The idea of the time value of money:
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• A dollar today is not the same thing as a dollar expected tomorrow.
• The evaluation of future cash flows is a fundamental theme underlying all
areas of finance.
• The concept of time value of money is quantified through the use of
Discounted Cash Flow Analysis (DCF)
• DCF techniques allow us to make an exact dollar value adjustment for
time and risk so that we can compare the current "worth" of cash flows
arriving at different times and/or having different amounts of risk associated
with them (DCF comes up a lot in interviews)
,Falcons sell stadium naming rights article:
1) _____ purchased naming rights for the Falcons
2) They signed a ___ year deal with Farmer's insurance to purchase the rights of the
new LA stadium.
3) Why would Mercedes do this?
a)
b)
4) what is the downside to this?
a)
b)
5) for the Falcons this is a _____ because this pays for the Falcon's share of the stadium
cost
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1) mercedes benz
2) 27
3)
a) all about branding (marketing)
b) substitute for commercials
4)
a) it is not clear there is a sales impact
b) not clear on NPV
5) win
efficiency ratios
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, How well does the firm manages its current assets
examples: Collections (DSO), Total Asset Turnover, Days Held In Inventory
Compounding more frequently means we are paid interest more frequently. How will
this affect future value?
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when I increase compounding, interest is paid sooner... so we should she
an increase in FV
rD=
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r(risk free) + r(INT) + r(DR) + r(LIQ)
- this is dynamic & based on current market conditions (supply and
demand)
As rD increases, price_____
As duration increases, risk______
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decreases
, increases
PREMIUM
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price> face value
YTM < coupon rate
liquidity
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the ability or ease to convert an asset to cash
financial management
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refers to the operation of the firm. Typical issues facing a financial manager:
a) What are projects we should invest in?
b) How do we raise the capital (money) to finance the project?
c) making daily firm decisions, examples:
• pricing (marketing)
• inventory (management)
• working with budget (accounting)
Give this one a try later!
• A dollar today is not the same thing as a dollar expected tomorrow.
• The evaluation of future cash flows is a fundamental theme underlying all
areas of finance.
• The concept of time value of money is quantified through the use of
Discounted Cash Flow Analysis (DCF)
• DCF techniques allow us to make an exact dollar value adjustment for
time and risk so that we can compare the current "worth" of cash flows
arriving at different times and/or having different amounts of risk associated
with them (DCF comes up a lot in interviews)
,Falcons sell stadium naming rights article:
1) _____ purchased naming rights for the Falcons
2) They signed a ___ year deal with Farmer's insurance to purchase the rights of the
new LA stadium.
3) Why would Mercedes do this?
a)
b)
4) what is the downside to this?
a)
b)
5) for the Falcons this is a _____ because this pays for the Falcon's share of the stadium
cost
Give this one a try later!
1) mercedes benz
2) 27
3)
a) all about branding (marketing)
b) substitute for commercials
4)
a) it is not clear there is a sales impact
b) not clear on NPV
5) win
efficiency ratios
Give this one a try later!
, How well does the firm manages its current assets
examples: Collections (DSO), Total Asset Turnover, Days Held In Inventory
Compounding more frequently means we are paid interest more frequently. How will
this affect future value?
Give this one a try later!
when I increase compounding, interest is paid sooner... so we should she
an increase in FV
rD=
Give this one a try later!
r(risk free) + r(INT) + r(DR) + r(LIQ)
- this is dynamic & based on current market conditions (supply and
demand)
As rD increases, price_____
As duration increases, risk______
Give this one a try later!
decreases
, increases
PREMIUM
Give this one a try later!
price> face value
YTM < coupon rate
liquidity
Give this one a try later!
the ability or ease to convert an asset to cash
financial management
Give this one a try later!
refers to the operation of the firm. Typical issues facing a financial manager:
a) What are projects we should invest in?
b) How do we raise the capital (money) to finance the project?
c) making daily firm decisions, examples:
• pricing (marketing)
• inventory (management)
• working with budget (accounting)
