COMMERCE 3FA3 Study Guide - Final Guide: Foreign Exchange Spot, Purchasing Power Parity, Operating Leverage

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 3FA3
• Professor: Anwar Husain

Document Summary

Ebit = earnings before interest and taxes kdb. N = number of rights required to buy one share of stock. Cost of capital and capital structure k k. = cost of capital for an unlevered firm. Po = time 0 share price d1 = period 1 dividend ke = share yield r = retention rate return on investment. Pv of tax savings from cca (declining balance depreciation) Pv of lost tax shield if an asset is sold after n years (declining balance depreciation) d+k k+ ds. = kd (1- c) = after tax cost of debt. Vb = value of the target firm fraction of combined firm received by target firm shareholders. S/s = change in the spot exchange rate f. F(0,t)= forward rate for time t at time 0. F(0,1) = forward rate for time 1 at time 0. = (fixed) cost of selling securities or of borrowing. = total amount of cash needed for the period.