Summary Recap Fundamentals of Corporate Finance, Global Edition, ISBN: 9781292215075 Capital Structure And Financial Planning

CS&FP exam:

Week 1; Recap AP&CP:

 Perpetuity = forever
 No growth? V = C/r



 Annuity = period




Bond Valuation:
Yield to maturity:
( couponrate∗face value )
CPN =
number of coupon payments per year




Stock valuation:
Constant-growth dividend discount model:




Pt = (Dt+1 + Pt+1) / (1+rE)

, Enterprise valuation:
Discounted free cash flow model :




EV = enterprise value = E+D
V = value = E + D – Ex. cash

EV = Vt + Excess cash
Vt = equity + debt – excess cash
Equity = Vt – debt + excess cash

Vt = FCFt+1 / (WACC – g)N
Vt = FCFt+1 / WACC

Current share price: P = EV/N

Capital asset pricing model BDH:
CAPM:




Beta = systematic risk.
E(Rm) – Rf = market risk premium



Weighted average cost of capital:




Weigh of equity = = wE = E/(E+D)
Weight of debt = wD = D/(D+E)