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18 Cards in this Set
- Front
- Back
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When evaluating the WACC for a company, what Value do you use when determining the total capital/asssets?
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Market Value |
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The Cost of preferred stock is calculated as what why? |
because its the cost of capital if you decided to raise capital right now. You would have to pay out a dividend but the price it would be issued at is market price |
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What are the two types of risk? Which kinds would debt levels affect? |
demand, sales price, input price, output price, operating leverage Financial risk Debt has to do with financial risk |
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When determining the cost of capital if you have a company that currently has 300 Million of assets, and wants to finance total assets of 600 million, how much capital will be used to determine new financing required? |
and extra 300 million will be financed to bring the total to 600 Million
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When calculating the effect on Book value per Share (BVPS) of a share repurchase, what do you need to check first?
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is the stocks Market Value currently greater than the current Book Value? If yes than the company is buying the stock back at a loss and the Book Value per Share will decrease |
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What is the effect on Common Stock Total Book Value of a share repurchase |
Total book value - share repurchase amount |
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What is the profitability index
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PV of FCF / initial outlay
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how do you rank 2 mutually exclusive projects that have a positive NPC and the same initial outlays?
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higher NPV.. since we aren't given NPV, The higher Profitability index is picked b/c PIndex is PV of FCF / Initial outlay if initial outlay is the same then higher PI means the FCF will be greater which means greater NPV |
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what is the minimum required of mgmt/ board when they try to make new amendments to existing takeover defenses where would you find takeover information |
A firms ARTICLES OF ORGANIZATION |
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what are the three methods to calculate cost of capital for common equity
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CAPM approach Discounted cash flow approach Bond yield plus risk premium approach |
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CAPM approach |
K = Rfr + B(Rm - Rfr)
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Discounted cash flow approach |
K = (D1 / P0 ) + g |
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Bond yield plus risk premium approach |
K = current market yield on LT Debt + risk premium
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how do you calculate the UNLEVERED BETA
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how do you calculate a Levered beta from an unlevered beta
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when calculating the breakeven point of sales, what must you pay extra careful attention to?
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if yes then your profit above variable costs need only break even with the operating fixed costs |
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when calculating a payback period what specific wording must you be aware of?
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Does it just say a normal payback period or does it specify a discounted payback period |
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What is the difference on a Bond quivalent yield in the Quant section vs corporate finance |
BEY (quant) = effective semi annual yield * 2 |
