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    Nanyang Business School AB1201 Financial Management Tutorial 1: Introduction (Common Questions)

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    This document contains 5 questions from a tutorial on financial management that discuss various topics: 1) Whether there is still a tax disadvantage to setting up a corporation over a sole proprietorship in Singapore given that dividends are not taxed. 2) Which of three estimates of a stock's intrinsic value from different sources (roommate, analyst, company CFO) would be most trusted and why. 3) How stockholders might view a company's donations to charity or pollution of local rivers, and how these actions could affect stock price. 4) How increased spending on R&D this year would affect earnings per share this year versus intrinsic value and stock price in the future. 5

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    Nanyang Business School AB1201 Financial Management Tutorial 1: Introduction (Common Questions)

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    asdsadsa
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    This document contains 5 questions from a tutorial on financial management that discuss various topics: 1) Whether there is still a tax disadvantage to setting up a corporation over a sole proprietorship in Singapore given that dividends are not taxed. 2) Which of three estimates of a stock's intrinsic value from different sources (roommate, analyst, company CFO) would be most trusted and why. 3) How stockholders might view a company's donations to charity or pollution of local rivers, and how these actions could affect stock price. 4) How increased spending on R&D this year would affect earnings per share this year versus intrinsic value and stock price in the future. 5

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    This document contains 5 questions from a tutorial on financial management that discuss various topics: 1) Whether there is still a tax disadvantage to setting up a corporation over a sole proprietorship in Singapore given that dividends are not taxed. 2) Which of three estimates of a stock's intrinsic value from different sources (roommate, analyst, company CFO) would be most trusted and why. 3) How stockholders might view a company's donations to charity or pollution of local rivers, and how these actions could affect stock price. 4) How increased spending on R&D this year would affect earnings per share this year versus intrinsic value and stock price in the future. 5

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    120 views1 page

    Nanyang Business School AB1201 Financial Management Tutorial 1: Introduction (Common Questions)

    Uploaded by

    asdsadsa
    This document contains 5 questions from a tutorial on financial management that discuss various topics: 1) Whether there is still a tax disadvantage to setting up a corporation over a sole proprietorship in Singapore given that dividends are not taxed. 2) Which of three estimates of a stock's intrinsic value from different sources (roommate, analyst, company CFO) would be most trusted and why. 3) How stockholders might view a company's donations to charity or pollution of local rivers, and how these actions could affect stock price. 4) How increased spending on R&D this year would affect earnings per share this year versus intrinsic value and stock price in the future. 5

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    Strictly for course AB1201 internal circulation only.

    Nanyang Business School


    AB1201 Financial Management
    Tutorial 1: Introduction
    (Common Questions)

    1) In the U.S., corporations are subjected to double taxation. In Singapore, dividends to


    shareholders of corporations are not taxed. In this case, would there still be a tax
    disadvantage to setting up a corporation rather than a sole proprietorship in Singapore?

    2) Suppose three honest individuals gave you their estimates of Stock Xs intrinsic value.
    One person is your current roommate, the second person is a professional security analyst
    with an excellent reputation on Wall Street, and the third person is Company Xs CFO. If
    the three estimates differed, in which one would you have the most confidence? Why?

    3) The president of Southern Semiconductor Corporation (SSC) made this statement in the
    companys annual report: SSCs primary goal is to increase the value of our common
    stockholders equity. The newspapers also reported the following news on SSC.
    a) The company contributed $1.5 million to the symphony orchestra in Birmingham,
    Alabama, its headquarters city.
    b) In an effort to reduce cost, SSCs plant released untreated industrial waste into the
    nearby river.
    Discuss how SSCs stockholders might view each of these actions, and how they might
    affect the stock price.

    4) This year, Edmund Enterprises spent a huge sum of money on research and development
    (R&D) to develop a new product, which will be launched in a few years time. While the
    new product wont have much effect on performance in the short run, it is expected to
    increase future profits significantly. What effect will this increase in R&D have on
    Edmund Enterprises earnings per share (EPS) this year? Would there be any effect on the
    companys intrinsic value and stock price?

    5) If a companys board of directors wants management to maximize shareholder wealth,


    should the CEOs compensation be set as a fixed dollar amount, or should the
    compensation depend on how well the firm performs? If it is to be based on performance,
    how should performance be measured?

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