finance exam

Project Description:

this is my finance class. i have 7 questions below, i need you to answers them. each questions has to be 1 to 2 pages. .. use finance vocabulary, need it very quality and quantity answers and professional. about q# 7 last question solve it and send me excel sheet as well. i’ve attached powerpoints in order to get answers and use these books only as references.
1. titman & martin, valuation: the art & science of corporate investment decisions, 3rd. edition, pearson isbn: 9780133479522
2. benninga, financial modeling, 4th edition, mit press. isbn 9780262027281

instructions: answer all 7 questions.

1. compare and contrast the free cash flow to the firm (fcf) and equity free cash flow (efcf) approaches to valuation. chapter # 2 (titman & martin, valuation)

2. explain why net debt is used in weighted average cost of capital calculations. what are the implications if a company has a negative net debt?

3. explain the concepts of duration and modified duration. chapter# 20 (benninga, financial modeling)

4. compare and contrast the three tools used to deal with uncertainty in discounted cash flow analysis: scenario analysis, break-even analysis, and simulation.

5. explain the problem of using a firm-wide weighted average cost of capital for individual projects. explain how you would estimate the discount rate for these projects.

6. explain the concept of value-at-risk (var). explain how var is calculated.

7. in december 1995 boise cascade’s stock had a beta of 0.95. the treasury bill rate at the time was 5.8% and the treasury bond rate was 6.4% the firm had debt outstanding of $1.7 billion and a market value of equity of $1.5 billion; the corporate tax rate was 36%; the market risk premium is 5.5%
a. estimate the cost of equity in the company.
b. estimate the firm’s unlevered beta.
c. assume the term structure of interest gives a 200 bp (basis point – a basis point is 1/100 of a %) spread between treasury securities and the yield on debt with the same rating as boise cascade. calculate the firm’s wa cc.
d. assume boise cascade’s debt has a duration of 5.0. if treasury rates rise to 6.3% and 6.9%, respectively and there is a parallel shift in the corporate debt term structure, estimate:
i. the change in the market value of boise’s debt.
ii. the change in the company’s cost of equity
iii. the change in the firm’s wacc.

thank you in advance
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