100% tevredenheidsgarantie Direct beschikbaar na je betaling Lees online óf als PDF Geen vaste maandelijkse kosten
logo-home
Eerder door jou gezocht
Eerder door jou gezocht
logo
Summary of Introduction to Finance and Accounting for the Midterm! €3,49
In winkelwagen
Snel navigeren naar
Voorbeeld
  2.  
  3. Universiteit Utrecht (UU)
  4.  
  5. Introduction to Finance and Accounting

Samenvatting

Summary of Introduction to Finance and Accounting for the Midterm!

3 beoordelingen
 19 keer verkocht

This is a very usefull summary of all the formulas and information from the books and the lectures. It is a summary which you can use to learn for the midterm!

Voorbeeld 2 van de 15  pagina's

Document informatie

  • Nee
  • Chapter 1 till 4
  • 7 oktober 2019
  • 15
  • 2019/2020
  • Samenvatting

Onderwerpen

Gekoppeld boek

book image

Titel boek:

Auteur(s):

  • Uitgave:
  • ISBN:
  • Druk:

Meer samenvattingen voor studieboek

Alles voor dit studieboek (35)

Geschreven voor

Alle documenten voor dit vak (13)

3  beoordelingen

review-writer-avatar

Door: fmkruijssen • 4 jaar geleden

review-writer-avatar

Door: thijstwenhfel • 5 jaar geleden

Handige beknopte samenvatting! Goed overzicht

review-writer-avatar

Door: Rex9311 • 5 jaar geleden

Verkoper

avatar-seller
bczutrecht

Ontvangen beoordelingen

Voorbeeld van de inhoud

Summary of Introduction to Finance and Accounting, Utrecht University.


Principles of Corporate Finance
Brealey, Myers and Allen

Chapter 1 – Introduction to Corporate Finance
There are three types of enterprises

1. Sole proprietorship; it is simple to establish, it is controlled by the owner and the owner is liable.
An example is a hairdresser or a cleaner.
2. Partnership; it is simple to establish, there is a shared control and a shared ownership which
means that there are more and broader skills and resources, there is limited and unlimited
liability. A law firm (Pearson, Spector, Litt) is an example.
3. Corporation; there is a separated ownership and separated control, it is easy to transfer
ownership through stockholders, the stockholders own the corporation but cannot control it, the
CEO (etc.) makes the decisions, there is a limited liability which means that shareholders cannot
be held personally responsible for the corporation’s debts. A corporation pays for its real assets
by selling claims on them and on the cash flow that they will generate. These claims are calls
financial assets or securities.

The financial manager makes investment (about spending
money, purchase of real assets) and financial decisions
(about getting money, sale of securities and other financial
assets). He/she stands between the firm and the outside
investors. A smart investment decision creates more value
than a smart financing decision.

Investment decisions are often referred to as capital
budgeting or capital expenditure (CAPEX) decisions because most large corporations prepare an annual
capital budget listing the major projects approved for investment. Financing decisions are less important
than investment decisions -> value comes mainly from the asset side of the balance sheet; thereby should
the financing strategy be simple.

There are tangible assets (assets that you can touch and kick) and intangible assets (assets such as
research and development, advertising and computer software. There is also a difference between real
assets (they need to be paid for) and financial assets or securities (bank loan, corporate bond).

A stockholder wants three things

1. To be as rich as possible to maximize their current wealth
2. Transform wealth into the most desirable time pattern of consumption, either by borrowing to
spend now or investing to spend later; shareholders can do this on their own – corporation
doesn’t need to do this
3. To manage risk characteristics of chosen consumption plan; shareholders can do this on their
own – corporation doesn’t need to do this

So, the most appropriate goal for the financial manager is to maximize share (stockholder) value.
Compared to the other goals, like maximizing profits (which year’s profit -> it’s about the long term profit,
not short term), maximize market share (but make losses while doing so?), avoid bankruptcy (but what if
further losses are made?), maximizing share value is the best one because they can increase the wealth of
the stockholder. The shareholders will buy the stock for a long term, so they want to have a return on a

, long period of time. But laws need to be upheld, ethics and trust matter, many shareholders care about
long term rather than short term.

