Silicon Valley Medical Technologies Case Study

Then we can use the following formula to calculate the WACC. The cost of debt is taken to be on an after tax basis to further to account for the depreciation tax shield.

Fraser, L. M., & Ormiston, A. (201). Understanding financial statements (9th ed.). Upper Saddle River, NJ: Prentice Hall.

CitedBrigham, Eugene F. , and Phillip R. Daves. Intermediate Financial Management. 8th ed. Mason: Thomson South-Western, 2004.

This solutions manual provides the answers to all the review questions and end-of-chapter problems in Financial Management: Principles and Practice, by Timothy Gallagher. The answers and the steps taken to obtain the answers are shown. Readers are reminded that in finance there is often more than one answer to a question or to a problem, depending on one‘s viewpoint and assumptions. One answer is

AGENDA 1. 2. 3. 4. 5. Announcements Financial Markets and Net Present Value Survey Results Optional Material (e.g. Cases, Practical

This course focuses on ways in which financial statements reflect business operations and emphasizes use of financial statements in the decision-making process. The course encompasses all business forms and various sectors such as merchandising, manufacturing and service. Students make extensive use of spreadsheet applications to analyze accounting records and financial statements. Prerequisites: COMP100 and MATH114 / 4-4

3. Please do not ask the professor or the invigilator to explain or interpret questions. State any assumptions you feel are necessary.

Whenever there is a question about what assignments are due, please remember this syllabus is considered the ruling document.

Answer: WACC covers computation of SIVMED’s cost of capital in which each category of capital is proportionately weighted. All capital basis - common stock, preferred stock, bonds or any other long-term borrowings – should be listed under SIVMED’s WACC. We determine WACC by multiplying the cost of the corresponding capital component by its proportional weight and then adding: where: Re is a cost of equity Rd is a cost of debt E is a market value of the firm's equity D is a market value of the firm's debt V equals E + D E/V is a proportion of financing that is equity

WACC = Cost of Debt X proportion of debt + Cost of Preferred Stock X Proportion of preferred stock + Cost of equity X proportion of equity

Silicon Valley Medical Technologies - SIVMED was found in San Jose, CA, in 1982 by Kelly’s O’Brien, David Roberts, and Barbara Smalley. O’Brien and Roberts, both MDs, were on the research faculty at the UCLA Medical School at the time; O’Brien specialized in biochemistry and molecular biology, and Roberts specialized in immunology and medical microbiology. Smalley, who has a PhD, served as department chair of the Microbiology Department at UC-Berkeley.

They also help determine the financing needs of a business and analyze alternative methods of financing. Financial analysts use financial forecasts concerning the economic situation, business operations, types of financing available, interest rates, and stock and bond prices to develop an optimal financing plan for the business. Electronic spreadsheet packages, DSS Software, and Web-based groupware can be used to build and manipulate financial

|Personal Financial Planning |Complete the Personal Financial Planning Worksheet located in Appendix B. |Day 7 | |

Parrino, R., Kidwell, D.S., & Bates, T. W. (2012). Fundamentals of Corporate Finance (2nd ed).

Ehrhardt, M.C. & Brigham, E.F. (2011). Financial Management: Theory and Practice, Ed 13. Ohio: South-Western Cengage Learning.