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The following cash flows are expected:

10 yearly payments of $60, with the first payment in 3 years from now (first payment at t=3 and last at t=12).
1 payment of $400 in 5 years and 6 months (t=5.5) from now.

What is the NPV of the cash flows if the discount rate is 10% given as an effective annual rate?

Find Scubar Corporation's Cash Flow From Assets (CFFA), also known as Free Cash Flow to the Firm (FCFF), over the year ending 30th June 2013.

Scubar Corp
Income Statement for
year ending 30th June 2013
	$m
Sales	200
COGS	60
Depreciation	20
Rent expense	11
Interest expense	19
Taxable Income	90
Taxes at 30%	27
Net income	63

Scubar Corp
Balance Sheet
as at 30th June	2013	2012
	$m	$m
Inventory	60	50
Trade debtors	19	6
Rent paid in advance	3	2
PPE	420	400
Total assets	502	458

Trade creditors	10	8
Bond liabilities	200	190
Contributed equity	130	130
Retained profits	162	130
Total L and OE	502	458

Note: All figures are given in millions of dollars ($m).

The cash flow from assets was:

Question 321 foreign exchange rate, monetary policy, American and European terms

The market expects the Reserve Bank of Australia (RBA) to increase the policy rate by 25 basis points at their next meeting.

Then unexpectedly, the RBA announce that they will increase the policy rate by 50 basis points due to high future GDP and inflation forecasts.

What do you expect to happen to Australia's exchange rate in the short term? The Australian dollar will:

Question 376 leverage, capital structure, no explanation

Question 459 interest only loan, inflation

In Australia in the 1980's, inflation was around 8% pa, and residential mortgage loan interest rates were around 14%.

In 2013, inflation was around 2.5% pa, and residential mortgage loan interest rates were around 4.5%.

If a person can afford constant mortgage loan payments of $2,000 per month, how much more can they borrow when interest rates are 4.5% pa compared with 14.0% pa?

Give your answer as a proportional increase over the amount you could borrow when interest rates were high ##(V_\text{high rates})##, so:

###\text{Proportional increase} = \dfrac{V_\text{low rates}-V_\text{high rates}}{V_\text{high rates}} ###

Assume that:

Interest rates are expected to be constant over the life of the loan.
Loans are interest-only and have a life of 30 years.
Mortgage loan payments are made every month in arrears and all interest rates are given as annualised percentage rates (APR's) compounding per month.

Question 467 book and market values

Which of the following statements about book and market equity is NOT correct?

(a) The market value of equity of a listed company's common stock is equal to the number of common shares multiplied by the share price.

(b) The book value of equity is the sum of contributed equity, retained profits and reserves.

(c) A company's book value of equity is recorded in its income statement, also known as the 'profit and loss' or the 'statement of financial performance'.

(d) A new company's market value of equity equals its book value of equity the moment that its shares are first sold. From then on, the market value changes continuously but the book value is recorded at historical cost which typically only changes due to retained profits.

(e) To buy all of the firm's shares, generally a price close to the market value of equity will have to be paid.

Question 590 future, market efficiency

Which of the following statements about futures contracts on shares is NOT correct, assuming that markets are efficient?

When an equity future is first negotiated (at t=0):

Question 613 debt terminology

Question 725 return distribution, mean and median returns

Question 742 price gains and returns over time, no explanation

For an asset's price to quintuple (be five times as big, say from $1 to $5) every 5 years, what must be its effective annual capital return?