Notes of a second year student studying Bachelors of Accounting at the University of the Free State. With this notes that i have compiled, i was able to proudly say that i received a distinction in Financial Management by using this notes. If you are struggling with Financial Management use this no...
Summary: Ratio Analysis - Corporate Finance [EMNF2724]
All for this textbook (14)
Written for
University of the Freestate (UFS)
EMNF2724 (EMNF2724)
All documents for this subject (13)
Seller
Follow
Acc07
Reviews received
Content preview
LU 8: Appraising investment risk (chapter 7)
High risk – compensated with – high return
Investment appraisal methods
Low risk – low return
1. Average return
Uncertainty 2. Payback period
3. Discounted payback period
Probability NOT known Both is present 4. NPV
Risk in every decision 5. IRR
6. Profitability index
Probability is known
Use risk for a better scenario and to PLAN
better Does not take risk into account
Need to take risk into account
Risk tolerance
Amount of risk a company is willing to take when making an investment.
Avoid risk Willing to take on more
Expect proportionate
risk
Will not accept risk if increase/decrease in
returns are not Even if expected returns return for accepting an
disproportionately are not proportionately increase/decrease in risk.
higher to compensate for higher (only slightly higher
taking on more risk. return)
Return
Return
Return
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Acc07. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.43. You're not tied to anything after your purchase.
