Fin221 Final Revison 2slides

Fin221 Final Revison 2slides - 6/7/2010 Tairan Kevin Huang...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
6/7/2010 1 Tairan Kevin Huang & Jin Cui CCAD Group www.ccaduow.com Recap Mid Session Final Topics Aiming for Success
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6/7/2010 2 Lec1 Lec 2 Lec 3 Lec 4 The 3 Decision TimeValue of Money Bond Valuation RRR Type of Market PV,FV & Formulas Share Valuation Risk & Return Fisher Equation Cash Flows, Compounding & Discounting Expected Returnfor Individual and Portfolios Securities Ordinary Annuity, Annuity Due, Perpetuity, Growing Perpetuity CAPM Working Capital Management Decisions Affect current asset, current liability and current working capital (CA-CL) Capital Budgeting Decisions Determine what long-term productive assets the firm will purchase Financing Decisions Determinethefirm’s capital structure.(ratio of Debt andEquity) Themanagement’sobjectiveis – MaximizeShareholder’sValue(Wealth) Which reflects on Share Prices
Background image of page 2
6/7/2010 3 Primary Market Vs Secondary Market Money Market Vs Capital Market Public Market Vs Private Market Interest rate is the price for money Hence it decides the cost of financial decisions, and value of bonds and shares Real rate of interest Inflation-adjusted return earned by lender-savers Inflation-adjusted cost incurred by borrowers spenders Rarely observable as inflation > 0 Nominal rate of interest The rate that we actually observe in the marketplace at a given time Fisher Equation (1+Nominal) = (1+Real)*(1+ Inflation) i = r + Δ pe
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6/7/2010 4 The time value of money is the value of money figuring in a given amount of Interests earned over a given amount of time. Notice Use the right formula Calculate time period Annually, Semi-Annually, Quarterly, Monthly Did NOT consider the compound frequency a 5 year term deposit with interest paid quarterly equal to 20 times compounding Tips: A dollar today is worth more than a dollar tomorrow!!!!!! The present value formula is the core formula for the time value of money; each of the other formulae is derived from this formula. The Present Value (PV) formula has four variables, each of which can be solved for: PV is the value at time=0 FV is the value at time=n i is the rate at which the amount will be compounded each period n is the number of periods
Background image of page 4
6/7/2010 5 In this case the cash flow values remain the same throughout the n periods. The present value of an Annuity (PVA) formula has four variables, each of which can be solved for: PV(A) is the value of the annuity at time=0 A is the value of the individual payments in each compounding period (or CF , the Cash Flow) i equals the interest rate that would be compounded for each period of time n is the number of payment periods. To get the PV of an Annuity Due , multiply the above equation by (1 + i ).
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/16/2010 for the course COMMERCE f221 taught by Professor Ala during the Spring '10 term at Uni. West.

Page1 / 46

Fin221 Final Revison 2slides - 6/7/2010 Tairan Kevin Huang...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online