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FINC 5880Name______________________________________Final ExaminationSession 9 Current Balance SheetCurrent LiabilitiesRetained earningsTotal AssetsTotal claimsAlternative 1: Common stockTax rate # new sharesNew financingPar value per shareExisting LoanInterest rateAlternative 2: DebenturesInterest amount - oldExercise price per warrantInterest amount - new# bonds to raise 2MPresident ownswarrants per bondShares outstandingNew money raisedAddition to parAdditional paid-in capitalTotal assetsd. Calculate the debt ratio under both alternativese. Which alternative do you recommend and why?Delivery MonthOpenHighLowSettleChangeOpen Interest(1)(2)(3)(4)(5)(6)(7)Dec103'14102'11102'17Mar102'23100'28101'01June101'14101'26Sale of current assetsSale of fixed assetsTrustee costsBeforeDefaultBalance SheetCurrent AssetsAccounts payableNet fixed assets Accrued taxesAccrued wagesNotes payable Total current liabilitiesFirst-mortgage bondsSecond-mortgage bondsSubordinated debenturesCommon stocka. How much will SHs receive?b. How much will mortgage bondholders receive?c. How much will priority creditors receive?a. Calculate the expected return of the portfolio.b. Calculate the standard deviation of the portfolio.c. Calculate the beta of the portfolio99'32Stock A: expected returnStock A: standard deviationStock B: expected returnStock B: standard deviationCorrelation between A and BStock A betaStock B beta% portfolio in Stock A% portfolio in Stock BPortfolio: expected returnPortfolio: standard deviationCommon Stock, Par $0.25FACTS# bonds to raise new capitalFutures Prices: Treasury Bonds--$100,000; Pts. 32nds of 100%99'08b. Unlevered cost of equityGrowth rate after Year 3Year 1Year 2Year 3Free Cash Flowa. Calculate the expected free cash flow for Year 4. What might cause the free cash flow to be lower?b. Calculate the horizon value of the unlevered operations. c. Calculate the total value of unlevered operations at Year 0.FCF for year 4 = FCF Year 3*(1+growth rate)Horizon value = P3 = FCF4/(k-g)Total value of unlevered operations = FCF1/(1+k)+ FCF2/(1+k)^2 +(FCF3+P3)/(1+k)^3Name: Molly Molina
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