FIN3004 Ch1 QUESTIONS AND RIGHT ANSWERS UPDATED

FIN3004 Ch1

FIN3004 Ch1 QUESTIONS AND RIGHT
ANSWERS UPDATED 2024 - 2025
Ch.1 Introduction ANS -Corporate Finance:

mainly "Cost & Benefit" analysis

Purpose:

For the benefit to the shareholders

➡️To maximum wealth of Shareholders



Cost and Benefit measures:

(1) Cash Flows (CF)

(2) Present value (turn future value to present value)

(3) Net Present value-NBV (subtraction)

Benefit- Cost = Profit

*Always choose NPV calculator



Assumption:

Distinguished "Positive" & "Negative"

ALWAYS Choose "POSITIVE ALTERNATIVE"

➡️make/return good money



Affecting Cost:

➡️Construction Cost

➡️The period of construction

➡️Stamp duties

, ➡️Tax



Ch.1 Review ANS -Financial management:

"Cost & Benefit analysis"



•Basic types of financial management decisions:

Type1️⃣

Take good project (positive value)

Type2️⃣

Raising funding because of not enough funding

E.g. Issue shares,bonds which one is better

Type3️⃣

Maintain Liquidity

E.g. Cash 💰 for paying wage for employees

Repay for suppliers



•Goals of financial management 🆒

Maximise shareholders' value

(Owner of company, make sure wealth, they have been growing)



•Review Net Present value, payback, internal rate of return and profitability index, cash flow



————————Corporate Finance————————

Address Three questions:



*most of the time concerned

(1) Long-term investment

Invest good Long-term project with positive NPV project