Going Through Chapters For Stuff Flashcards
How do you value a bond if the market rate is different than when it was issued?
Sum the present cash flows. So…each component is per year increasing t…until the last year it changes
Interest Payment / (1 +r)^t + Interest Payment / (1 +r)^t + (Interest Payment + Face amount ) / (1 +r)^t)
How do you calculate the NPV using Discounted Cash Flows…this is the one if given PV of annuity
1: Calculate after tax cash flow (Savings after tax per year)
2: Add back depreciation tax shield
3: Multiply result by the appropriate PV of Annuity Factor(assunimg they are an annuity) OR PV factor if not an annuity….
REMEMBER, if salvage value, take taxes out and add the gain in to last year calculation
4: Add all those years together
5: Subtract the intital cash outflow
6: If positive, buy that shit.
How do you find average accounts receivable?
Average accounts receivable = Annual sales / (360/Average collection period)
How do you find the value of a sector’s P/E
Take the Net Income and multiply it by the given P/E Multiple.
How do you find the value of equity using the dividend discount model (or called gordon growth)
P0 = D1 / (R-G)
WHERE THE R is the required Return, often times the CAPM answer is R
How do you calculate Economic Value Added
NOPAT (Net operaitng profit after taxes) - Required Return (where RR = Investment * WACC)
How do you find the present value of an annuity due if just given the PV of an ordinary annuity
1 + PVOAD
What is the equation for the VOH efficiency variance
Standard Rate * ( Actual Hours - Standard Hours allowed for the ACTUAL Volume)
How do you find NPV of a project when there are multiple factors like: intial outflow, tax, depreciation, salvage, and either PV or PVAD factors?
Break it out year by year: Savings or Inflow -Tax \+Deprciation Tax Shield =Amount x PV Factor
Repeat each year and add in taxed salvage at the end…Sum all final answers and net against initial investment
What is the inputed interest rate used in the residual income method?
the target return rate as set by management
If youre doing a joint cost allpocation, and one of the products can be sold without incurring the extra processing what do you do
You do not factor those posible further costs into the NRV calculation to allocate the costs…just use the original.
Who looks after a firms Enterprise Risk system
the board
What is one way of backing up data by using more and more recent copies of a file
Son-Father-grandfather
Increasing the demand and the supply of product does what
Causes equillibrium quantity to increase
What is a closed loop system regarding checking information
Closed-loop verification is a method that takes data entered into a system and uses it to display other information to verify the accuracy of that shit
