Chapter 1 Correct Answer-Introduction to corporate Finance
What are possible resources to get start up funding? Correct Answer-Debt and equity
What is the optimal combination of debt and equity? Correct Answer-Capital structure
How do you choose from different investment decisons? Correct ...
FIN 325 Exam #1 Questions with Correct Answers
Chapter 1 Correct Answer-Introduction to corporate Finance
What are possible resources to get start up funding? Correct Answer-
Debt and equity
What is the optimal combination of debt and equity? Correct Answer-
Capital structure
How do you choose from different investment decisons? Correct
Answer-NPV criteria: purchase new equipment/patent, when do dispose
an asset that is no longer profitable
What is a corporation? Correct Answer-a business organized as a
separate legal entity owned by shareholders who have limited
liability( max they can lose is their entire investment), widespread
ownership, separation of ownership and control
Financial goal of corporation? Correct Answer-stockholders want to
maximize current wealth, to transform wealth into most desirable time
pattern of consumption, and to manage risk characteristics of chosen
consumption plan
Chapter 2 Correct Answer-How to calculate Present Value
Present Value Correct Answer-value today of a future cash flow
, Future Value Correct Answer-amount to which an investment will grow
after earning interest
Future value equation Correct Answer-FV= $100 x (1+r)^t (example)
on graph it is growing from zero because you keep multiplying interest
getting bigger
Present Value equation Correct Answer-PV= $100/(1+r)^t
on graph it is declining from $100 because it is being discounted to time
0 getting smaller
rate of return Correct Answer-profit/investment
PV of multiple CF Correct Answer-sum PV for each year at discount
rate (what we always do)
NPV Correct Answer-=C0 +sum of PV's
slide in chapter 2 of multiple CF
annuity Correct Answer-an asset that pays a fixed sum each year for a
specified number of years
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 cracker. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $15.49. You're not tied to anything after your purchase.
