Math 5621 (369) Financial Mathematics II

(Applied Mathematics of Corporate Finance)

Spring 2014

Instructor – James G. Bridgeman

Term Paper is due by 5 PM Monday May 5, in my office (under the door is OK), in my Math Department mailbox, or in my email.

Final Exam  -- Final Exam Solutions --  Solutions Spreadsheet  ---  Grading Worksheet  Course grades have been posted to the registrar’s site

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.

Cumulative assignments (most recent assignment at top)

(Final)

Read ch. 9 for background only

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

Read for background 15K-L

Study Section 14C and Sections 15A-15J

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)

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

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 – write down formulas, now more complicated.

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

Study Opportunity Cost of Capital and WACC (download it just above)

Read for background Chapter 1 and Chapter 2, sections A and B