Dirección Financiera II

Transcription

1 Diección Financiea II Javie Gómez Biscai Albet Banal-stanol Wednesday, Mach 8 th, 01, 9:00 am Maximum duation of the exam: hous THORY point fo each coect answe; -0. points fo wong answes. 1 Fo a potfolio of two secuities, the maximum possible eduction in isk is obtained when the coelation coefficient between the two secuities is: a 1 b 0 c -0.5 d -1. The Modigliani and Mille ielevance of dividends poposition states that: a In a wold with taxes, the choice between dividends and stock epuchases will always be ielevant, especially if thee ae impefections in financial makets. b In a wold without taxes o tansaction costs, the choice between dividends and stock epuchases will be ielevant if thee ae impefections in financial makets. c In a wold without taxes o tansaction costs, the choice between dividends and stock epuchases will be ielevant if thee ae not impefections in financial makets. d In a wold of taxes and tansaction costs, the choice between dividends and stock epuchases will be ielevant if thee ae impefections in financial makets.. Geneally, an announcement of eduction of dividends is intepeted by investos as: a Bad news, and the shae pice dops. b Good news and the stock pice ises. c Since dividends ae ielevant, nothing happens with the stock pice. d The company will gow in the futue. 4. If an asset has etuns above those pedicted by the CAPM, the asset is: a No asset can yield above the one pedicted by the CAPM. b Undevalued c Ovevalued d Has a zeo pice 5. If a company changes its financial stuctue: a The equied ate of etun on its debt will not change b The equied ate of etun on the equity will not change c The equied ate of etun on the assets will not change d None of the equied ates of etun will change. 6. Modigliani and Mille's Poposition I states that, unde cetain conditions: a The maket value of a fim's common stock is independent of its capital stuctue b The maket value of a fim's debt is independent of its capital stuctue c The maket value of any fim is independent of its capital stuctue d None of the above

2 7. The positive value to the fim by adding debt to the capital stuctue in the pesence of copoate taxes is: a Due to the exta cash flow going to the investos of the fim athe than the tax authoities. b Due to the eanings befoe inteest and taxes being fully taxed at the copoate ate. c Because pesonal tax ates ae the same as copoate tax ates. c Because shaeholdes pefe to let financial manages choose the capital stuctue thus making thei value independent of it. 8. What ae some of the possible consequences of the possibility of financial distess? a Debt holdes, who face the pospect of getting only pat of thei money back, ae likely to want the company to take additional isks. b quity investos would like the company to cut its dividend payments to conseve cash. c quity investos would like the fim to shift towad iskie lines of business d quity investos would like the fim to settle up with ceditos as fast as possible 9. The yield to matuity: a Is the pesent value of futue coupons divided by the pesent value of the final pincipal payment. b Is the discount ate at which the pesent value of pomised inteest and pincipal payments equals face value. c Is the discount ate at which the pesent value of expected inteest and pincipal payments equals maket pice. d Is the discount ate at which the pesent value of pomised inteest and pincipal payments equals maket pice. 10. The tade-off theoy of capital stuctue pedicts that: a Unpofitable fims should boow moe than pofitable ones b Safe fims should boow moe than isky ones c Rapidly gowing fims should boow moe than matue fims d Inceasing leveage inceases fim value 11. Which of the following is not a divesifiable isk? a The isk of a key employee being hied away by a competito b The isk of a poduct liability lawsuit c The isk that oil pices ise, inceasing poduction costs d The isk that the CO is killed in a plane cash 1. Which of the following statements is false? a Leveage deceases the isk of the equity of a fim. b It is inappopiate to discount the cash flows of leveed equity at the same discount ate that we use fo unleveed equity. c Because the cash flows of the debt and equity sum to the cash flows of the poject, by abitage the combined values of debt and equity must be equal to the cash flows of the poject. d Fanco Modigliani and Meton Mille agued that with pefect capital makets, the total value of a fim should not depend on its capital stuctue. 1 Which of the following statements is false? a Given a foecast of futue inteest payments, we can detemine the inteest tax shield and compute its pesent value by discounting it at a ate that coesponds to its isk. b The total value of the unleveed fim exceeds the value of the fim with leveage due to the pesent value of the tax savings fom debt.

3 c Thee is an impotant tax advantage to the use of debt financing. d To compute the incease in the fim's total value associated with the inteest tax shield, we need to foecast how a fim's debt and theefoe its inteest payments. 14 Which of the following statements is false? a By educing a fim's copoate tax liability, debt allows the fim to pay moe of its cash flows to investos. b The value of a fim is equal to the amount of money the fim can aise by issuing secuities. c quity investos must pay taxes on dividends but not on capital gains. d Fo individuals, inteest payments eceived fom debt ae taxed as income. 15 Which of the following statements is false? a quity holdes expect to eceive dividends and the fim is legally obligated to pay them. b In the exteme case, the debt holdes take legal owneship of the fim's assets though a pocess called bankuptcy. c Afte a fim defaults, debt holdes ae given cetain ights to the assets of the fim. d A fim that fails to make the equied inteest o pincipal payments on the debt is in default. 16 Which of the following statements is false? Assume pefect capital makets. a A fim's WACC is dependent of its capital stuctue and is equal to its equity cost of capital only if the fim it is unleveed. b As the fim boows at the low cost of capital fo debt, its equity cost of capital ises, but the net effect is that the fim's WACC is unchanged. c Although debt has a lowe cost of capital than equity, leveage does not lowe a fim's WACC. d With no debt, the WACC is equal to the unleveed equity cost of capital. 17 Which of the following industies is likely to have the highest costs of financial distess? a Gocey stoe b Real estate c Semiconductos d Utilities 18 Which of the following statements is false? a Because top manages often hold shaes in the fim and ae hied and etained with the appoval of the boad of diectos, which itself is elected by shaeholdes, manages will geneally make decisions that incease the value of the fim s equity. b A negative-npv poject is detimental fo the fim oveall. c An ove-investment poblem occus when shaeholdes have an incentive to invest in isky positive-npv pojects. d When a fim faces financial distess, shaeholdes have an incentive not to invest and to withdaw money fom the fim if possible. 19 The idea that manages who peceive the fim's equity is unde-piced will have a pefeence to fund investment using etained eanings, o debt, athe than equity is known as the a Signaling theoy of debt b Lemons pinciple. c Cedibility pinciple d Pecking ode hypothesis. 0 The maket pice of a zeo coupon bond: a It will always be equal to the pincipal. b It cannot be geate than the pincipal.

