Chapter 5: Introduction to Valuation: Time Value of Money
Present Value earlier money on a time line
PV =
FV
(1 + r)t
Future Value later money on a time line
t
FV = PV (1 + r)
Interest Rate exchange rate between earlier money and later money
Discount Ra
FE 11 PROJECT ANALYSES
NPV ESTIMATE

Recognize that future cash flow estimates are uncertain

Scenario, sensitivity, and simulation analysis focus on the risk of uncertainty of cash flow
SCENARIO ANALYSIS

Best case and worst case
SENSITIVITY ANALYSIS
FE 323
Final Exam Practice Questions
This packet of practice questions contains a total of 24 multiple choice questions and 25 long
answer questions.
Please note that there are additional multiple choice practice questions found on Connect.
A typical FE 3
FE 323
Midterm Practice Questions
This packet of practice questions contains a total of 18 multiple choice questions and 22
long answer questions. You can get plenty of practice here!
Please note that there are additional multiple choice practice question
FE 323
Spring 2015
Class Outline to accompany Chapter 16 Capital Structure
Neither a borrower nor a lender be Polonius, Hamlet
In the world of managerial finance, we look at decisions that managers are faced with where the use
of debt is one of the choic
Chapter 13: The Cost of Capital
know how to calculate a marketvalue balance sheet (13.1)
know how to calculate the market weights of debt, equity and preferred stock in a firms
capital structure (13.2)
You can determine the weights of the three differe
Chapter 21
basic option terminology:
Financial option an option that gives its owner the right (but not the obligation) to
purchase or sell an asset at a fixed price at some future date
Call option a financial option that gives its owner the right to b
Chapter 11
Risk and Return in Capital Markets
Investors are averse to fluctuations in the value of their investments, so they
demand that riskier investments have higher expected returns
o Investors do not like risk and therefore demand a risk premium to