b. people make decisions regarding resource allocation over time and how to handle risk c. people decide whether or not to become risk averse. d. society can reduce aggregate risk. ANSWER: b. how people make decisions regarding resource allocation over time and how to handle risk TYPE: M DIFFICULTY: 1 SECTION: 14.0 2. If you put $300 in an account paying 2 percent interest‚ what is the future value of this account in two years? a. $310 b. $312
Premium Utility Interest rate Time value of money
FINS1613 Business Finance Semester 2 – 2009 Version 1.0.3 Contents Page 3 Page 7 Page 10 Page 14 Page 18 Page 23 Page 26 Page 29 Page 32 Page 38 Page 42 Basic Concepts Introduction to Financial Mathematics The Valuation of a Firm’s Securities Capital Budgeting Capital Budgeting Applications – Part 1 Capital Budgeting Applications – Part 2 Risk and Return The Capital Asset Pricing Model Cost of Capital and Raising Capital Capital Structure Dividend Policy Copyright © Ka Hei Yeh 2009 First
Premium Net present value Internal rate of return Cash flow
................1.3 Demerits of Payback Period........................................................................................................1.4 Merits of Net Present Value .......................................................................................................1.5 Demerits of Net Present Value...................................................................................................1.6 Merits of Internal Rate of Return..........................................
Premium Net present value Financial ratios Internal rate of return
order-processing department to be $180‚000. The company produces 50‚000 sweaters and 80‚000 jackets each year. Sweater production requires 25‚000 machine hours‚ jacket production requires 50‚000 machine hours. The company places raw materials orders 10 times per month‚ 2 times for raw materials for sweaters and the remainder for raw materials for jackets. How much of the order-processing overhead should be allocated to jackets? a. $90‚000 b. $120‚000 c. $110‚770 d. $144‚000 8. ABC Bread sells a
Premium Net present value Inflation Time value of money
OVERVIEW OF CORPORATION Lesson 1 Chapter 1 : Outline 1.1 What is Corporate Finance ? Some important questions that are answered using finance • What long-term investments should the firm take on? • Where will we get the long-term financing to pay for the investment? • How will we manage the everyday financial activities of the firm? Financial Manager Financial managers try to answer some or all of these questions The top financial manager within a firm is usually the Chief
Premium Net present value Time value of money Internal rate of return
Maximization Approach; Time Value of Money and Uncertainty; Agency Problem; Social Responsibility Business Environment‚ Taxes‚ and Financial Environment: Forms of Business Organizations; Financial Instruments; Money Market and Capital Market Instruments; Financial Intermediaries; Financial Risk and Return Concepts in Valuation / Time Value of Money: Present Value vs. Future Value; Simple Interest vs. Compound Interest; Annuities vs. Simple Compounding and Discounting; Future Value of an Ordinary
Premium Finance Bond Corporate finance
components of earnings Requirement 1: a) Permanent earnings is the reported earnings component that is value-relevant. Permanent earnings are those earnings that are expected to continue into the future. This component roughly corresponds to income from continuing operations as reported in the income statement. b) Transitory earnings is the earnings component that is value-relevant‚ but not expected to persist into the future. This component roughly corresponds to income from discontinued
Premium Financial ratio Cash flow Time value of money
precursor to decision d i i to proceed (feasibility phase) d (f ibili h ) Ongoing evaluation through design and planning phase Outline Session Objective & Context Financing projects Owner O Project Contractor Financial Evaluation Time value of money Present value NPV & Discounted cash flow Simple Examples Formulae IRR Missing factors Alberto De Marco 2 Financing Project Management Course Session Objective & Context The role of project financing p j g Mechanisms for project
Premium Net present value Debt Cash flow
the current assets were liquidated today‚ the company would receive $1.9 million in cash. The book value of the Widget Co.’s assets today is _____ and the market value of those assets is _____. A. $4‚600‚000; $3‚900‚000 B. $4‚600‚000; $3‚125‚000 C. $5‚000‚000; $3‚125‚000 D. $5‚000‚000; $3‚900‚000 E. $6‚500‚000; $3‚900‚000 Book value = ($725‚000 + $1‚375‚000) + $2‚500‚000 = $4‚600‚000 Market value = $1‚900‚000 + $2‚000‚000 = $3‚900‚000 AACSB: N/A Bloom’s: Knowledge Difficulty: Basic Learning
Premium Time value of money Dividend yield Net present value
2. Which one of the following statements is correct? A. The future value of an annuity is unaffected by the amount of each annuity payment. B. The present value of an annuity is unaffected by the number of the annuity payments. C. The present value of an annuity increases when the interest rate decreases. D. The present value of an annuity increases when the interest rate increases. E. The future value of an annuity increases when the interest rate decreases. 4. A debenture is: A. long-term debt
Premium Bond Compound interest Time value of money