Stocks Flashcards
(17 cards)
Growth rate=
ROE x (1-payout ratio%)
Growth rate =
ROE x retention ratio
Dividend rate=
Dividend/ par value
Expected return %=
Dividend/ price
What is the Pi formula
NPV + IO/ IO
Payback period with uneven cashflows how to find ?
uncovered cost at start of year / cash flows during that year.
How to find depreciable asset ?
purchase price of asset + shipping and installation costs
Salvage value
book value - accumulated depreciation
Net initial outlay formula ?
PP SI DA NWC PSA IO
Annual cashflow formula ?
R C Dep EBT T EAT Deprev
Terminal cash flows formula ?
=Salvage value +or - tax effects of gain or loss+ recapture net working capital
How to find EAA ?
Make NPV into PMT
Use the EAA for time disparity problems
Use the IRR for size disparity problems
_____ is used by corporations that attempt to consider differential project risk in their capital budgeting procedures
risk adjusted discount rate
cost of preferred stock financing
do not subtract taxes
the firm’s cost of debt financing
Do subtract taxes
How to find MIRR?
Solve for I using the IO is PV
