# Finance Test 1 Prep*

Default risk – If the lender thinks that there's a igher probability that the borrower will default, they'll charge a higher interest rate
Calculating NPV – 1. The level and timing of the "incremental" cash flows of the investment
2. The required rate of return on the investment
What is the purpose of Form W-2? – to itemize how much money was earned by an employee and how much was withheld and sent to the IRS
Cuales son las variables que definen una inversión – capital invested
Operating cash flow
residual value
horizon

capital invertido
cash flow de explotación
valor residual
horizonte temporal

P/E Ratio Model – Price per share/net income per share
Bonds – long-term loans made to governments or corporations that are made by investors
the entity – организация / компания
The revenue is \$13,500, the cost of goods sold is \$1,910, the selling, general and administrative expenses are \$2,800, and depreciation is \$922. What is the EBIT?
General Obligation municipal bonds – state and local bonds that are repaid with property tax dollars
APY – Annual percentage yield or (EAR) Effective annual rate which includes compounding
APY/EAR > APR
The revenue is \$13,500, the cоst оf gоods sold is \$1,910, the selling, generаl аnd аdministrative expenses are \$2,800, and depreciation is \$922. What is the EBIT?
valuing a stream of cash flows – compute the present value of each cash flow and then combine values to get present value. To get future value take the present value and convert it into future
Cn/(1+r)^n
an investment – un investissement
Cash inflows – The sums of money received by a business during a period of time.
prospectus – document that explains goals of fund, how it is managed, fees, past performance, and details of op

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