The good professor's last hurrah
Our Advanced Financial Management final went live this morning. Six problems, each with at least four parts. Here's one:
Tundra Corporation is interested in acquiring Tantrell Corporation. Tantrell has 2 million shares outstanding and a target capital structure consisting of 40 percent debt. Tantrell's debt interest rate is 8 percent. Assume that the risk-free rate of interest is 3 percent and the market risk premium is 7 percent. Tantrell's free cash flow (FCF0) is $3 million per year and is expected to grow at a constant rate of 6 percent a year; its beta is 1.2. Tantrell has $5 million in debt. The tax rate for both companies is 30 percent. Calculate the required rate of return on equity using equation: rs= KRF + RPM(b).
There are four more parts to this problem.
On top of the final going live at 12 a.m. this morning, our butthead instructor posted yet another discussion question on the boards at the same time. Because, you know, assigning a final that will take every spare moment between now and Sunday night when it's due just isn't enough. Discussion is 15% of our grade, so you bet your bippy we have to respond. Here's the discussion question:
Use the page of recent foreign exchange rates from FT.com. in the lecture to determine how many, if any of the currencies are selling at a premium to the dollar, based on 1 year forward prices. Be sure to take note of the significance of how the currencies are expressed in the market - direct or indirect terms.
WTF.
I have developed an intense dislike for the professor, simply due to the sheer volume of work the man feels he must assign. I call it, "Death by Advanced Financial Management."
I want this class to be over.
Tundra Corporation is interested in acquiring Tantrell Corporation. Tantrell has 2 million shares outstanding and a target capital structure consisting of 40 percent debt. Tantrell's debt interest rate is 8 percent. Assume that the risk-free rate of interest is 3 percent and the market risk premium is 7 percent. Tantrell's free cash flow (FCF0) is $3 million per year and is expected to grow at a constant rate of 6 percent a year; its beta is 1.2. Tantrell has $5 million in debt. The tax rate for both companies is 30 percent. Calculate the required rate of return on equity using equation: rs= KRF + RPM(b).
There are four more parts to this problem.
On top of the final going live at 12 a.m. this morning, our butthead instructor posted yet another discussion question on the boards at the same time. Because, you know, assigning a final that will take every spare moment between now and Sunday night when it's due just isn't enough. Discussion is 15% of our grade, so you bet your bippy we have to respond. Here's the discussion question:
Use the page of recent foreign exchange rates from FT.com. in the lecture to determine how many, if any of the currencies are selling at a premium to the dollar, based on 1 year forward prices. Be sure to take note of the significance of how the currencies are expressed in the market - direct or indirect terms.
WTF.
I have developed an intense dislike for the professor, simply due to the sheer volume of work the man feels he must assign. I call it, "Death by Advanced Financial Management."
I want this class to be over.
posted by Amy at 8:07 AM
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