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finance and accountingThe financial goal of the Corporation:
Stockholders want 3 things when invest:
- Maximize current wealth
- Best time to consume wealth
- No risks by the consumption plan
Goal: maximize shareholder value
Time value of money:
Interest makes time value important
Future value (FV): the amount an investement is worth after one period or more.
Present value(PV): current value of cashflows discounted at the rate.
Discount factor(DF): PV / FV
Simple interest: Interest earned only on the original principal amount invested.
Compound interest: Interest earned on both the initial principal and the interest reinvested
from prior periods.
Perpetuity: A level stream of cash flows forever
Les 2: 14/09
Formules:
FV= C x (1+r)^t
PV= C/ (1 + r)^t or C(t) x 1/(1+r)’t
PVperpetuity: C/R
Delated Pvperuity: C/R x 1/ (1+r)’t
PVannuity: C x (1/r – 1/r(1+r)’t) or. C/R x (1- 1/(1+r)’t)
FVannuity: C/R x ((1+r)’t – 1)
PVdelated annuity: C/R x (1 – 1/(1+r)’t) x 1/(1+r)’t
Discount Factor: 1/(1+r)^t
Rate of return How much money you’ve earned on your investment
Oppurtinity Cost: The profit you give up for youre other investment
Peruitity: infinite so you only use C/R. Periode(t) altijd eentje minder dan dat er staat
Annuity= Perpetuity- Delayed perpetuity.
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