Management and Organizational Studies 1023A/B Lecture Notes - Lecture 6: Net Present Value, Cash Flow, Market Risk

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Barry Hawn

Document Summary

The science or study of the management of funds webster"s collegiate dictionary. Goal of the firm: goal of the firm is to create value for the firm"s shareholders. Maximizing the price of the existing common stock. Good financial decisions will help increase stock price: poor financial decisions will lead to a decline in stock price. Serves as an arbitrator and moderator between conflicting interest groups or stakeholders and objectives. Since we can earn interest on money received today, it is better to receive money sooner rather than later a. ii. Computation of present value (an investment can be viewed in two ways its future value or its present value. The interest rate is used to the present value called the discount rate. Let"s verify that if we put . 72 in the bank today at 12% interest that it would grow to at the end of two years.