Monday, November 10, 2014

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—the sum of all future cash flows, both incoming and outgoing, is the net present value after allowing for cost of servicing debt capital. Advantages: Makes explicit allowance for the cost of debt garbage out". Small changes in inputs can result in large changes in the value of a ... Read Article

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An investor buys into a mutual fund by purchasing shares from the fund and cashes out by redeeming those (no debt), potential EPS levels range from zero to infinity given potential EBIT levels ranging from zero to [INT] ÷ #shs} to infinity, given that EBIT ranges from zero to infinity. ... Get Doc

Highlights
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* Corporate Debt is a Put Option Sold The simple accounting identity states that the asset value must equal the sum of debt and equity at any point in time and so we debt, we get Figure 12.5: Market put option although the out-of-the-money payoff has been lifted from 0 to $50 on the ... Get Content Here

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Payback period in capital budgeting refers to the period of time required to recoup the funds expended in an investment, or to reach the break-even point. For example, a $1000 investment which returned $500 per year would have a two-year payback period. The time value of money is not taken into ... Read Article

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