New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Study Guide Exam 2

by: Chris Holder

Study Guide Exam 2 FIN 315

Marketplace > Finance > FIN 315 > Study Guide Exam 2
Chris Holder
GPA 3.28

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

This is a list of the material that was said to be on the test. Make sure that you know how to use your financial calculator to calculate Future Value, Present Value for a single amount, FV & PV ...
Business Finance
Dr. Milanese
Study Guide
FIN 315
50 ?




Popular in Business Finance

Popular in Finance

This 3 page Study Guide was uploaded by Chris Holder on Monday February 29, 2016. The Study Guide belongs to FIN 315 at a university taught by Dr. Milanese in Spring 2016. Since its upload, it has received 69 views.


Reviews for Study Guide Exam 2


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 02/29/16
Chris Holder FIN 315: Managerial Finance Exam 2 Review Cash flow is the meat and potatoes that keeps a firm alive Understand how cash flows work Chapter 4: Cash flows Positive values represent cash inflows Negative values represent cash outflows () Depreciation: a portion of the costs of fixed assets charged against annual revenues over time. Depreciation for tax purposes is determined by using the modified accelerated cost recovery system (MACRS) Depreciation formula = (full cost – salvage value)/useful Life Depreciation formula under (MACRS) = (full cost)/useful life Recovery period aka useful life, is the appropriate depreciable life of a particular asset as determined by MACRS. (n + 1) Developing the statement of cash flows Liquidity is increased by cash inflows and decreased by cash outflows. Categorization of Cash flows:  Operating Activities: cash flows directly related to sales and production  Investment Activities: cash flows related to purchase and sale of both fixed assets and equity investments in other firms.  Financing Activities: cash flows related and that result from debt (loans from the bank) and equity transactions. Calculating Operating Cash Flows: the cash flow generated from normal operations: OCF=NOPAT+DEPRECIATION Free Cash Flow equations: Net Fixed Asset Investment NFAI=Change∈¿Assets+Depreciation Net Current Asset investment NCAI=Change∈current assets−Change∈ (accounts payable+accrua)s Free Cash Flow FCF=OCF−NFAI−NCAI Then evaluate according to the interest expense, if FCF > INTEREST, then the firm generated a sufficient amount of cash flow to satisfy investors. Chapter 5 Time value of money: Money today is worth more than a money in the future. FV PV= n Present Value: (1+i) Future Value: FV=PV ×(1+i) n Discounting: present value(the inverse of future value) Compounding: future value Annuities(2 types) nominal vs effective rate: 1. nominal rate: the stated annual rate of interest charged. Does not reflect the effects of compounding frequency. 2. effective rate: the annual rate of interest actually paid/earned. This rate reflects the effects of compounding frequency** ordinary annuity vs annuity due: Annuity Due v Ordinary Annuity Ordinary Annuity: the cash flow occurs at the end of each period. (INCALCULATOR_END) Annuity Due: the cash flow occurs at the beginning of each period. They have higher future value than ordinary annuities because each cash flow can earn interest for 1 year more than each of an ordinary annuity.*(INCALCULATOR_BEGIN) Finding the future value of an ordinary annuity Calculator Inputs Input Function -1000 PMT 5 N 7 I CPT FV Finding the present value of an an ordinary annuity Calculator Inputs Input Function 700 PMT 5 N 8 I CPT PV LONG METHOD OR FOR FINDING THE PRESENT VALUE FOR A PERIOD SUM OF PRESENT VALUES ∑ PV= FV (1+i)n *To Find The Present or Future value of an annuity due just change the mode from END to BEGIN mode Amortization of a loan  (on financial calculator. = shift+AMORT+enter+(++)) Net Present Value  The sum of all the present values for a mixed stream. Used (FV, I, n as the period, pmt=0) Internal Rate of Return Perpetuity is an annuity with an infinite life PV=CF ÷r *You must also learn how to use the financial calculator. Mixed Streams: unequal periodic cash flows Future value of a mixed stream:  You need to use your calculator to calculate the future value of each individual cash flow  Then sum the values to get the future value of the entire cash flow stream. Present value of a Mixed Stream:  Use the future/present value of a Single lump sum equation for each period then add up all the values


Buy Material

Are you sure you want to buy this material for

50 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Janice Dongeun University of Washington

"I used the money I made selling my notes & study guides to pay for spring break in Olympia, Washington...which was Sweet!"

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.