of 14% Island Expeditions, Inc Financial Forecast 2016 2017 2018 2019 2020 2021 Revenue 500.00 550.00 605.00 665.50 732.05 768.65 NI 100.00 110.00 121.00 133.10 146.41 153.73 Interest (2-T) 2.40 2.64 2.90 3.19 3.51 3.69 NOPAT 102.40 112.64 123.90 136.29 149.92 157.42 Depreciation 300.00 330.00 363.00 399.30 439.23 461.19 Capital Expenditure 200.00 220.00 242.00 266.20 292.82 307.46 Net Working Capital 57.50 98.75 144.13 194.04 248.94 306 59 Investment in WC 37.50 41.25 45.38 49.91 54.90 57.65 a. (10 pts) If you assume that the free cash flow to the firm levels off and grows at a constant rate of 5% per year after 2021, calculate the per share value of Island Expeditions stock. b. (5 pts) Pro forma expectations for Gulf Cruisers (a competitor) suggest that it will trade at a MV/EBIT multiple of 11.5 in 2021. Using this information to estimate your terminal value, calculate the per share value of Island Expeditions stock. c. (10 pts) Based on your research, the appropriate leading MV/EBIT multiple is 11.5 Based on 2017 EBIT, calculate the per share value of Island Expeditions stock. (10 points) Answer the following questions given the information in the table below. a (5 pts) Calculate the 3-day moving average for days 5-7. b. (5 pts) What would the chart of the prices and the 3-day moving average tell the technical analyst? What are the buy and sell implications? What is the holding period rate of return from this strategy? [Assume trades occur at the closing prices) Date Closing Price Moving Average 65 66.66667 2 70 68 3 75 70 4 74 73 22 9 2 6 70 2 7 69 3. (25 points) Big Oil, Inc (OTC BO), a company used to calculate the S&C 500 a value weighted index), has a closing stock price of $36 per share on July 25. Given the information in the table below, answer the following questions assuming that after the market clones on May 4, BO will announce a 4-for-I stock split. May 4 Date J&C 500 Number of BO BO Price Sum of the NP of the Shares other 499 stock prices Outstanding 1340 500 536 55.900,000 May 3 7772 ??? 58 56,100.000 a (3 pts) How many shares of BO are outstanding on July 26? b. (9 pts) What is the closing value of the J&C 500 index on July 267 (5 pts) Calculate the percentage change in the J&C 500 between July 25 and July 26. d. (3 pts) If you bought 50 shares of BO right before the close on July 25 and sold them at the closing price on July 26, what would be your holding period rate of return? e (3 pts) What adjustments, if any, must be made to the index after a stock split? Why? 4. (40 points) Answer the following questions, given the regression results from the historical return information for the 3 funds below. Fund A B с S&P 500 T-Bond Mean (%) 9.3 10.75 12.4 8.0 2.0 Std. Deviation (%) 8.5 113 15.8 7.77 0.75 Beta 1.10 1.25 1.70 R 0.91 0.76 0.65 (21 pts) Rank the performance of the 3 funds according to Sharpe's Index, Treynor's Index. and Jensen's Index (make sure you show your work!) b. pts) Which of the 3 funds had the most systematic risk? c. (3 pts) Which of the 3 funds is least correlated with the market? d. (3 pts) Which of the 3 funds" returns moved more closely with the market's returns? c. (10 pts) Fund D currently has $125 million in assets. S5 million in fiabilities and 5 million shares outstanding. If you bought fund D for $20 per share on January 1 and you recently received a capital gain distribution of $0.75 per share and a dividend distribution of 0.25 per share, what is your holding period return. Extra Credit: You can choose to add either 2 points or 6 points to your exam (circle one below) There is a catch though, if more than 20% of the class chooses 6 points, no points will be awarded to anyone 2 points 6 points
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