**METHODOLOGICAL INSTRUCTIONS AND COMMENTS ON TEST SOLUTION**

**Test 1.** Economic profit differs from accounting profit in that it takes into account __opportunity costs__ , but not actual costs

__For reference:__

__For reference:__

*Net operating profit after taxes* (

*Net Operating Profit After Tax, NOPAT*).

This is post-tax operating profit, excluding accrued interest on loans and borrowings received. When calculating it, all income and expenses of the enterprise reflected in the income statement, including income tax, are taken into account. To determine NOPAT, interest payable must be added to the net profit of the reporting period.

*Operating income before taxes, depreciation and interest on loans* (

*EBITDA*).

This is a financial and analytical indicator that reflects the financial result of the company, excluding the effect of the effect of the capital structure (interest paid on borrowed funds), tax rates and depreciation.

EBITDA allows you to determine the effectiveness of the company, regardless of its debt to various creditors and the state, as well as the depreciation method. The indicator is useful when comparing enterprises in the same industry, but with a different capital structure. It allows you to compare companies with different accounting policies (for example, in terms of depreciation or asset revaluation) and different taxation conditions.

**Test 3** . The optimal portfolio of an investor always belongs to the set of admissible portfolios

**Test 10.** Profit after taxes and before interest was 350 million rubles, depreciation for the period – 75 million rubles, the company did not invest in working capital, but purchased equipment in the amount of 30 million rubles. What is the free cash flow to the firm for withdrawal by all investors?

To solve this test, you should use the following formula, presented schematically:

**Test 11** . The company’s net profit for the period amounted to 150 million rubles, investments in working capital amounted to 40 million rubles, equipment was also purchased in the amount of 70 million rubles, depreciation in the amount of 30 million rubles was charged for the period. The company did not take out a new loan and did not repay the past long-term debt. What is the cash flow that is free for the owners to withdraw?

To solve this test, you should use the following formula, presented schematically:

**Test 12. The** optimal capital structure is the capital structure that maximizes the company’s market value.

__For reference:__

*The capital structure* is the ratio between the sources of equity and debt used to finance the company’s assets.

**Test 13** . When calculating the weighted average cost of capital, the following sources of funding will be taken into account:

– Bank loans

– Syndicated loan

– Bond loan

– Undestributed profits

__For reference:__

*A syndicated loan* **is** a loan provided to the borrower by at least two lenders (a syndicate of lenders) participating in this transaction in certain shares within the framework, as a rule, of a single loan agreement.

**Test 17.** Accounts payable at the end of the period is 33 million rubles, the balance of funds on the account is 26 million rubles, accounts receivable is 13 million rubles, stocks of materials in the warehouse at the end of the period are 7 million rubles.

How many million rubles is the company’s net working capital? (Only a number must be indicated in the answer. For example, if the answer is 30 million rubles, then 30 must be indicated in the cell)

Formula for calculation:

**= (** 26 + 13 +7) – 33 u003d 13 million rubles.

**Test 22** . *Value discounting* is the process of bringing the future value of money to its present value by subtracting the appropriate amount of interest from its future value.

– the process of converting the future value of the cash flow into the current one.

**Test 23** . What is the present value of 600 rubles, which will be received in 7 years, at a rate of 8%?

To solve the problem, the formula for discounting cash flows is used:

where is the discount factor for compound interest.

**Test 24** . Rank the following alternatives in ascending order of investor attractiveness:

To solve the problem, the formula for discounting cash flows is used (see Test 23).

**Test 27** . What is the future value of 700 rubles in 4 years at a rate of 12%?

To solve the problem, the formula for generating (growing) cash flows with compound interest is used:

where *FV* is the future value,

*PV is* the present value,

*r –* interest rate **,** measured in fractions of a unit,

*n* is the term of the financial transaction, years.

^{}– compound interest multiplier.

**Test 28** . The cash flow under the project in a year will be 540 thousand rubles, in two years 200 thousand rubles. The project requires investments today in the amount of 430 thousand rubles. What is the net present value of the project (in thousand rubles) at a discount rate of 13%?

Net present value ( *Net Present Value, NPV* ) can be calculated using the formula:

where ** СF _{t}** are cash flows in time period

*t* **I** – investments in the period of time *t = 0*

**r** – discount rate (required return)

**Test 29** . What is the present value of the annuity with annual payments of 13 thousand rubles, a rate of 13% and a term of 8 years?

*For reference:*

**Annuity** is a *finite* sequence of equal payments made at regular intervals.

The present value of an annuity with payments *C* (no risk) made every period up to time *T is* given by:

In our test:

**Test 30** . The share price at the beginning of the year was 350 rubles, during the year it increased by 30 rubles. During the year, the share was paid a dividend of 20 rubles. per share. What is the return on the stock for the period?

*For reference:*

**The return on shares** ( *d* ) is the sum of the growth in the market value of shares and dividends and is determined by the formula:

**Test 31.** Choose the correct statement:

**d) In a perfect financial market, expected return = required return**

__For reference:__

*Expected return* is the weighted average of the most expected return on a financial instrument. The expected return indicator takes into account all possible incomes and determines the weight of the income, the receipt of which has the highest probability. The expected return is based on the concept of mathematical expectation.

*Required return* – the minimum return that an investor agrees to invest in a project.

Do not confuse *the expected return on* an investment with the *required* return.

*Required yield –* the rate at which cash flows must be discounted in order to obtain their present value ( *Present Value, PV)* – the value of cash flows from the position of the point in time to which the reduction (discounting) is carried out.

The expected return could be:

– higher than required, then *NPV* > 0

– below required, then *NPV* < 0

**In a perfect financial market, expected return = required return.**

__For reference:__

** A perfect financial market** (

*Perfect Financial Market*) is a theoretical construct: a market of free

*competition*, on which rational investors operate, there is no

*uncertainty*and there are no

*transaction*

*costs*for attracting and providing

*financing.*

In a perfect market, it is impossible to get *NPV* > 0 from a financial investment.

In a perfect market, the work of investment analysts would be meaningless.

## Be First to Comment