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UNIVERSIDAD DEL PACFICO

Cdigo
DEPARTAMENTO ACADMICO DE CONTABILIDAD
FINANZAS CORPORATIVAS
AO 2011 - SEGUNDO SEMESTRE
Profesor: Samuel Mongrut

Tiempo: 02 horas

FINAL EXAM

1. Five years ago Karla Cabellos bought the company "Musique" for 4 million
dollars, one million dallar more than its book value at that time. With the
Company, Karla hired a research and development team dedicated to
producing and manufacturing new types of vinyl capable of reproducing music
with high fidelity, such the old vinyl, but at the same time resistant to scratches.
During year 2011, they managed to develop such type of vinyl and to put it
ready for the market. The following tables show the Balance Sheet and the
Profit and Loss Statement of the company for 2011.

BalanceSheet
Company "Musique"
(In Thousands of dollars at December2011)

Assets US$ Labilities US$

Cash 100 Account Paya bles 100
Account Receivables 1000 Long-Term Debt 900
lnventory 1500
Goodwill 3000 Equity
Cumulative Amortization -1000 Social Capital 3000
Fixed Assets 1500 Retained Earnings 1600
Cumulative Depreciation -500
Total 5600 Total 5600

Profit and LossStatement

Company "Musique"
{In thousands of dollars for the year 2011)

US$
Sales 6000
Cost of goods sold -3000
GrossMargin 3000
Sales and Administrative Expenses -500
Amortization of Goodwill -200
Depreciation of fixed assets -100
Expenses in Research and Development -1000
Extraordinary gains and losses -500
Earnings befare interests and taxes 700
lnterest -100
Earnings befare taxes 600
Taxes (30%) -180
Net income 420
Given the previous information you are being asked to answer the following
questions:

1.1 Estimate the lnvested Capital of the Company "Musique" for year 2011.
Note: Take into account only the accounts that reflect invested capital
with a cost for the company in arder to generate the profit from the core
business. (02 points)
Answer:
IC. z: NWc +- R-f + (/HvC - PNc..)

\)h.JC...: AC-PC.. .:: IGO + \OC)O -t' ISQ - iC>~ ;::"2S\J'0

fW
Alllc.-PNL
- ,soa-Sa\:l=IQC)Q
o 3ciO<> ~-ooti "'l!OO y \

+C..::: '2 seo t-' oco 1-21 : 5 00

1.2 Estimate the corresponding Net Operating Profit Less Adjusted Taxes
(NOPAT)foryear2011 (02 points)

Answer:

--
1 .3 lf the unlevered cost of equity is 15%, the cost of debt is 10% and the
total market capitalization of the company is US$ 5100 dollars, what is
the levered cost of equity for the company? Note: The company long-
term is quoted in the capital marketwith a ratingAAA (02 points)
Answer:

Acc1o'fl~ 'J)e.v~
r~ S,1 ~ \ 1 16.3~1-
e,
lo5k_ IS v. I a 'l.

h/ KC {2.5~ /. 1, (o Lt -' /

1.4 Estimate the company economicvalue added (EVA) for the year 2011.
lnterpret the result (02 points)
Answer:

EV ft::: tJOPf}, ., [l+C.) (wAcc.)]

) e
l~ v A : ~ ~o - C. '5 f,oo"') l J 4, 1 ~-; y

3
 1 .5 Do you agree with the following statement from Prof. Damodaran (2001,
p. 821) " ... Economic Value Added is an approach skewed toward
assets-in- place and away from future growth ... " Explain your answer.
(02 points)

Answer:

