summary of concepts needed to be memorixed

summary of concepts needed to be memorixed - Firms Weighted...

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Retained Earnings Beginning Retained Earnings + Net Income - Dividends Paid = Ending Retained Earnings Quoted Rate of Interest r R = r* + IP + DRP +LP + MRP Current Yield on Bond Bond’s current annual interest payment Current Price Capital Asset Pricing Model (CAPM) r =r rf + B(r m -r rf ) Constant Growth Stock (Dividend Discount Model) P 0 = D 1 r-g Zero Growth Stock P 0 = D R Valuing the entire firm (Use expected information) 1. Calculated Free Cash Flow (FCF) 2. Find Present Value of FCF FCF WACC-g 3. 4. Divided answer in 3 by # of common shares outstanding
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Unformatted text preview: Firms Weighted Average Cost of Capital (WACC) (% debt)(cost of debt)+ (% preferred stock)(cost of preferred stock)+(% common stock)(cost of common) Cost of Debt Capital YTM (1-t) Cost of Preferred Stock Capital Current Annual Dividend Current Price Cost of Equity Capital Use CAPM formula provided above Net Present Value NPV = CF 0 + CF 1 + .CF n (1+r) (1+r) n CF is the expected cash flow R = Projects cost of capital (WACC) N = Life of project...
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summary of concepts needed to be memorixed - Firms Weighted...

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