MBA 530 Test 3

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Author:
Calbrenar
ID:
161900
Filename:
MBA 530 Test 3
Updated:
2012-07-10 10:53:12
Tags:
MBA WSU
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Description:
MBA 530 Final
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  1. WACC
    • = WdRd(1-T) + WpRp + WsRs
    • Weighted Avg Cost of Capital
  2. marginal debt
    new debt
  3. embedded rate
    avg rate on previously issued debt.  also historical rate
  4. project financing
    large project w/ special financing that get's a claim on project specific cash flows.
  5. F
    % flotation cost (% of proceeds paid)
  6. Rps
  7. Rs
    = Rf + b(Rm-Rf)
  8. Rm
    Rm=RHATm = D1/P0 + g
  9. D0
    D1/(Rs-g)
  10. RHATs
    = Rs = D1/P0 + Expected g
  11. Re
    • = RHATe = D1/(P0(1-F)+g)
    • Cost of common equity
  12. Uncontrollable Financing Factors
    • Stock & Bond Market
    • Market Risk Premium
    • Tax Rates
  13. Controllable Financing Factors
    • Capital Structure Policy
    • Divident Policy
    • Investment Policy
  14. Independent -- NPV > 0
    Exclusive
    • Accept both Projects
    • Accept Highest NPV if > 0
  15. Independent - IRR > WACC
    Exclusive
    • Accept Both
    • Accept highest IRR if > WACC
  16. MIRR
    Same as IRR but cash flows invested at WACC instead of IRR
  17. NVP Profile 
    What is IRR
    Where NPV = 0
  18. Profitability Index (PI)
    = PV of Future Cash Flows / Initial Cost
  19. Payback (PB)
    # of years prior to full recovery of cost + unrecovered cost / cash flow during full recovery year
  20. Discounted PB
    cash flows discounted at WACC

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