MGT 8803 Financial
Management (detailed &
elaborated)
QUESTIONS AND VERIFIED
CORRECT ANSWERS
GRADED A+ LATEST 100%
GUARANTEED PASS
Test Marketing Costs - CORRECT ANSWER-Marketing research expenses expended
Erosion Costs - CORRECT ANSWER-Cash flow transferred to a new project from sales and
customers of other products of the firm
Opportunity Costs - CORRECT ANSWER-Lost revenues from alternative uses of the asset
After-Tax Cash Flow (ATCF) - CORRECT ANSWER-add depreciation back to income after tax
=(Revenue-Costs)(1-Tax)+D(tax)
Factors to Consider When Making CF Estimates - CORRECT ANSWER-price, volume, variable
costs, fixed costs, capital expenditure, working capital
Nominal Return - CORRECT ANSWER-percentage change in the amount of money you have; R
, Real Return - CORRECT ANSWER-The percentage change in the amount of stuff you can actually
buy; r
The Fisher Effect - CORRECT ANSWER-1+R = (1+r)x(1+h)
Sensitivity Analysis - CORRECT ANSWER-target market share, cost overrun, inflation,
competition, discount rate, valuable options
Simulation - CORRECT ANSWER-Step 1: Identify each key variable and the probability
distribution associated with it
Step 2: Draw one outcome for each variable
Step 3: Estimate NPV and IRR
Step 4: Repeat steps (2) and (3) 5,000 times; Compute the summary statistics
Step 5: Use the distribution of NPV to answer the following
-What is the likelihood that this will be a bad project?
-What is the worst case and best case scenerios?
-Can you try to build linkages in the simulation?
Zero Growth - CORRECT ANSWER-Assume that dividends will remain at the same level forever;
since future cash flows are constant, the value of a zero growth stock is the PV of a perpetuity
=Div/R
Constant Growth - CORRECT ANSWER-Assume that dividends will grow at a constant rate, g,
forever; since the future cash flows grow at a constant rate forever, the value of a constant
growth stock is the PV of a growing perpetuity
=Div/(R-g)
Management (detailed &
elaborated)
QUESTIONS AND VERIFIED
CORRECT ANSWERS
GRADED A+ LATEST 100%
GUARANTEED PASS
Test Marketing Costs - CORRECT ANSWER-Marketing research expenses expended
Erosion Costs - CORRECT ANSWER-Cash flow transferred to a new project from sales and
customers of other products of the firm
Opportunity Costs - CORRECT ANSWER-Lost revenues from alternative uses of the asset
After-Tax Cash Flow (ATCF) - CORRECT ANSWER-add depreciation back to income after tax
=(Revenue-Costs)(1-Tax)+D(tax)
Factors to Consider When Making CF Estimates - CORRECT ANSWER-price, volume, variable
costs, fixed costs, capital expenditure, working capital
Nominal Return - CORRECT ANSWER-percentage change in the amount of money you have; R
, Real Return - CORRECT ANSWER-The percentage change in the amount of stuff you can actually
buy; r
The Fisher Effect - CORRECT ANSWER-1+R = (1+r)x(1+h)
Sensitivity Analysis - CORRECT ANSWER-target market share, cost overrun, inflation,
competition, discount rate, valuable options
Simulation - CORRECT ANSWER-Step 1: Identify each key variable and the probability
distribution associated with it
Step 2: Draw one outcome for each variable
Step 3: Estimate NPV and IRR
Step 4: Repeat steps (2) and (3) 5,000 times; Compute the summary statistics
Step 5: Use the distribution of NPV to answer the following
-What is the likelihood that this will be a bad project?
-What is the worst case and best case scenerios?
-Can you try to build linkages in the simulation?
Zero Growth - CORRECT ANSWER-Assume that dividends will remain at the same level forever;
since future cash flows are constant, the value of a zero growth stock is the PV of a perpetuity
=Div/R
Constant Growth - CORRECT ANSWER-Assume that dividends will grow at a constant rate, g,
forever; since the future cash flows grow at a constant rate forever, the value of a constant
growth stock is the PV of a growing perpetuity
=Div/(R-g)
