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BUSI121 > Other Stuff > Flashcards

Other Stuff Flashcards

1
Q

How to shift compounding in rates:

A

P/yr, #nom%, give EFF%, new#p/yr, give EFF%

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2
Q

How to get principle/interest/balance for loan

A

Enter loan info, if rounding payment, enter new payment. Then press #(n) INPUT, down, AMORT, =,=,=

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3
Q

How to calculate principle/interest for year 2:

A

13 INPUT 24 down AMORT, = (P paid), = (I paid)

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4
Q

Simple interest calculation for months given % per annum

A

% / 12 x months x investment

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5
Q

What is j and how does it relate to i?

A

j = nominal interest rate (no compounding)
i = interest per period (periodic)
i x periods/year = j

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6
Q

Convert z% compounded quarterly to periodic daily rate

A

Convert from quarterly to 365 then divide by 365

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7
Q

How do you calculate interest adjustments for early advances on loans?

A

Convert interest rate to daily then run calc on loan amount for the required number of days

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8
Q

When calculating payment advanced days what is day 1?

A

The day the funds are given

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9
Q

How is semi-annual periodic interest rate denoted?

A

i(sa)

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10
Q

What is the difference between nominal and effective rate?

A

Nominal at stated compounding, effective is always annual compounding.

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11
Q

What is the difference between annuity due and ordinary annuity?

A

Annuity due = pmts at beginning
Ordinary = pmts at end

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12
Q

What is the difference between a simple annuity and a general annuity?

A

Simple = interest same as compounding
General = interest different than compounding

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13
Q

How do you calculate a perpetual annuity?

A

N = 999

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14
Q

When discounting to the beginning of an ordinary annuity at the end of year 5, how many years are there?

A

4

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15
Q

What are the variables in:
FV = PMT x s[[n, j(m)]]

A

FV = future value
PMT = payment
s[[n, j(m)] = “S-N-J” future value of $1 per period at…
n = periods
j = nominal rate
m = compounding frequency

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16
Q

What do FAL and PAL stand for?

A

Fully amortized loan/partially amortized loan

17
Q

How do you calculate balances with accelerated biweekly payments?

A

Calculate monthly payment, half and enter it, convert interest to biweekly, recalculate N, then amort schedule.

18
Q

Why might a vendor offer below market financing instead of selling the property for a lower price?

A

Not wanting to devalue entire development for one property, expected decrease in interest rates and wanting to get those buyers now.

19
Q

What creates a bonus in the secondary mortgage market?

A

When the interest rate is lower than the contract rate

20
Q

What creates a discount in the secondary mortgage market?

A

When interest rates are higher than the contract rate

21
Q

How to calculate market value of a mortgage?

A

Calculate payment, re-enter to get amort period, use amort period/payment or future value at market to get PV at market

22
Q

Net vs. Gross mortgage amount

A

Net is funds advanced after fees. Gross is face value (amount to be paid back).

23
Q

If the net loan is higher than the gross loan, will the COFA be higher or lower than the contract rate?

A

Lower

24
Q

If the net loan amount is lower than the gross loan amount, will the COFA be higher or lower than the contract rate?

A

Higher

25
Q

What is included in COFA calculations?

A

Brokerage, appraisal, loan legal fees, survey

26
Q

How is APR total value received calculated?

A

Face value of loan less brokerage and commission

27
Q

When is APR preferred over COFA?

A

When payments (in either direction) are irregular

28
Q

NPV calculation uses which buttons?

A

CF (cash flow) and NPV

29
Q

When do you use the NJ button?

A

To enter groups of payments sequentially (enter number of terms)

30
Q

What is PVR?

A

Present value ratio = NPV / cost

31
Q

What is the profitability index?

A

= PV positive CF’s / PV negative CF’s

32
Q

NPV pros & cons

A

Pro:: comparing similar size investments
Con: does not consider investment size

33
Q

What does PVR give you?

A

How much you gain per $ invested

34
Q

What does profitability index allow/give?

A

Allows different interest rates for negative and positive flows. Accounts for investment size.
Above 1 means satisfies investment criteria.

35
Q

What does IRR do?

A

Gives the “break-even” rate. Assumes reinvestment.

36
Q

How to calculate IRR?

A

Enter reinvestment rate, then CF’s no cost, then NPV, then SWAP (gives NFV), enter - as FV and cost as PV to ger I/YR (IRR)

37
Q

How to calculate IRR ignoring reinvestment?

A

Use desired yield, enter CF’s, get NPV, add back cost, press IRR

38
Q

What do financial ratios not account for?

A

Affordability, risk, liquidity, management requirements, and magnitude of the investment

39
Q

When comparing investments, which timeline should be used?

A

Longest

BUSI121 (3 decks)

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