Test One - Chapter 2 Future Value = Present Value(1 Interest ^ N Present Value = Future Value(1 Interest ^ N Ordinary(Deferred Annuity = Payments Occur

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

Chapter 2 Future Value = Present Value (1 + Interest) ^ N Present Value = Future Value / (1 + Interest) ^ N Ordinary (Deferred) Annuity = Payments Occur at the End of the period = END MODE Annuity Due = Payments whose Payments occurs at the begging of the period = BEGIN MODE Future Value Ordinary Annuity = Payment [((1 + I) ^ N) – 1 / I] Present Value Ordinary Annuity = Payment [(1 – (1 / ((1 + I) ^ N)) / I)] Present Value Perpetuity = Payment / Interest Uneven Cash Flows Present Value = NPV (Interest, Initial Outlay, {Cash Flow Per Period}) Interest with Uneven Cash Flows = IRR (- Payment, {Cash Flow Per Period}) When Compounded Semi Annual and other Compounding Periods: Periodic Rate = Stated annual rate / Number of Payments per year Number of Periods = (Number of years)(Periods per year) Effective Annual Rate (EFF% or EAR) = ((1 + (Interest /Periods Per Year)) ^ Periods Per Year) – 1 Comparing Two Different Interest Rates with Two Different Periods: EFF % ( Nominal Interest Rate, Number of Periods 1) NOM (Eff%, Number of Periods 2) Uneven cash flow to solve for PV do npv(i, CFo{CF1, CF2, CF3….}) Rule of 72 = 72/i= # of years for sum to double Extra lump sum for cash flow : lump goes into FV and PMT how much each time If not annual eff> than nom To solve eff on the calc (nom rate, # of periods) then subtract difference Retirement questions solve for fv then make fv into pv and solve for pmt Pv interest factors always<1, dollars today worth more than in the future , solver for eff than take value put in nom Chapter 3 Net Sales -Operating Costs except depreciation = Earnings before interest, taxes, and depreciation ( EBITDA ) -Depreciation = Earnings before interest and taxes (Operating Income) ( EBIT ) -Interest = Earnings before Taxes (EBT) -Taxes = Net Income - Common Dividends = Addition to Retained Earnings Earnings Per Share = EPS = Net Income / Common Shares Outstanding Dividends Per Share = DPS = Dividends Paid to common sock holders / Common Shares Outstanding Book Value Per Share = BVPS = Total Common Equity / Common Shares Outstanding Cash Flow Per Share = CFPS = Net Income + Depreciation + Amortization / Common Shares Outstanding Balance Sheet ASSETS Cash + Accounts Receivable + Inventories = TOTAL CURRENT ASSESTS Gross Fixed Assets – Accumulated Depreciation = NET FIXED ASSETS TOTAL CURRENT ASSETS + NET FIXED ASSETS = TOTAL ASSETS LIABILITIES AND EQUITY Accounts Payable + Notes Payable + Accruals = TOTAL CURRENT LIABILITIES Long Term Debt + Common Stock ( # Of Shares ) + Retained Earnings = TOTAL EQUITY TOTAL CURRENT LIABILITES + TOTAL EQUITY = TOTAL LIABILITIES AND EQUITY EBIT = Sales Revenues – Operating Costs