Past Exam for FINC 422 - Intermediate Corporate Finance at Christopher Newport (CNU)

Exam Information

Material Type:Final
Class:FINC 422 - Intermediate Corporate Finance
University:Christopher Newport University
Term:Fall 2003
  • Limited Partner
  • Chapter 7 Bankruptcy
  • Distribution Center
  • Shareholders
  • Acquisition
  • Conglomerate
  • Public Companies
  • Depreciated
  • The Independent
  • General Partner
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FINC 422 Advanced Finance Dr. Gudikunst Fall 2003 NAME______________________________ FINAL EXAM Part B (80 points) Instructions: Open notes Exam portion, plus calculator Do all work in this test packet. Time limit: 2 ½ hours. 1. (20 points) The Han Lee Shipbuilding Company is considering three independent capital projects. Each project requires a $4 million investment. Project A has an IRR = 20%, Project B has IRR = 11 %, and Project X has IRR = 8%. The estimated Beta for project A is 2.0, for project B the Beta is estimated at 1.2, while project X has a Beta of 0.90 . The risk free rate is estimated to be 5% and the market risk premium is estimated to be 8 percent. The company’s desired capital structure is 40% debt and 60% equity, and debt funds cost 7 % interest rate . The firm estimates that this year its pre-tax profits will be $12 million, with a 30 % tax rate. a. What would be the minimum required rates of return for each of the projects? determine suitable WACC for each project- A= 14.56% B= 10.7...

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