Math 5621 (369) Financial Mathematics II

(Applied Mathematics of Corporate Finance)

Fall 2012

Instructor – James G. Bridgeman

Opportunity Cost of Capital and WACC

The solution to Q14 in the financial analysis handout is incorrect.  Correct is 14(a) .0847 and 14(b) .1429.  Make sure you can get those answers.  Extra credit to anyone who can figure out how the authors (or the grad student who came up with the solutions) got their incorrect answers.

The solution manual has an error for exercise 2.8.  You should be able to spot the error yourself, but ask me if you don’t see it.

The solution manual has an error for exercise 5.14 part (b).  A hint for the correct solution: when you sell something short you get cash in return.

Final exam is here.  Exam Solutions are here.  Solution spreadsheet is here

Grades for the exam and for the term papers will be posted here by the end of the weekend and final course grades on the registrar’s website.

Cumulative assignments (most recent assignment at top)

(Final)

Do exercises 16.1, 16.5, 16.6, 16.7, 16.8 and 16.10

Study sections 16A-D and 16G

Do exercises 15.1-15.9, 15.11-15.15, 15.17-15.18, and 15.20-15.21

Study Section 14C and Sections 15A-15J

Study sections 7G, H, and I and read 7J and 7K for background

Do exercises 11.1, 11.3, 11.4, 11.8, and 11.9

Study Chapter 11 sections A, D, E, F and G (read the other sections for background only)

Do exercises 10.1, 10.2, 10.5, 10.6, 10.8

Study Chapter 10, sections A, C, E, and F (read the other sections for background only)

Submit a topic for your term paper by Friday 10-12 in writing (if you are stuck for a topic, look at trinomial default model above, follow the instructions and write a paper about it and what you learned from it.)

Do exercises 6.2-6.18, 6.21

Study Chapter 6

Do exercises 5.3-5.7, 5.9-5.11, and 5.13-5.14; make sure you understand exercise 5.8 (but no need to prove)

Study Chapter 5

Read chapters 3 and 4 for background only

Do exercises 14.1 thru 14.5

Study Chapter 14, section B … keep connections with financial analysis statement handout, chapter 2 and chapter 14A in mind.

Work through Chapter 14A again but drop the assumption that maintenance investment exactly equals depreciation plus amortization.

Study Chapter 7, sections A-E

Study Chapter 14, section A … keep in mind the connections with chapter 2 and with financial statements

Do exercises 2.1 thru 2.11

Study Chapter 2 C-H