Managerial finance
Capital budgeting process involves estimate the cash flows from the project, to make
the decision wheter to invest in the project.
Cost of capital determination. Loans, bonds,
Chapter 4: Discounted of valuation
Present value and future value of a single cash flow
Pv and Fv of a single CF , a series of CF´S
PVA & FVA: annuity
PV of perpetity
Interest rates: APR( annual percentage rate, EAR ( affective annual rate)
0
1
2
3
4
Discounting
$1,000
PV: FV/ (1+r) t quarterly
FV
0
1
$5,000
FV: PV(1+r)t compunding
2
3
4
Financial market
Investors place money and receive return and debtors pull money and they have
to pay a return (interest).
In financial market you can find stocks , bonds and equity securities.
If you see the balance sheet of a company you are going to find the equity and the debt
in the end in the accounting equation
Assets= L+OE
2 kinds of market
Primarly and secundary , the first one issues new stocks and the secondarly trades
existing bonds and stocks.
Investments companies.
Insurances companies