Stocks Flashcards
Growth rate=
ROE x (1-payout ratio%)
Growth rate =
ROE x retention ratio
Dividend rate=
Dividend/ par value
Expected return %=
Dividend/ price
What is the Pi formula
NPV + IO/ IO
Payback period with uneven cashflows how to find ?
uncovered cost at start of year / cash flows during that year.
How to find depreciable asset ?
purchase price of asset + shipping and installation costs
Salvage value
book value - accumulated depreciation
Net initial outlay formula ?
PP SI DA NWC PSA IO
Annual cashflow formula ?
R C Dep EBT T EAT Deprev
Terminal cash flows formula ?
=Salvage value +or - tax effects of gain or loss+ recapture net working capital
How to find EAA ?
Make NPV into PMT
Use the EAA for time disparity problems
Use the IRR for size disparity problems
_____ is used by corporations that attempt to consider differential project risk in their capital budgeting procedures
risk adjusted discount rate
cost of preferred stock financing
do not subtract taxes
