Mega Terms 3 Flashcards
(63 cards)
Payback period
Full years until recovery + ((unrecovered cost at the beginning of the last year)/(cash flow during the last year))
Profitability Index
PV of future cash flows/CF0 = 1 + NPV/CF0
WACC
wd(kd(1-t)) + wps(kps) + wce(kce)
Cost of preferred stock
kps = Dps/P
Cost of Common Equity
kce = D1/Po + g
Cost of common equity beta vs. bond yield
Rf + B(E(Rm)-Rf) vs. current market yield on firm’s long term debt + risk premium
Breakpoint
amount of capital at which the component’s cost of capital changes/Weight of the component in the capital structure
Degree of operating leverage
Q(P-V)/Q(P-V)-F
Degree of Financial Leverage
EBIT/EBIT-I
Degree of total leverage
DOL x DFL
Unlevered asset beta
Bequity{1/(1+[(1-t)D/E])}
Breakeven quantity of sales
(fixed operating costs + fixed financing costs)/(price - variable cost per unit)
Operating Breakeven quantity of sales
Fixed operating costs/(price-variable cost per unit)
Operating Cycle
Average days of inventory + average days of receivables
Discount basis yield
((FV-P)/FV)*(360/days)
Money Market yield
(FV-P)/P (360/days)
Bond equivalent yield
(FV-Price)/P (365/days to maturity) = HPY (365/days)
Cost of trade credit
(1+(% discount/(1-% discount))^365/days past discount -1
Margin call price
P0((1-initial margin)/(1-maintenance margin))
Price-weighted index
Sum of stock prices/number of stocks in index adjust for splits
Market cap-weighted index
Sum(Pricetoday)(number of shares outstanding)/Sum(Pricebase year)(number of shares outstanding)) x base year index value
Preferred stock valuation model
Po = Dp/kp
One-period stock valuation model
Po = D1/(1+ke) + P1/(1+ke)
Infinite period model - constant growth model
Po = D1/ke-g = D0 x (1+g)/ke-g
