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8 Cards in this Set

  • Front
  • Back
Liquidation
Money that could be realized by selling assets seperately from the operating organizations. Money that would be made if people showed up one day and just took everything away from you.
Going-Concern Value
Selling business as a continuing operating business. Selling the business and keeping it going. What is it worth?
Book-Value for an Asset
Cost minus accumulated depreciation
Book-Value for a firm
Assets - total debts (liabilities + preferred stock)
Market Value
represents the actual market price at which an asset trades "Microsoft is trading at ... today."
Intrinsic Value
Opinion, a price that a security "should" have based on calculation. "Microsoft is worth ..."
Bond Valuation - Perpetual Bond
V = I / Kd
<br>
Value = Period Payment / Discount Rate
<br>
$1000 Face Value at 8% per period, at a 10% discount rate
<br>
V = $80/10% = $800 Present Value
Bond Valuation - Coupon Bond
V = I(PVIFA kd, t) + MV(PVIF kd, t)
<br>
Value = period payment (PVIFA discount rate, years) + Maturity Value (PVIF discount rate, years)
<br>
Bond C has a $1,000 face value and provides an 8% annual coupon for 30 years. The appropriate discount rate is 10%. What is the value of the coupon bond?
<br>
V = $80(PVIFA 10%,30) + $1000(PVIF 10%,30)
<br>
V = $80(9.427) + $1000(.057)<br>
V = $754.16 + $57.00<br>
V = $811.16
<br>
PVIFA = Table IV<br>
PVIF = Table II