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Final Exam Review

# Final Exam Review - Exam 1 Perpetuity o PV= PMTi o Type of...

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Exam 1 Perpetuity o PV= PMTi o Type of Question: How much is the person willing to pay for an investment? Holding Period Return o Ending Price - Beginning Price + DistributionsBeginning Pricex 100% o Distributions DividendsNumber of Shares Future Value Single Sum o FV = PV1+in Future value of an Ordinary Annuity o FVA = PMT x FVIFAi,n o Solve for payment Present Value of an Ordinary Annuity o PVA = PMT x PVIFAi,n o Solve for Payment Present Value Single Sum o PV = FV 1+in Value of money compared to another o Appreciated Amount Decreases o Depreciated Amount Increases Tax Liability o Taxable Income (\$) o Tax Calculation o Up to 50,000 o \$0 + (15% Amount over \$0) o 50,001-75,000 o \$7500 + (25% Amount over \$50,000) o 75,001- 100,000 o \$13,750 + (34% Amount over \$75,000) o 100,001- 335,000 o \$22,250 + (39% Amount over \$100,000) o 335,001- 10,000,000 o \$113,900 + (34% Amount over \$335,000) o 10,000,001- 15,000,000 o \$3,400,000 + (35% Amount over \$10,000,000) o 15,000,001- 18,333,333 o \$5,150,000 + (38% Amount over \$15,000,000) o Over 18,333,333 o 35% X Taxable Income o Look at the amount and complete the equation o True False Way Table with every year and the taxable income Find a certain year, if negative year before you have to subtract starting from first year

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Average Tax Rate o Total Tax DueTaxable Income Marginal Tax Rate o Look in Table Payment o Beginning of each year o ( + ) Payment Per Year 1 Interest Rate Uneven Cash Flow o PV =t=1nCFt1+it Taxable Portion of Preferred Dividends Received o Taxable Portion =Dividend Income * (.3) Primary goal of Financial Managers o Increase shareholders wealth o NOT profit maximization Money markets o Define o
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Final Exam Review - Exam 1 Perpetuity o PV= PMTi o Type of...

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