4 c It is always geate than the pincipal. d May be highe o lowe than the pincipal. PRÁCTICAL QUSTIONS ( points fo each coect answe; -0.6 points fo wong answes. Use the infomation fo the question(s below. Conside a poject with fee cash flows in one yea of $90,000 in a weak economy o $117,000 in a stong economy, with each outcome being equally likely. The initial investment equied fo the poject is $80,000, and the poject's cost of capital is 15%. The isk-fee inteest ate is 5%. 1 The NPV fo this poject is: a $6,50 b $18,600 c $10,000 d None of the othes Suppose that you boow only $0,000 in financing the poject. Accoding to MM poposition II, the fim's equity cost of capital will be: a 0% b 5% c 15% d 5% Use the table fo the question(s below. Conside the following income statement fo Koge Inc. (all figues in $ Millions: Yea Total Sales 60,55 56,44 5,791 Cost of goods sold 45,565 4,140 9,67 Selling, geneal & admin expenses 11,688 1,191 11,575 Depeciation 1,65 1,56 1,09 Opeating Income, ,70 Othe Income BIT, ,70 Inteest expense anings befoe tax 1, Taxes (5% Net Income The inteest ate tax shield fo Koge in 006 is: a $510 million b $54 million c $ million d $178.5 million Use the following infomation to answe the question(s below. You ae consideing investing in a stat up poject at a cost of $100,000. You expect the poject to etun $400,000 to you in two yeas. Given the isk of this poject, you cost of capital is 0%. 4 The IRR fo this poject is: a 100% b 1% c 0% d None of the othes Use the following infomation to answe the question(s below. Wyatt Oil has assets with a maket value of $600 million, $70 million of which ae cash. It has debt of $50 million, and 0 million shaes outstanding. Assume pefect capital makets. 5 Wyatt Oil's cuent stock pice is: a $14.00 b $17.50 c $1.50 d None of the othes

5 6 If Wyatt Oil distibutes the $70 million as a dividend, then its stock pice afte the dividend will be: a $17.50 b $6.50 c $14.00 d None of the othes 7 If, instead, Wyatt Oil distibutes the $70 million as a shae epuchase, then its stock pice afte the shae epuchase will be: a $11.00 b $17.50 c $14.00 d None of the othes 8. A company has (pepetual debt with nominal value equal to 10 million euos, at a ate of 8%, what is the pesent value of tax shield if the tax ate is 5%? a.50 million b 4.85 million c 8.00 million d 1.50 million 9. A potfolio has 5 million invested in two assets A / of the total value and B (/ of the total value. Daily etuns of A and B have mean of 0% and standad deviations of 1% and 0.5% espectively. The coelation between the two etuns is 0.5. The VaR at thee days at 1% (o 99% confidence is: a euos b 6761 euos c euos d 9511 euos 0. The beta of a fim's debt is 0, the stock beta is 1.5, the maket value of equity is $ 40 million and the maket value of debt is $ 0 million. What is the beta of the assets? a 5 b 1.10 c 1.00 d 1.50 Questions 1-5 You have to value a company using the WACC method ( fee cash flow. The tax ate is 0%. The cost of debt is 8% and the beta of the assets is 1. The maket isk pemium is 6% and the isk fee ate is 6%. At the end of yea the company will be liquidated: the assets will be sold at book value. With this money we will epay the face value of the debt, we will deduct the liquidation costs of 100, and the est will go to shaeholdes.

6 The table shows the balance sheet and the foecast eanings in the coming thee yeas. 0 1 Net woking capital (NWC Capital investment (Goss fixed assets (FA Depeciation/Amotisation Accumulated depeciation (AD Net fixed assets NFA=FA-AD Total assets (NFA NWC Debt quity (book value Total liabilities BIT Inteest expenses.8 7. Petax income Income tax Net income The equied etun on equity of this company ( is: a 10.0% b 8.0% c 16.0% d 1.0%. The afte-tax weighted aveage cost of capital ( of this company is: a 1.0% b 10.8% c 16.0% d 8.5%. The fee cash flow to the fim in the fist peiod ( 1 is: a 9. b 119. c 41.6 d The teminal value (TV which we would use fo the end of yea is: a 47 b 87 c 57 d The fomula that we would apply to find the value of the fim would be: 1 TV a V = D = D 1 ( 1 TV b V = 1 (

7 c 1 1 ( TV D D V = = d 1 TV V =