Tip sheet for Fin 335 Final Exam.docx

Tip sheet for Fin 335 Final Exam.docx - Tip sheet for Fin...

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Tip sheet for Fin 335 Final Exam Chapter 9 Be able to identify incremental cash flows- The difference b/w a firm’s future cash flows with a project & those without the project Sunk costs- A cost that has already been incurred and cannot be returned (not relevant) Opportunity costs- Most valuable alternative that is given up (relevant) Side effects- Cash flows of a new project that come at the expense of a firm’s existing projects (relevant) in NWC- Investment (relevant) Financing costs- interest (not relevant) Taxes ( relevant) Be able to calculate operating cash flows OCF= EBIT + Depr. – Taxes o Make income statement first Be able to calculate net working capital NCW= CA-CL Be able to calculate after-tax selling price A-T Sell Price= Sell price – Tax rate (Sell price – Book Value) o Book Value= Purchase price – Accum. Depr. Be able to calculate the net present value, IRR, profitability index, and payback. Done in calculator All assigned homework and class notes Chapter 10 Be able to calculate the HPR, APR and EAR HPR (Holding Period Return) = (Price end –Price beg) + Dividends / Price beg o HPR = Amount earned / Amount invested APR= HPR x (365 / M) o
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