lOMoAR cPSD| 45476132
VIETNAM NATIONAL UNIVERSITY OF AGRICULTURE FINAL EXAMINATION Department of Finance Subject: Corporate Finance Time duration: 60 minutes
Exam category: Writing & open book
Exam paper number: 100
ABC company is considering undertaking an investment project. The initial
investment of the project will be 15xyz millions dollars of which the investment in fixed
assets will be 80% and the investment in net working capital will be 20%. The fixed asset
will be depreciated using straight-line method over a 5-year effective life. Also, the
company will finance the long term assets (fixed assets) by taking a bank loan with the
principal of 70% of the value of the assets. The loan will be paid by an annuity in three
years with the first payment made 1 year after the completion of initial investment and the interest rate is 5%/year.
The revenue resulted from running project after innitial investment will be 6xyz
million dollars in the first year and then increase in each year for the last four years with
the constant rate of 8% per year. Suppose that the total cost (excluding interest and
depreciation expenses) in each year will be 4z% of total revenue. In addition, suppose that
in each year, the company will incease short term assets with the ammount of 5% and
short term debt of 3% of total revenue.
At year 2 the company will sell some fixed assets with the sold book value equating
to 2% of total revenue, the selling cost will be 10% of the selling price and the selling price
will be one and a half of the sold book value. Additionally, in the year the company will
buy some new fixed assets with the amount equating 3% of total revenue. This asset will
have the economic life of 3 years and will be depreciated using straightline method.
At the end of the year five, the company will close the project and liquidate all the
assets. The selling price of fixed assets will be 3% and the selling cost is 1% of total revenue in the year. Tax rate is 20% 1. (3 marks)
Please make the payment schedule for loan taken to buy fixed assets in initial investment. 2/ ( 4 marks)
Please calculate the Free Cash Flows (FCF) and Free Cash Flow to Equity (FCFE) for each
year of the investment project. 3/ (3 marks)
Please indicate if the company should undertake project or not if the discount rate is 10%/year
Notes: x,y,z in any numeric information are the three last numbers in your student code.
Approved by department of finance Exam composer
MSC Nguyen Thi Huong
Ph.D. Hoang Si Thinh lOMoAR cPSD| 45476132
VIETNAM NATIONAL UNIVERSITY OF AGRICULTURE Department of Finance FINAL EXAMINATION Subject: Corporate Finance Time duration: 60 minutes
Exam category: Writing & open book
Exam paper number: 200
MNH company is considering undertaking an investment project. The initial
investment of the project will be 20xyz millions dollars of which the investment in fixed
assets will be 80% and the investment in net working capital will be 20%. The fixed asset
will be depreciated using straight-line method over a 5-year effective life. Also, the
company will finance the long term assets (fixed assets) by taking a bank loan with the
principal of 70% of the value of the assets. The loan will be paid by an annuity in three
years with the first payment made 1 year after the completion of initial investment and the interest rate is 5%/year.
The revenue resulted from running project after innitial investment will be 6xyz
million dollars in the first year and then increase in each year for the last four years with
the constant rate of 8% per year. Suppose that the total cost (excluding interest and
depreciation expenses) in each year will be 4z% of total revenue. In addition, suppose that
in each year, the company will incease short term assets with the ammount of 5% and
short term debt of 3% of total revenue.
In year 3 the company will sell some fixed assets with the sold book value equating
to 2% of total revenue, the selling cost will be 10% of the selling price and the selling price
will be one and a half of the sold book value. Additionally, in the year the company will
buy some new fixed assets with the amount equating 3% of total revenue. This asset will
have the economic life of 2 years and will be depreciated using straightline method.
At the end of the year five, the company will close the project and liquidate all the
assets. The selling price of fixed assets will be 3% and the selling cost is 1% of total revenue in the year. Tax rate is 20% 1. (3 marks)
Please make the payment schedule for loan taken to buy fixed assets in initial investment. 2/ ( 4 marks)
Please calculate the Free Cash Flows (FCF) and Free Cash Flow to Equity (FCFE) for each
year of the investment project. 3/ (3 marks)
Please indicate if the company should undertake project or not if the discount rate is 12%/year
Notes: x,y,z in any numeric information are the three last numbers in your student code.
Approved by department of finance Exam composer
MSC Nguyen Thi Huong
Ph.D. Hoang Si Thinh