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Exam 2
FIL240 Equations ISU
16
Finance
Undergraduate 3
11/02/2010

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Cards

Term
WACC
Definition
(Wd)(Kd)(1-t)+(Wp)(Kp)+(We)(Ke)
(Lenders) (PS) (CS)
Term
Cost of Debt
(Kd)
Definition
((Par Value X Annual Interest Rate)(PV of Annuity)) + ((Par Value)(PV of $))
Term
After-tax cost of debt
Definition
(Kd)(1-t)
Term
(Kp)
Preferred Stock
Definition
Dividends/$ Paid Today
D/Po
Term
(Ke)Common Stock
Dividend Growth Model
Definition
(Do(1+g))/Po
(D1/Po)+g
Term
(Ke) Common Stock
Security Market Line Model
Definition
Krf + Risk Adjustment
Krf+(Km-Krf)β
(Theoretical)
Term
(Wd)
Definition
Debt:Asset Ratio
OR
Debt:Equity Ratio/ 1+Debt:Equity Ratio
Term
(We)
Definition
1/(1+Debt:Equity Ratio)
Term
IRR
Definition
BAMT(1+r)^n=EAMT
solve for r
Term
Profitability Index (PI)
Definition
Total PV/Initial Amount
Term
NPV (same every year)
Definition
(CFo/(1+r)^0)+(CF 1-n((1-(1/1+r)^n)/r))
Term
OCF
Definition
Revenues-Costs-IncomeTaxes=OCF
Term
IS
Definition
Revenues-Costs-Depreciation=Earnings Before Taxes-Income Taxes=Net Income
Term
Depreciation Tax Shield
Definition
Depreciation X Tax Rate
Term
Discounted Payback Period
Definition
BAMT ((1-(1/1+r)^n)/r)= EAMT
Solve for n
Term
Truncated Annuity
Definition
PMT [(((1+r)^#per.-1)/r)(1+r)^#per.left]
+ the same thing for different pmt amts.
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