Summary
Samenvatting Financial Management And Tax
- Course
- Institution
Summary of the content of the slides + your own added notes.
[Show more]
Seller
Follow
evibekooy
Content preview
Financial Management &Accounting
Summary exam part 1 – Evi Bekooij
Table of Contents
Maths of finance 1....................................................................1
Revision of time value of money.......................................................1
Simple vs compound interest rate investment...................................1
Formulas.........................................................................................2
AER................................................................................................2
Maths of finance 2....................................................................3
Constant immediate annuity/perpetuity............................................3
Decision making 1.....................................................................4
NPV................................................................................................4
Decision making 2.....................................................................5
Payback method..............................................................................5
Internal rate of return.....................................................................6
Profitability index............................................................................8
Overview of all decision-making possibilities....................................8
Accounting rate of return.................................................................8
Working capital management....................................................9
Net working capital/cash conversion cycle........................................9
Formulas.......................................................................................10
Maths of finance 1
Revision of time value of money
Investment = a certain amount of money moves forwards
Discount = a certain amount of money moves backwards
Simple vs compound interest rate investment
Simple: lineal FV = FV =PV (1+ Rt )
Compound: exponential FV =PV (1+r )t
, Formulas
FV =PV (1+r )t ¿ FV ¿
FV
PV = ¿ PV ¿
( 1+ r )t
r=
√
t FV
PV
−1 ¿ rate ¿
t=
ln ( )
FV
PV ¿ nper ¿
ln ( 1+r )
With periodicity:
f = frequency
- Semesterly basis: twice per year (f=2)
- Quarterly basis: four times per year (f=4)
- Monthly basis: twelve times per year (f=12)
- FV =PV 1+ ( )
r t·f
f
- Continuously basis: twelve times per year (f=12)
- FV =PV · e r·t
AER
AER = annual equivalent rate A E R= 1+ ( )r f
f
−1
So, the AER (Annual Equivalent Rate) can be found by comparing these
two equivalent operations:
( )
f
r
So, in general: FV =PV 1+
f
( ) ( )
f
r r f
FV =PV (1+ A E R )1 so: 1+ A E R= 1+ A E R= 1+ −1
f f
11236=10000 (1+
2 )
2
0.12
so: 1+ A E R=( 1+
2 )
2
1 0.12
11236=10000 ( 1+ A E R ) =1.1236 A E R=0.1236=12.36 %
11255=10000 (1+
4 )
4
0.12
so: 1+ A E R=(1+
4 )
4
0.12
11255=10000 ( 1+ A E R )1 =1.1255 A E R=0.1255=12.55 %
11268=10000 (1+
12 )
12
0.12
so: 1+ A E R=(1+
12 )
12
0.12
11268=10000 ( 1+ A E R )1 =1.1268 A E R=0.1268=12.68 %
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 evibekooy. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.64. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
56326 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now