were estimated regarding the construction of a new plant. Cost of plant 4‚000‚000 Annual cash inflows 4‚000‚000 Annual cash outflows 3‚600‚000 Estimated useful life 15 years Salvage value 2‚000‚000 Discount rate 11% Juan Optimist believes that these figures understate the true potential value of the plant. He suggests that by manufacturing its own bikes the company will benefit from a “buy Filipino” patriotism that he believes is common among bikers. He also notes that the firms
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* Know goal of the financial manager * Define agency problem * Describe the four areas of Ratio Analysis (liquidity‚ activity‚ solvency‚ and profitability) and their purpose‚ know information that gives ratios value and meaning. Chapter 5 (15%) * Time Value of Money: PV‚ PMT of loan‚ FV of annuity‚ growth rate and mixed stream of cash flows Chapter 6-8 (46%) * Expected return‚ Standard deviation and Coefficient of variation of a single asset (Prob 8-5 but also find Standard
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of the time was used to review for the final exam. One of the things that worked for this course was the Khan Academy educational videos. Even though they seemed to teach on a simplistic level‚ they start from the basics and add on new techniques and information on top of earlier learned subjects. Understanding how to analyze data by using analytical tools and techniques was one of the things that were learned in this course. Another was using formulas to calculate time value of money and utilizing
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Capitalisation without growth Earnings Capitalisation with growth Price-Earning Multiple Model 3. Free Cash Flow Models Discounted Free Cash Flow to Equity (FCFE) model Discounted Free Cash Flow to the Firm (FCFF) model 4. Book Valuation (Net Asset Value) Model Discounted Dividend Model The dividend discount model (DDM) is a method of valuing a company based on the theory that a stock is worth the
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is 320‚000. Part Two “Caution is warranted when using PE ration to value stocks”.There are two main reasons: PE Ratio cannot show the value of stock comprehesively In some cases‚ there will be a fall or up of share prices because of some market fears about the economy even the company still has a stable situation.Sometimes‚ when there is economic crisis all over the world‚ there will be a fall in stocks price and value investor will buy the stocks in a large amount.Focusing on the PE ratio
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Q1 Definition of ’Accounting Information System - AIS’ The collection‚ storage and processing of financial and accounting data that is used by decision makers. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. The resulting statistical reports can be used internally by management or externally by other interested parties including investors‚ creditors and tax authorities. Investopedia
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low as well when it fell from 87.5 in September to 85 in October‚ the lowest it has been since October 2003. While this may be a large decrease‚ some economists say that it may not matter much because people seem to be borrowing and spending more money no matter how little confidence they have in the economy. The industrial production (based on output from U.S factories‚ mines and utilities) of the U.S. has fallen drastically as well after hurricane Katrina. The fall was quite substantial at 1
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life of 5 years. Using a discount rate of 8 percent‚ the net present value of all benefits is $1‚732‚836.16; the net present value of all costs is $1‚640‚384.79; the overall net present value is $92‚451.36‚ and the project breaks even in approximately 3.84 years. Using a 10 percent discount rate‚ the net present value of all benefits is $1‚645‚201.46; the net present value of all costs is $1‚576‚173.19; the overall net present value is $69‚028.27‚ and the project breaks even in approximately 4.04 years
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Compounding F J Answer: a EASY 3. A time line is meaningful even if all cash flows do not occur annually. a. True b. False (28.2) Compounding F J Answer: b EASY 4. A time line is not meaningful unless all cash flows occur annually. a. True b. False (28.2) Compounding F J Answer: a EASY 5. Time lines can be constructed in situations where some of the cash flows occur annually but others occur quarterly. a. True b. False (28.2) Compounding F J Answer: b EASY 6. Time lines cannot be constructed in
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Ødegaard 2006 LECTURES ON CORPORATE FINANCE - (Second Edition) © World Scientific Publishing Co. Pte. Ltd. http://www.worldscibooks.com/economics/6188.html Contents 1 Finance 2 Axioms of modern corporate finance 3 On Value Additivity 4 On the Efficient Markets Hypothesis 5 Present Value 6 Capital Budgeting 7 Valuation Under Uncertainty: The CAPM 8 Valuing Risky Cash Flows 9 Introduction to derivatives. 10 Pricing Derivatives 11 Pricing of Multiperiod‚ Risky Investments 12 Where To Get State Price Probabilities
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