Discount CF Valuation Wk 1 Flashcards
1
Q
Agency Relationship
A
Principal hires an agent to Acton on their behalf to make financial decision making
2
Q
Agency Problem
A
When there is conflict between the principal and agent
3
Q
Examples of Agency Problem
A
Separation of ownership
Conflict of interest between shareholders and managers
4
Q
What is an annuity
A
Annuity has an end period
Payments made periodically
5
Q
Perpetuity is?
A
CF are infinite
6
Q
Give two key parts of growing perpetuity
A
- CF are infinite
2. grows at a constant rate of g
