Corporate Finance (FIN-201)

/in /by
Kingdom of Saudi Arabia Ministry of Education Saudi Electronic Universityالمملكة العربية السعودية وزارة التعليم الجامعة السعودية الإلكترونية  

                          College of Administrative and Financial Sciences

Assignment 3

Corporate Finance (FIN-201)

Due Date: 

Course Name: Corporate FinanceStudent’s Name:
Course Code: FIN-201Student’s ID Number:
Semester: First CRN:  13958
Academic Year: 2023/24
 

For Instructor’s Use only

Instructor’s Name:         
Students’ Grade:      /Out of 10Level of Marks: High/Middle/Low

General Instructions – PLEASE READ THEM CAREFULLY

  • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
  • Assignments submitted through email will not be accepted.
  • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
  • Students must mention question number clearly in their answer.
  • Late submission will NOT be accepted.
  • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
  • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
  • Submissions without this cover page will NOT be accepted.

Answer the following questions:

Q1. What is the cash conversion cycle for a firm with $3 million average inventories, $2 million average accounts payable, a receivables period of 45 days, and an annual cost of goods sold of $20 million?                                                          (2 marks)

Q2. If a firm’s bonds pay a 6% coupon and mature in 3 years, what is their market value, assuming a 8% yield to maturity?  Assume the bond has a $1,000 par value.

(2 marks)                   

Q3. What is the WACC for a firm with a Debt of 20% in its capital structure, and a total market value of $150 million. Assume required returns of 8% and 12%, for debt and equity respectively and a tax rate of 35%?                                                 (2 marks)

Q4. Explain the three strategies for short term financial planning.                (marks 2)

Q5. Assume that you are acquiring a company. Can you calculate the value of that company with the help of Weighted Average Cost of Capital? Explain it with the help of an example.                                                                                                                        (marks 2)