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Question 1

Firm Value

Answer 1

1. Firm Value: Value= ∑ FCFt (1+WACC)t
   a. FCFt​: Free cash flow in time period t.
   ○ WACC: Weighted Average Cost of Capital.

Question 2

does I/y on the calculator by decimal (ex 0.1) or by percentage (10%) or you just write the number 10?

Answer 2

just write the number 10 in the current configurarion. if the teacher asks us to change the settings this might change

Question 3

when you need to put a negative number on the calculator, when do you press the negative sign? before or after the number?

Answer 3

before AND after ex [-][5000] [-]

Question 4

how do you go from having Fv of an ordinary annuity to a due annuity? including payments

Answer 4

you just multiply Fv by the interest percent because everything will grow one more period

Question 5

Write down the formula for fixed payments of principal and interest of a period of time.

Answer 5

(P)(R)(1+r)^n

/

(1+R)^n - 1

Question 6

how do you calculate EFF%?

Answer 6

if its compunded twice in a year (semiannually, every 6 months) then you do this:

(1+APR/2)^2 -1 note that 2 is because is compounded twice in a year

Question 7

Write down the PV formula. discount an amount of money in the future

Answer 7

Pv = FV / [1+i]^n

Question 8

FV formula. no payments

Answer 8

PVx[1+i]^n

Question 9

actual definition of an annuity

Answer 9

a stream of fixed identical cashflows. BUT limited period of time

like a bond

Question 10

2 types of annuity

Answer 10

ordinary (end) and due (beg)

Question 11

write down FV and Pv formulas for annuties

Answer 11

look at notes to confirm

Question 12

actual definition of a perpetuities

Answer 12

equal cashflow at identical intervals that continue on forever

Question 13

formula pv for a perpetuity

Answer 13

PV = PMT/i

Question 14

pv formula for a lump sum

Answer 14

pv = future payment / [1+i]^n