El Evfi rf'N.ttlt QA svf"pLv.s / ~ V~ ~tf1J ~

{? s ~ f o r- \}V'r'-C\ ~o.., r.r 0 tl 5 cv't)1, ~.S ~ l.{)V

e t~t-s~ ov- J--tv ? W',ac:i-o Qk)e1~_. Bel() eQf-e-.-

J,&~ es~~\~ ""f~c{cl ffolt~o. ~
0~ V -U 't. VA se, ~<A, ~ \os V'\l_j f/h, V.'.)o

f~ ct.i V{l~ U6Cl.f'{' ~ 'YV'-oci ~ f>~

~~~u~,,, 3tN") ~jo fY\IJ fo<'-b. .e}~
h>!-v ' J t le:., 0rVpres~ e.) f;Yfl

2. Mrs. Cabellos hired Mr. Sergio Medina to help her to establish a proper
dividend policy for the company. During the last five years, the Company
"Musique" had a net income annual growth rate of 15% and Mr. Medina is
thinking that this growth rate could be kept into the future. lf the dividend
payout ratio was 25% for 2011, you are being ask to answer the following
questions:

2.1 What will be the distributed dividends in year 2012 if the company
follows a policy of growingdividends? (01 point)
Answer:

'f'Ci\,-\-to 2..0 '1 :; zs 1 J IV\Q~ l.C)) C.. .:: ( 0-2~ x 4'2DJ t \ ~-lSJ
~ z: IS"/.
::; \US k \,\s/
""~ , 'l\cornt z: '1 lt \J
- t2.o.1S

4
2.2 What will be the distributed dividends in year 2012 if the company
follows a policy of constant dividend payout? (01 point)

Answer:

\QS
------,.
Lf c.C)
.::e o 1 '2 -5

D. 2S >< 4 g 3 -

2.3 lf the company is facing a capital budget of US$ 426,000 dollars for the
year 2012 and it is operating at its optimal capital structure, what would
be the distributed dividends in year 2012 if the company follows a
residual approach? (01 point)
Answer:
. JJivl~ zo,?..
U~~
= 1, IS~ '11 '2,() .::. ~ 63

<.'.) F...-rv~cs de mf(/('5ot'I -

1) IVl~os ~l~~ .:::

2.4
Explain your answer. r/
Which of the previous dividend policies is the better for the company?
(01 point)

Answer: fJ
l"" '3 ~"" 0 o W-W,. 0 ~
~e_ ~ 1 v-,~~c)
~~ j se. re

5
3. During the last year, Mrs. lrma Tam financia! manager of "Papelito Company''
has been worried about the decreasing level of monthly credit sales, which on
average are about US$ 80,000 dollars and also with a decreasing market
share dueto the entrance of its main competitor "Arts Company". According to
the new sales manager, Mr. Victor Quispe, "Arts Company'' has "stolen"
customers dueto an aggressive credit policy that goes with a discount for early
payment of 10/30, n/60. Given this situation, Mrs. Tam has decided ease the
company credit policy by changing its current discount for early payment from
5/30, n/60 to 20/30, n/60. The new credit policy for "Papelito Company" is
expected to raise the level of monthly credit sales to US$ 120,000 dollars and
to increase the proportion of credit sales that will take the discount for early
payment from 40% to 60% of the average monthly credit sales.

In the other hand, Mrs. Tam has decided to avoid the opportunity cost of having
cash in the company and she has established the policy of investing any
excess of cash in short-term fixed income securities with a variable cost of US$
0.002 anda fixed cost of US$ 30 dollars per deposit. However, whenever she
has to withdraw part of this investment, her broker will charge a variable cost of
US$ 0.004 dollars anda fixed cost of US$ 40 dollars per withdrawal. Given this
information you are asked to:

3.1 Determine the monthly opportunity cost of having cash for "Papelito
Company" assuming that its providers are offering a discount for early
payment of 20/30, n/60. (02 points)

Answer:

( \ - a "2.') l \ + e, 05~ f 36S) ' -30

Co,;,, = -\
3'75

'3GS

lt.ft - \ \ +
'2.,::\1.50351.. j -\ - \ L\ .1 YY2..Di\
....,

3G.S
'/1
) -
1 tM -. \ \ -+ l{ . 103 Zl~ _, 1 ::; 2.5 3''3(5

6
3.2 What is the minimum monthly cost of managing cash far "Papelito
Company"? (02 points)

Answer:

3.3 lf the annual effective opportunity cost for "Papelito Company'' with the
previous discount for early payment was 7%, lt is convenient or not for
the company to implement the new discount for early payment equal to
20/30, n/60? (02 points)