Investments, 11th Edition (exclude Access Card)
Investments, 11th Edition (exclude Access Card)
11th Edition
ISBN: 9781260201543
Author: Zvi Bodie Professor; Alex Kane; Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 22, Problem 7PS

A

Summary Introduction

To calculate: The investment amount with the broker to trade the September maturity contract.

Introduction: The monthly deposit amount is depending on the previous amount. September deposit value is depending on the March investment. Maturity contracts are agreement based on the period of time.

B

Summary Introduction

To calculate: Return percentage of the net investment at the long side of the contract if future prices to be 2090.

Introduction: Return percentage is ratio of the credit amount to the net investment. Credit amount is the product of the dollar value to the increment.

C

Summary Introduction

To calculate: Return percentage when future price is fall down by 1%

Introduction: Return is the final payment after the maturity period. The percentage value is given compared with the previous value.The March price is fall down by theInvestments, 11th Edition (exclude Access Card), Chapter 22, Problem 7PS Net return percentage is depend on the credit value and decreased value.

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(d) Estimate the value of a share of Cisco common stock using the discounted cash flow (DCF) model as of July 27, 2019 using the following assumptions Assumptions Discount rate (WACC) Common shares outstanding 7.60% 5,029.00 million Net nonoperating obligations (NNO) $(8,747) million NNO is negative, which means that Cisco has net nonoperating investments CSCO ($ millions) DCF Model Reported 2019 Forecast Horizon 2020 Est. 2021 Est. 2022 Est. 2023 Est. Terminal Period Increase in NOA FCFF (NOPAT - Increase in NOA) $ 1241 1303 1368 10673 11207 11767 1437 $ 12354 302 ✓ Present value of horizon FCFF 9918 9679 9445 ✔ 0 × Cum. present value of horizon FCFF $ 0 × Present value of terminal FCFF 0 ☑ Total firm value 0 ☑ NNO -8747 ✓ Firm equity value $ 0 ☑ Shares outstanding (millions) 5029 Stock price per share $ 40.05
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