ECO 130 Chapter Notes - Chapter 5: Metlife, Mutual Fund
31 Oct 2016
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Manage and influence the flow of currency; money management. Fin has three objectives: max profit, min risk, max growth. Stock price = f ( max profit; mi risk; max growth) Max the value of the firm = stock price * number of shares o/s. If ibm today is trading at per share. Value of firm = ()*(10*10^6) = . 5 billion (olivia macedo) Future value = present value* (1 + k)^n. Average price appreciation (growth; rate) is 7% per year. Assume real estate jump from quarter to quarter (quarter compounding). Redo the above as if it is growing monthly! If i owe you ,602,557 in 20 years from now. I want to discount it today and pay you cash now at 7% yearly but discounted quarterly. Pv = 1,602,557/( 1 + . 07/4) ^ (20*4) A (cid:272)o(cid:373)pa(cid:374)y"s sales is proje(cid:272)ted to (cid:271)e (cid:1004) (cid:373) (cid:271)y de(cid:272). (cid:1007)(cid:1005), (cid:1006)(cid:1004)(cid:1006)(cid:1004). Total value of oil stock is currently ,835,261. 67.
