Reference no: EM132502609
BAF 305 Corporate Finance - Emirates College of Technology
Question 1:
A. Complete the following table in the regards of Forms of Market Efficiency
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SR
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Form
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Description
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Chance to achieve Abnormal Return
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|
1
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Weak
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|
|
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2
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Semi-strong
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|
|
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3
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Strong
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|
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B. Explain the Event Test in the semi-strong form of Efficiency?
Question 2: Use the following data in the table below to answer the following questions:
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Item
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Scenarios 1
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Scenarios 2
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Growth (g)
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6%
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4%
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Dividend (Div)
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$3 / share
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$3 / share
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Required Return (r)
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12%
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12%
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1. Calculate the PV (stock) or the Price of stock in the above two scenarios?
2. Explain the dramatic impact that growth can have on the value of a stock index?
Question 3:
Use the information in the table below to answer the following questions:
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Item
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Symbol
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Amount
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Net Income 2018
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NI
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$ 1,000,000
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Number of common stocks
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N.O.C.S
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200,000
|
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Target dividend Ratio
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TR
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7%
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Target dividend 2017
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DIV0
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20%
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A. Calculate EPS (Earning per share) (2018)
B. CalculateTarget dividend 2018
C. Calculate the target change in dividend for the year 2018
Question 4:
Complete the following table by calculating the empty values (A, B, C andD)?
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Data
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Item
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Amount
|
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Number of Shares
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2000
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Price Per share
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A
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Market Value of Shares ($)
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40,000
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|
|
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Item
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2010
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2011
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2012
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2013
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Operation Income ($)
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2000
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B
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4500
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5000
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Earnings Per Share ($)
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1
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1.5
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D
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2.5
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Return on Shares
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C
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0.075
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0.1125
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0.125
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Question 5:
Use the information in the table below to answer the following?
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Item
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Year 1
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Year 2
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Year 3
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Year 4
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Year 5
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profit after tax
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200,000
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220,000
|
240,000
|
250,000
|
260,000
|
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depreciation
|
20,000
|
30,000
|
40,000
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50,000
|
60,000
|
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fixed assets
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800,000
|
820,000
|
840,000
|
860,000
|
880,000
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working capital
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200,000
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220,000
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240,000
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250,000
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260,000
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WACC
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10%
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|
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Growth (g)
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3%
|
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A. Calculate the Present value for free cash flows PV (FCF)?
B. Calculate the Present value for horizon value PV (horizon value)?
C. Calculate the Present value for the business PV (business)?
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