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Finance Test 2
Note cards
Question | Answer |
---|---|
Multiple cash flows | Different amounts over a specified time period. |
Annuity | Same amount over a specified time period |
Perpetuity | Infinite cash flow (constant growth and no growth). |
Ordinary Annuity | Cash flow is at the end of the period. |
Annuity Due | Cash flow is at the beginning of the period. |
Capital Budgeting | What long-term investments should a firm take on. |
Capital | The resources that a company has (i.e. dollars). |
Incremental Cash flows | FCF asre those that will only occur if the project is accepted. |
Forecasting risk | How well have you estimated the future revenues, expenses, capex, NWC. |
Scenario Analysis | Change several variables at once to develop base, best and worst case scenarios for NPV. |
Sensitivity Analysis | Using your BASE case, change one variable at a time to see which variables have the most impact on project NPV. |