Finance Answers

A one-year Japanese security is currently yielding 5%. Furthermore, it is expected that the exchange rate between the dollar and the yen is changing from 98 yen to the dollar, to 95 yen to the dollar over the next year. To invest in U.S. security rather than Japanese security, you would need a return at least equal to what value?

a. The U.S. economy is growing faster than that of Japan. The faster growth rate in the U.S. should cause the value of the dollar to depreciate against the yen, everything else being equal. Explain.

Taeh Company has following financial information:
- Total Assets: Rp 2 Billion
- EBIT: Rp 600 Million
- Fixed Assets: Rp 1 Billion
- Short Term Debt: Rp 550 Million
- Book value of equity: Rp 1.2 Billion
- Accumulated retained earnings: Rp200 Million
- Sales: Rp1.8 Billion
- Stock Price: Rp1,200
- Shares outstanding: 1,100,000
According to financial distress theory, give your argument about the company financial condition? Why do we need to analyse the financial distress of a company?

Discuss why homogenous expectations a bout probability distribution of expected returns is a critical in CAPM (6 marks)
The following details relates to three portfolios held by Uzima Fund managers.
Portfolio
Expected Return
Beta Factor
Variance

W
16.5%
1.3
16

X
13.5%
0.8
4

Y
14.5%
1.1
9

The risk free rate is 5%

Evaluate the performance of the portfolios using appropriate measures. (4mks)

2. Clayton Industries is planning its operations for next year. Ronnie Clayton, the CEO, wants you to forecast the firm's additional funds needed (AFN). Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.

Last year's sales = S0 $350 Last yr's accounts payable $40
Sales growth rate = g 30% Last yr's notes payable $50
Last year's total assets = A0* $360 Last yr's accruals $30
Last year's prof margin = PM 5% Target payout ratio 60%

a. $67.0
b. $78.7
c. $63.9
d. $77.9
e. $91.1

You and your partner developed a social media App, which became very popular. You soon find more funds are needed to continue growing the business. You and your partner discuss how you can raise some short-term funding. Your partner heard Commercial Papers and CDs are among the vehicles of short-term funding companies often use. Your partner is a nice guy but just finance-naive partly because he did not take the economic as you did. How would you respond to your partner's suggestion? What do you think about their feasibility? (If you think you need more information, make your own assumptions)

The success of your APP brought the attention of a venture capital firm, they are interested in investing your company. Though the APP proves to be a success, your company has not begun to make profits. You have a solid cashflow, but the business is still losing money. You want a fair valuation for your business. How would you evaluate your business using what you learned in economic?

The success of your APP brought the attention of a venture capital firm, they are interested in investing your company. Though the APP proves to be a success, your company has not begun to make profits. You have a solid cashflow, but the business is still losing money. You want a fair valuation for your business. How would you evaluate your business using what you learned in Economic?