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Unformatted text preview: j )= R rf + β j (R m – R rf ) . feasible set, efficient frontier, capital market line Ch 8. Stock . Value of preferred stock . V ps = D / R ps or R ps = D / V ps . Constant growth model Vcs = D1 / (Rg) or R = (D1 / P ) + g . Non constant model . Reward to risk ratio . Ch 14. Cost of Capital . Tax effect . Cost of Debt Rd = Rd before tax * (1Tax) . Cost of Preferred stock R ps = Div / price . Cost of Common equityinternal equityexternal equity CAPM Rs = Rrf + b (Rm – Rrf) DDM Rs = (D1 / price) + g . WACC = wd * Rd (1T) + wps* Rps + ws* Rs Ch 9. Capital Budgeting . Basic concepts and the benefits/costs of each method 1. Payback period 2. Discounted payback period 3. NPV = PV of CF – IO = [∑ FCF / (1+ R) t ] – Initial Outlay. 4. IRR : NPV=0 5. MIRR, PI . Reinvestment assumption of NPV and IRR GOOD LUCK!!!...
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 Spring '11
 Mr.singh
 Management, Capital Asset Pricing Model, 2 hour, Final Exam Guideline, problem solving/essay questions, page index card

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