Finance Management

Finance ManagementPaper details:THE PROBLEMS MUST BE ANSWERED IN ESSAY FORMAT – PLEASE EXPLAIN EACH THEORY –1.Assume that a public corporation has 33,000,000 shares outstanding and faces a marginal tax rate of 30%. First, you are to create the necessary Balance Sheets and Income Statements and then calculate the annual Cash Flow from Assets (aka: CFFA or Free Cash Flows (FCF)) for this corporation — there is no need to do the Cash Flow Identity supplement. A constraint here, however, is that your CFFA must range between $50,000,000 and $60,000,000 annually (you may not use any of your prior produce balance sheets or income statement). Second, after calculating CFFA, you are to estimate the intrinsic value of this corporation. You are to assume that this corporation and its stock is a constant-growth perpetuity. You also know that P_0=$52.50, D_0=$2.50, g=4% (growth rate in both dividends and CFFA) and that this corporation is financed 100% with equity.2.Explain the superior capital budgeting methodology.3.When the Profitability Index for a project equals 1, the NPV of the project equals 0. First, is this statement true or false? Second, explain your answer, i.e. provide a numerical example supporting your true or false choice. Highlight, your true false choice in yellow.4.Explain the Coefficient of Variation (CV), which is the appropriate standalone risk measure. Specifically, you are to create a known probability distribution for two assets (Asset A and Asset B). You will then calculate the E(R) (expected return) and s (standard deviation) for each asset. From there, you will calculate the CV for each asset (?CV?_A and ?CV?_B) and choose which asset provides the best set of risk-adjusted returns. Constraints here are:There must be three states of the world (High, Average, Low)E(R_A )?E(R_B)Assume investors have an aversion to risk. That is, they like E(R) but dislike s. More specifically, they prefer fewer units of risk per unit of return.


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