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HFT 4464

HFT 4464. Exam 3 Review. This Exam Covers the Following Topics. Chapter 8: Cost of Capital Chapter 9: Capital Budgeting Chapter 10: Capital Budgeting Methods 30 Multiple Choice Questions Total 12 are vocabulary oriented. Chapter 8. Solve problems for Cost of Capital Cost of Debt

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HFT 4464

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  1. HFT 4464 Exam 3 Review

  2. This Exam Covers the Following Topics • Chapter 8: Cost of Capital • Chapter 9: Capital Budgeting • Chapter 10: Capital Budgeting Methods • 30 Multiple Choice Questions Total • 12 are vocabulary oriented

  3. Chapter 8 • Solve problems for Cost of Capital • Cost of Debt • After Tax Cost of Debt • Cost of Preferred Stock • Cost of Internal Equity • Cost of External Equity • Weighted Average Cost of Capital • See Worksheet Problem & quiz from Ch. 8

  4. Chapter 9 • Calculate Net Investment for a Project • Calculate Net Cash Flows for a Project • Similar to Chapter 9 homework • Know difference in opportunity & sunk costs

  5. Chapter 10 • Capital Budgeting Problems for the Following Methods • Payback period • Discounted payback period • Net present value • Profitability index • Internal rate of return • Modified internal rate of return • Refer to handout sample problem

  6. Vocabulary • Independent versus mutually exclusive decision • Definition of opportunity cost • What are net cash flows? • Definition of payback period • Net present value & scale differences • Issuance costs • Purposes for considering a capital project • Marginal cost of capital • What is terminal value in the MIRR formula?

  7. Other Notes: • You must provide your own Scantron • Brown form • You must provide your own calculator • Formula sheet will be provided • Bring your book for tables • Scratch paper will be provided • Questions?

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