Q FINE 332 Corporate Finance I Module 9 Final Exam 1. JTM is considering purchasing a 3D printer. The price is $945,000. The dealer is offering a payment plan in which JTM pays 20% down and finances the rest over 24 months at $34,450/month. What is the implicit financing rate? If JTM's WACC is 7%, should it accept the financing offer? 2. ABC FBO is looking to buy another FBO. It is being offered an established FBO whose owner wants to sell. ABC's CFO gave you the numbers and asked you to calculate its price. The CFO asks that you use a 7.5% discount rate and a 2.75% growth rate for year 5 and on. What should ABC consider paying? The data you need is in the template provided! 3. JTM's treasury office is looking at buying a bond to earn some money on its cash balances. It has a number of options. All the prices are given to you in the template provided. Please calculate the prices for bonds A-D and the yields for bonds E-H. 4. JTM a. JTM pays its C-suite officers with stock options. Treasury asked you to price them. JTM's stock trades at $22.50/share; U.S. Treasurys, aka the risk-free rate, yield 1.50% and stock's volatility is 22%. The details of the stock option offers are below. What are the prices of the options? CEO CFO CIO Exercise Price 20.00 18.00 17.00 Maturity (yrs.) 14.0 10.0 9.0 b. JTM's treasury unit bought jet fuel futures to hedge its expenses. It uses 39feM gallon/yr. Each contract runs 42,000 gallons. The contract price locked JTM at $2.6111/gal. At maturity, JTM found that the spot price was $2.6050/gal. In effect, had they not taken the futures, they'd have paid less. What was the loss on the contract? FINE 332 | Jan ’22 | worldwide.erau.edu All rights are reserved. The material contained herein is the copyright property of Embry -Riddle Aeronautical University, Daytona Beach, Florida, 32114. No part of this material may be reproduced, stored in a retrieval system, or transmitted in any form, electronic, mechanical, photocopying, recording or otherwise without the prior written consent of the University.