Corporate Finance Exam 2 Review with |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
correct answers |||\\\
What is the calculation for EFN? - correct answer✔✔Projected Increase in Total Assets -
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Projected Increase in Spontaneous Liabilities - Projected Increase in Retained Earnings
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In the Intuit Example, what could cause a difference between the External Financing Needed
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(EFN) and Change in Cash we Calculated for 2020? - correct answer✔✔Differences in the
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Current (2019) and Projected (2020) Year Assumptions |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
What ratio do you not need to pay special attention to? - correct answer✔✔market/book ratio
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What value is equal to all of the future free cash flows of the firm discounted to the present
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value? - correct answer✔✔enterprise value |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
How do you calculate the Cost of Equity based on the Capital Asset Pricing Model (CAPM)? -
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correct answer✔✔Market Risk Premium (x) Beta (+) Risk Free Rate
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What is the calculation for WACC? - correct answer✔✔Cost of Equity (x) % of Equity + Cost of
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Debt (x) % of Debt (x) (1 - tax rate)
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When discounting dividends, what is the appropriate discount rate? - correct answer✔✔cost
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of equity
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Is the discounted cash flow analysis or dividend discount method a better approach to value a
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firm? - correct answer✔✔DCF
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correct answers |||\\\
What is the calculation for EFN? - correct answer✔✔Projected Increase in Total Assets -
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Projected Increase in Spontaneous Liabilities - Projected Increase in Retained Earnings
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In the Intuit Example, what could cause a difference between the External Financing Needed
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(EFN) and Change in Cash we Calculated for 2020? - correct answer✔✔Differences in the
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Current (2019) and Projected (2020) Year Assumptions |||\\\ |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
What ratio do you not need to pay special attention to? - correct answer✔✔market/book ratio
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What value is equal to all of the future free cash flows of the firm discounted to the present
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value? - correct answer✔✔enterprise value |||\\\ |||\\\ |||\\\ |||\\\ |||\\\
How do you calculate the Cost of Equity based on the Capital Asset Pricing Model (CAPM)? -
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correct answer✔✔Market Risk Premium (x) Beta (+) Risk Free Rate
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What is the calculation for WACC? - correct answer✔✔Cost of Equity (x) % of Equity + Cost of
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Debt (x) % of Debt (x) (1 - tax rate)
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When discounting dividends, what is the appropriate discount rate? - correct answer✔✔cost
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of equity
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Is the discounted cash flow analysis or dividend discount method a better approach to value a
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firm? - correct answer✔✔DCF
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