strategic financial management; exercises

Robert Alan Hill
Strategic Financial Management:
Exercises
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2

R.A. Hill
Strategic Financial Management
Exercises
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3

Strategic Financial Management Exercises
1
st
edition
© 2009 R.A. Hill &
bookboon.com
ISBN 978-87-7061-426-9
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Strategic Financial Management Exercises
4
Contents
Contents
About the Author 7
Part One: An Introduction 8
1 Finance – An Overview 9
Introduction 9
Exercise 1.1: Modern Finance eory 9

Exercise 1.2: e Nature and Scope of Financial Strategy 14
Summary and Conclusions 16
Part Two: e Investment Decision 17
2 Capital Budgeting Under Conditions of Certainty 18
Introduction 18
Exercise 2.1: Liquidity, Protability and Project PV 19
Exercise 2.2: IRR Inadequacies and the Case for NPV 22
Summary and Conclusions 25
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Strategic Financial Management Exercises
5
Contents
3 Capital Budgeting and the Case for NPV 26
Introduction 26

Exercise 3.1: IRR and NPV Maximisation 26
Exercise 3.2: Relevant Cash Flows, Taxation and Purchasing Power Risk 31
Summary and Conclusions 37
4 e Treatment of Uncertainty 38
Introduction 38
Exercise 4.2: Decision Trees and Risk Analyses 46
Summary and Conclusions 51
Part ree: e Finance Decision 52
5 Equity Valuation the Cost of Capital 53
Introduction 53
Exercise 5.1: Dividend Valuation and Capital Cost 53
Exercise 5.2: Dividend Irrelevancy and Capital Cost 61
Summary and Conclusions 68
360°
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