Click Understand the effect of financial leverage on cash flows and the cost of equityUnderstand the impact of taxes and bankruptcy on capital structure choiceUnderstand the basicponents of the ba
Click You should always ask yourself Will this cash flow occur ONLY if we accept the projectIf the answer is yes it should be included in the analysis because it is incrementalIf the answer is no it s
Click Suppose you invest 500 in a mutual fund today and 600 in one year. If the fund pays 9 annually how much will you have in two yearsYear 0 CF: 2 N -500 PV 9 IY CPT FV = 1 CF: 1 N -600 PV 9 IY
Click Total dollar return = ie from investment capital gain (loss) due to change in priceExample:You bought a bond for 950 one year ago. You have received two coupons of 30 each. You can sell t
Click What happens to the NPV under different cash flow scenariosAt the very least look at:Best case – high revenues low costsWorst case – low revenues high costsMeasure of the range of possible outco
Click Look for financial strengthChoose a VC that has a management that ispatible with your ownObtain and check referencesWhat contacts does the VC haveWhat is the exit strategyUnderwriter accept
Click Declaration Date – Board declares the dividend and it bes a liability of the firmEx-dividend DateOccurs two business days before date of recordIf you buy stock on or after this date you will
Click The required return is the same as the appropriate discount rate and is based on the risk of the cash flowsWe need to know the required return for an investment before we canpute the NPV and
Click Suppose you have predicted the following returns for stocks C and T in three possible states of the economy. What are the expected 2 1RC = .3(15) .5(10) .2(2) = RT = .3(25) .5(20) .2(1) =
Click 11-3Financial Manager6DisadvantagesLimited to life of ownerEquity capital limited to owners personal wealthUnlimited liabilityDifficult to sell ownership interest9What should be the goal of a co
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