Exam (elaborations)
CFA Level 1 - Corporate Finance Questions and Answers 2024
- Course
- Institution
CFA Level 1 - Corporate Finance
[Show more]
Seller
Follow
julianah420
Reviews received
Content preview
CFA Level 1 - Corporate FinanceCapital Budgeting Process (4 Steps) - answer1. Generate Idea
2. Analyze Projects
3. Create Firm Budget
4. Monitor & Post-Audit
[GACM!]
Categories of Capital Budgeting Process (5) - answer1. Replacement to Maintain or
Reduce Costs
2. Expansion of current business
3. New Products or Developments
4. Required/Regulatory Updates
5. Other (R&D, pet projects, etc)
[RENRO!]
Unconventional Cash Flows - answerMore than one sign change
5 Principles of Capital Budgeting - answer1. Cash Flow based, not accounting Income
2. Opportunity cost is considered
3. Timing of Cash flows (Discounting)
4. Tax considerations (CF is after-tax basis)
5. Required Return reflects Financing costs
[COTTR!]
Formula for NPV - answer
Formula & Definition for IRR - answerInternal Rate of Return is the Discount Rate
where... PV (Inflows) = PV (Outflows)
Payback Period & Discounted Payback Period
(Calculator Method) - answerInput CF's of a project. Click [NPV] and scroll down for
PPB and DPPB
Formula for Profitability Index of a Project - answer
Graph of NPV Profiles vs. Discount Rates - answerIntersects at IRR (where NPV = 0)
Advantages & Disadvantages of using IRR - answerPro: Better measure of margin of
profitability
Con: Projects can have multiple or no IRR
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 julianah420. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
77254 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now