Ch 11- Assignment - The Basics of Capital Budgeting

1. (2 marks) Provide a discussion on the similarities and differences of two companies: China Petroleum & Chemical and Alibaba. Minimum four key points for full marks. Hints: students may consider the following when attempting this question. • What services/products each company offers? • Which industry the company operates in? • Where their stocks are listed? • Where the company is found? Do not forget to cite the source of information. Referencing (Chicago 17B referencing) is mandatory. 2. (8 marks) Calculate the return and risk (standard deviation) of each stock. 3. (2 marks) Explain the relation (positive or negative) between risk and return based on your answers in the previous question. 4. (4 marks) Calculate the correlation coefficient between (1) Amazon and Alibaba, and (2) Amazon and China Petroleum & Chemical. 5. (3 marks) Calculate the expected (annual) return and standard deviation if you owned a portfolio consisting of 50% in Amazon and 50% in Alibaba. 6. (3 marks) Calculate the expected (annual) return and standard deviation if you owned a portfolio consisting of 80% in Amazon and 20% in China Petroleum. 7. (3 marks) Compare the portfolios in parts 5 or 6. Which portfolio (parts 5 or 6) provides better diversification? Define diversification and explain your answer(s).

Exercise 1 The following Trading and Profit and Loss Account of ABC Ltd for the year ended 31-12-2019 is given below: Exercise 2 The Balance Sheet of ABC Auto Limited as on 31-12-2002 was as follows: Exercise 3 Explain what finance is and how it affects individuals and corporations' life. Then explain the financial services and managerial finance areas of finance. Exercise 4 Discuss the two key activities of the financial manager as related to the firm's balance sheet and explain the major differences between accounting and finance with respect to emphasis on cash flows and decision making.

Exercise 4 George estimates that the dividend of ABC Company, an established textile producer, is expected to remain constant at $3 per share indefinitely. Calculate the stock's value if the market's interest rate is 15%.

4. From your analysis in question 3, which capital structure proves most beneficial? By what metrics? What is your recommendation to Hill Country's CEO? Given the current corporate culture of no debt financing, what arguments will you use to covey your recommendation?

9: The Cash Flow Statement 9.4: Analysing cash flow statements Analyse the three blocks of the cash flow statement of Ferrari and Marks & Spencer. Marks and Spencer (Retailer with Negative OWCR) ISIN Number GB0031274896 . . . Page 94 Cash flow Cash flow statement is on page: F9 Ferrari . ISIN NL0011585146 • Page 206 (pdf) Cash flow Analyze the three different blocks of the Cash-Flow segment of Ferrari in 2018-2019 (closed in December) and of Mark & Spencer in 2018-2019 (closed in March) and comment their operational performance and their Free Cash Flow. Using only the last year (2019), comment the consistency of each part of the cash flow statement with the income statement (for example the EBITDA and the Operational Cash Flow) and balance sheet (for example the variation of cash). What additional information does the cash flow statement provide with respect to the balance sheet and income statement?

Based on the information presented above, answer the following questions. 1. (12 marks) Calculate the incremental free cash flow during the project's life (starting from Year 0 to Year 5). Show workings. 2. (13 marks) Calculate the NPV, payback period and IRR of the project. Should the project be accepted? Show workings and explain your answer(s).

responses. a) Dana urged Danny to go online and order a credit report from a Credit Bureau. What is a Credit Bureau such as Equifax Canada or TransUnion Canada? (.25 marks) Response: e Concordia Concordia May not be copied or duplicated without the permission of the owner. b) Danny heard that ordering his credit report will make things worse by impacting his credit score. You explain to Dany that there are two types of credit checks: hard hits and soft hits. Fill in the space with either "hard hits" or "soft hits" for each of the credit check queries below. (.25 marks) • Your query on your credit report: • Employment application: • Applying for a new credit card: • Rental application: c) Danny's financial situation is overwhelming, and he wants to file for bankruptcy. Before filing for bankruptcy, Dana recommends that he instead file for a Consumer Proposal. Explain to Danny what both are. (.25 marks) Response: d) Dana explains that before filing for either a Consumer Proposal or Bankruptcy, Danny should try improving his debt situation and overall credit score first. Provide him with three (3) ways that he can do so. (.25 marks) 1) 2) 3) The End Good luck!

Explain the difference between valuing for preferred stock and common stock and how to calculate for each. Be sure to support your statements with logic and argument, citing any sources referenced.

1 List name of payer. If any interest is from a seller-financed mortgage and the buyer used the property as a personal residence, see the instructions and list this interest first. Also, show that buyer's social security number and address ► 2 Add the amounts on line 1. 3 Excludable interest on series EE and I U.S. savings bonds issued after 1989. Attach Form 8815. 4 Subtract line 3 from line 2. Enter the result here and on Form 1040 or 1040-SR, line 2b.

a) They are looking to you to help them calculate the amount needed to cover their Transfer Duties under the city of Montréal and CMHC mortgage loan insurance (they know that they have the option to pay the mortgage loan insurance as either a lump sum or they can increase their mortgage payments; they decided to pay the CMHC as a lump sum). (2 marks) Show calculations for the CMHC mortgage loan insurance: (1 mark) Show calculations for the Transfer Duties: (1 mark) b) Leanne and Fritz believe the only way they can cover the Transfer Duties, the CMHC mortgage loan insurance, down payment and new furniture is by with drawing funds from their Registered Retirement Savings Plan (RRSP) under the Home Buyer's Plan (HBP). Calculate the maximum amount they can each withdraw from their respective RRSPs. Leanne's RRSP market value is $36,980 and Fritz's is $29,459. (See Table D). (.5 marks) Calculation for RRSP withdrawal under the HBP: (.5 marks) eConcordia Concordia May not be copied or duplicated without the of the owner. 6