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

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
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
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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