FIN 302 Study Guide - Final Guide: Cash Flow, Net Present Value, Sunk Costs
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FIN 302 Full Course Notes
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Session 4: valuation of cash flows - part 1. We are currently at the end of year 0, so in five years we will have to set t = 5. Session 5: valuation of cash flows - part 2. Session 7: capital budgeting criteria - part 1. Npv = pv cash inflows pv cash outflows. Quantifies total value created for the firm. Measures total percentage return over the project"s life. If npv > 0, then pi > 1. Lecture 9: estimating cash flows - part 1. Only incremental cash flows matter - only if the project is implemented. Ignore - overhead, sunk costs, and financing costs. Include - opportunity costs, side effects, changes in nwc, capital expenditures and asset sales, and their tax effects. Session 10: estimating cash flows - part 2. Forecast cash flow drivers (sales, costs, and investments) Derive individual cash flows for each years of project life - fcfs. Compute the npv and make an investment decision.
