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Present Values 3
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IntroductionLecture1.1
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SolutionsLecture1.2
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List Comprehension ReviewLecture1.3
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NPV vs. IRR 4
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IntroductionLecture2.1
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The Functions Part 1Lecture2.2
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The Functions Part 2Lecture2.3
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Testing NPV vs. IRRLecture2.4
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Other Profit Measures 4
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IntroductionLecture3.1
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Measures Part 1Lecture3.2
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Measures Part 2Lecture3.3
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Investment TimingLecture3.4
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Depreciation 4
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IntroductionLecture4.1
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The Basic ProblemLecture4.2
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Creating the Depreciation EquationLecture4.3
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The Tax ShieldLecture4.4
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Cash Flow Challenges 9
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IntroductionLecture5.1
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Total Cash FlowsLecture5.2
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Solution 1Lecture5.3
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Solution 2Lecture5.4
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Solution 3Lecture5.5
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Solution 4Lecture5.6
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Solution 5Lecture5.7
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Solution 6Lecture5.8
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Solution 7Lecture5.9
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Capital Asset Pricing Model 3
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IntroductionLecture6.1
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The EquationLecture6.2
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Graphing CAPMLecture6.3
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Risky Debt 3
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IntroductionLecture7.1
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Adjusting Debt for RiskLecture7.2
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SolutionLecture7.3
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Unlevering Equity 3
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IntroductionLecture8.1
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The r for EquityLecture8.2
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Including TaxesLecture8.3
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Weighted Average Cost of Capital 4
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IntroductionLecture9.1
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The EquationLecture9.2
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TaxesLecture9.3
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SolutionLecture9.4
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Debt Effect Analysis 2
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IntroductionLecture10.1
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The Effect of Debt on EquityLecture10.2
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WACC Challenge 2
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IntroductionLecture11.1
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SolutionLecture11.2
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Relative Valuation 4
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IntroductionLecture12.1
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Financial ConceptLecture12.2
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Solving Systems of EquationsLecture12.3
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ArbitrageLecture12.4
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Forward Contract Valuation 3
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IntroductionLecture13.1
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Forward Contract BasicsLecture13.2
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Forward ContractsLecture13.3
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Total Cash Flows
The total cash flows for each period is equal to the equation:
Equation
TCF = OCF – NCS – CNWC
TCF = Total Cash Flow
OCF = Operating Cash Flow
NCS = Net Capital Spending
CNWC = Change in Net Working Capital
Also, we have the below equations.
Equations
Operating Cash Flows = Revenues – Costs – Taxes
Net Capital Spending = Depreciation Charge + Change in Fixed Assets
Net Capital Spending = Depreciation Charge + Change in Fixed Assets
Fixed assets are long term investments such as land, equipment and buildings.
Net working capital is current assets – current liabilities.
Challenge
A machine is bought for $100,000 in period 0, and will produce $50,00 of profit for periods 1-5. What is the present value of this investment? Assume a discount of 5% and we aren’t using depreciation. The tax rate is also 0%.
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Introduction
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Solution 1