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6 Cards in this Set
- Front
- Back
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What is the SF1 assumption for AOI/AE? |
Capital provided to the firm earns at the required rate of return, hence there is no abnormal returns |
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What is the SF2 assumption for AOI/AE? |
Operating income from assets in place at the beginning of the period earns at the current rate of return but any additions to assets over the period will only earn the required rate of return |
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What is the SF3 assumption for AOI/AE? |
Operating income from both assets in place at the beginning of the period and those added over the period earns at the accounting rate of return and profitability stays the same in the future indefinitely but the relevant balance sheet items grows at a constant rate g |
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What is the SF1 assumption for intrinsic value of NOA/CSE? |
Intrinsic value equals book values |
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What is the SF2 assumption for the intrinsic value of NOA/CSE? |
Intrinsic value equals capitalized earnings |
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What is the SF3 assumption for the intrinsic value of NOA/CSE? |
Intrinsic value equals book value plus AOI/(r-g) |
