Calvin glenn – 2301912454

Tugas financial managemtn sesi 7&8

22 oktober 2021

(NIM GENAP)

Sesi 7

Dari PPT

2. In general, early-stage ventures raise debt capital from individuals, venture lenders, and when
profitably entering rapid-growth, possibly other financial institutions. The founding entrepreneurial
team, business angels, and venture capitalists are the primary sources of early-stage equity capital.
In some instances, debt and/or preferred stock convertible into shares of common equity is held by
venture investors. Equity capital for private ventures is estimated by adding together the risk free
rate, an inflation premium, an advisory premium, a liquidity premium, and a hubris projections
premium.

4. Private equity investors own firms that are typically closely held while investors in publicly traded
stocks own firms whose shares trade in a public secondary market.

The cash budget is a type of budget that estimates cash inflows and the use of cash during a specific
period. Here, the sources of cash include receipts from debtors, bill receipts, interest as
loans, dividends on shares, and other incomes from the sale of fixed assets.

On the other hand, examples of cash utilization include payments to creditors, payment
of assets purchased, and daily routine payments such as wages, rent, postage, telephone, and
entertainment expenses.

The cash budget shows the budgeted cash receipts and cash disbursements for a future period of
time. The cash inflows and cash outflows are brought together in a cash budget to show the
expected cash flows of the company.

6. While accountants recognize that financial capital has a cost and recommend its complete
inclusion in performance appraisal and decision making, historical accounting for this cost is
incomplete, at least in formal financial statements. Unlike debt, much of equity’s cost is not an
expense in a traditional accounting sense (with documentation); only a part of this cost (e.g.,
dividends) is reflected in historical financial statements. There is virtually no historical accounting for
the nondividend component of equity cost, even though it is clear that the nondividend cost
component increases with cuts in dividends.

8. The Cash Conversion Cycle (CCC) is a metric that shows the amount of time it takes a company to
convert its investments in inventory to cash. The conversion cycle formula measures the amount of
time, in days, it takes for a company to turn its resource inputs into cash. Learn more in
CFI’s Financial Analysis Fundamentals Course.

The cash conversion cycle formula is as follows:

 Cash Conversion Cycle = DIO + DSO – DPO

Most early-stage financing is high-cost equity capital. However, the opportunity to use usually less-
costly debt increases as a successful venture progresses through its life cycle. Thus, the WACC is
likely to decrease over time for a successful venture.

Dari Wa

9.

a.

b.
c.

d.
Sesi 8

1.
a. Risk free rate = real rate + inflation premium
Inflation premium = risk free rate – real rate = 8% - 3% = 5%
b. Risk premium = nominal interest rate – risk free interest rate
= 12% - 8% = 4%
c. Risk premium = liquidity premium + default risk premium
Default risk premium = risk premium – liquidity premium = 4% – 1% = 3%
2.
a. Maturity risk premium: 7% - 4.5% = 3.5%
b. Maturity risk premium: 9.5% - 6% = 3.5%
c. 1 Year: 6% - 4.5% = 1.5%
5 Year: 9.5% - 7% = 2.5%
3. .
a. Expected rate of return = (.25) x (-20%) + (.50) x (15%) + (.25) x (30%) = 10%
b. Variance = (.25) x (-20% - 10%)^2 + (.5) x (15% - 10%)^2 +(.25) x (30% - 10%)^2 =337.5
Standard deviation = (Variance)^(1/2) = (337.5)^(1/2) = 18.37%
c. Coefficient of variation = (standard deviation)/(expected return) =
(18.37%)/(10%)=1.837. The coefficient of variation for this venture would be considered
to be more risky since it is above 1.5.

4. .
a. Expected rate of return = (.15)(500.0%) + (.35)(15.0%) + (.50)(-100.0%) = 75% + 5.25% +
(-50%) = 30.25%
 b. Variance = (.15) x (500% - 30.25%)^2 + (.35) x (15% - 30.25%)^2 + (.50) x (-100% -
30.25%)^2 = .15 x 220,665.06 + .35 x 232.56 + .50 x 16,965.06 = 33,099.76 + 81.41 +
8,482.53 = 41,663.69
Standard deviation = (Variance)^(1/2) = (41,663.69)^(1/2) = 204.12%
c. Coefficient of variation = (standard deviation)/(expected return) = (204.12%)/(30.25%) =
6.748. The coefficient of variation for this new venture would be considered to be more
risky relative to prior venture investments since it is above 4.0.
5. .
a. % Return = (cash flow + ending value – beginning value)/(beginning value)
Return on VEN1 = ($75,000 + $600,000 - $300,000)/ $300,000 = 125.00%
Return on VEN2 = ($50,000 + $300,000 - $400,000)/ $400,000 = -12.50%
Return on VEN3 = (-$60,000 + $360,000 - $300,000)/ $300,000 = 0.00%
b. Expected return = (.3) x (125%) + (.4) x (-12.5%) + (.3) x (0.0%) = 32.50%
c. Variance = (.3) x (125% - 32.5%)^2 + (.4) x (-12.50% - 32.5%)^2 + (.3) x (0% - 32.5%)^2 =
3,693.75
Standard deviation = (Variance)^.5 = (3,693.75)^.5 = 60.78%
d. Coefficient of variation = (standard deviation) / (expected return) = (60.78%/32.50%) =
1.870