Summary
Finance (MAN5) Samenvatting Tentamen 2 (MC2)
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All chapters for the second exam (MC2) in finance summarized. All important terms for the exam have been described.
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BE3 Summary
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Finance (MAN4) Samenvatting Tentamen 1 (MC1)
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Samenvatting The Basics of financial management, ISBN: 9789001889210 Finance (MAN4)
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Chapter 5Capital budgeting → analyzing alternative investment options and selecting the options to
be implemented
Replacement investments → preserve production capacity
Expansion investments → increase production capacity
Investment project → the sum of all related investments in fixed and current assets
Free cash flow → the difference between cash inflows generated by sales and cash outflows
related to purchasing and using resources in a particular period (all other pays are
completed) → only related to operational activities in contrast to normal cash flow
Time value of money → the difference in value between two equal amounts received at
different moments in time
Opportunity costs → missing out on this revenue due to an amount being received later
Weighted average cost of capital → the average cost against which a company can attract
capital →If an investment is equal to the weighted average cost of capital, the cash flow
that exactly meets the requirements of the capital providers
Period profit → calculated by the difference between sales revenue and costs of that period
Depreciation makes difference between period profit and free cash flow because of
depreciation
Disinvestments → residual value of the fixed assets
Free cash flows = period profit after tax + depreciations – investments + disinvestments
Marginal tax rate → the tax rate paid on additional project profit in addition to profit
incurred from existing activities
Leasing → hiring fixed assets can be an alternative to buying
- Financial lease → long term rental agreement that cannot be canceled
Risk is for the user of the asset (economic ownership)
- Operational lease → rental agreement that can be canceled at short notice
Risk and maintenance cost for leasing agency (not mentioned on the balance sheet)
(lessee is business and lessor is giver)
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