EAA - what do we do if there are different lengths of projects
run 4x
0
1
2
3
4
run 3x
-150
60
90
15
-125
80
70
60
10
when you are looking at the length of the project, you have to find the least common multiple
and then multiply bu that. You can only com
1. what is the fv of 1800 if the rate is 5% compounded quarterly?
2. What is the payment necessary to walk away with 1,250,000 in 40 years if the rate is 8% compounded annually?
3. What is the nominal rate if the effective is 10.56 compounded semi annuall
If I invest 35,000 into a piece of machinery that will provide thw
following revenues over the next 6 years what would the presnet
value of this investment be today if the discount rate is 2.35%
Solving for N: If sales grow at 20% per year, how long befor
NPER
Annual CPN
Face Value
5
0.08
1000
80
0 PV?
1
80
2
80
3
80
4
80
5
1080
required rate of return is 15%
($805.12)
($1,192.57) 5% premium
($1,000.00) Both have the same risk
($1,184.34)
bond originally issued at 8% coupon. The FV of the 1000 and the rewa
downgraded bonds rating, yield to invesrtor increases, bond price will decrease. Inverse relationship between yield and bond price
jump bond - more debt means more risk requires more reward in the form of the yield
portfolio diversification - want a portf
What is the price of a stock that is currently issuing a dividend of $1.15.
The growth rate rate over the next few years is expected to be 10%, 12%,
0%, and 25%. Afterwards it will be constant at 5%.
Assume that the return on the market is 14%, the firm b
Chapter 13 Notes
What determines business risk?
Competition is there a lot of competition within your industry
Is there a lot of demand
Usually if raw materials fluctuate a lot the output price would fluctuate a lot
Output prices different for each compan
Chapter 11 Notes
What is capital budgeting?
Long term decisions involve large expenditures
Analysis of potential additions to fixed assets
Very important to firms structure
Steps to capital budgeting
Estimate the cash flows
o What is the benefit of the pr