Stockholders only want the corporation to keep their money if they will get more money out of it. There is
always a rate where the stockholders get more or less money. This rate is called an opportunity cost of
capital. It depends on the risk of the proposed investment project.

In a corporation there can be an agency problem where the shareholder is the principal and the manager
is the agent. Agency costs are incurred when 1) managers do not attempt to maximize firm value and
2) shareholders incur costs to monitor the mangers and constrain their actions.

Chapter 2 – How to calculate present values
Time value of money; a dollar today is worth more than a dollar tomorrow, because of interest. Positive
interest rates imply money you invest today will be worth more in the future.

Future Value (FV): the amount an investment is worth after one or more periods.
V t =V 0 ( 1+ r )t - FV ( I )=I∗(1+r )t

Simple interest: Interest earned only on the original principal amount invested.
R*t

Compound Interest: Interest earned on both the initial principal and the interest reinvested from prior
periods (interest on interest).

Total interest:
( 1+r )t −1
Present Value: The current value of future cash flows discounted at the appropriate discount rate. The
present value of an investment is equal to the market price of the investment.
Ct
PV = C 0 =
( 1+ r )t
Present Value Discount Factor (DF) = PF of 1 dollar. This can be used to compute present value of any
cash flow. It measures the present value of one dollar received in year t.
1
DF =
( 1+ r )t
 Discounting to present values enables you to add up multiple cash flows.
CF 1 CF 2 CF 3
PV 0= 1
+ 2
+
( 1+ r ) ( 1+r ) ( 1+r )3
Discount Rate
PV = FV x Discount Rate
Discount Rate = PV/FV

Net Present Value (NPV): it tells you if an investment is profitable. NVP > 0 means that the investment is
profitable. NVP < 0 means that is not profitable. NVP = Sum of PV’s – Investment (= cashflow today).
C1
NVP = C 0+
( 1+r )
Rate of Return: if the return exceeds the return foregone by not investing in financial markets
(opportunity capital), you should go ahead with the investment in a certain project. The rate of return is

Dit zijn jouw voordelen als je samenvattingen koopt bij Stuvia:

Bewezen kwaliteit door reviews

Bewezen kwaliteit door reviews

Studenten hebben al meer dan 850.000 samenvattingen beoordeeld. Zo weet jij zeker dat je de beste keuze maakt!

In een paar klikken geregeld

In een paar klikken geregeld

Geen gedoe — betaal gewoon eenmalig met iDeal, creditcard of je Stuvia-tegoed en je bent klaar. Geen abonnement nodig.

Direct to-the-point

Direct to-the-point

Studenten maken samenvattingen voor studenten. Dat betekent: actuele inhoud waar jij écht wat aan hebt. Geen overbodige details!

Veelgestelde vragen

Wat krijg ik als ik dit document koop?

Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.

Tevredenheidsgarantie: hoe werkt dat?

Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.

Van wie koop ik deze samenvatting?

Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper bczutrecht. Stuvia faciliteert de betaling aan de verkoper.

Zit ik meteen vast aan een abonnement?

Nee, je koopt alleen deze samenvatting voor €3,49. Je zit daarna nergens aan vast.

Is Stuvia te vertrouwen?

4,6 sterren op Google & Trustpilot (+1000 reviews)

Afgelopen 30 dagen zijn er 64257 samenvattingen verkocht

Opgericht in 2010, al 15 jaar dé plek om samenvattingen te kopen

Begin nu gratis

Laatst bekeken door jou

Essay ·

(0)

WRT 101 Essay 2 Outline Peer Review

Voordeelbundel ·

(0)

Set of 3 A* Russia and its Rulers Economy & Society Exemplar Essays

College aantekeningen ·

(0)

BIOL 101 - Chapter 2 Notes: Small Molecules and the Chemistry of Life
€3,49  19x  verkocht
  • (3)
In winkelwagen
Toegevoegd