Question
1)In the AFN calculation, why is short-term bank debt (Notes Payable)not a part of spontaneous liabilities? 2)Explain the difference between NOPAT and Net Income. Which
1)In the AFN calculation, why is short-term bank debt (Notes Payable)not a part of "spontaneous liabilities"?
2)Explain the difference between NOPAT and Net Income. Which is a better measure of the performance of thefirm's operations?
3)Describe the risk/return relationship in the context of finance. Why do you think that relationship exists?
4)Company ABC had $10 Million in retained earnings on its balance sheet at the end of the year. Does this mean that ABC can pay $10 Million in dividends to its shareholders? Explain.
5)What does "interest rate risk"mean for a (fixed coupon rate) bond? Which types of bonds tend to have high interest rate risk?
6)When is it most appropriate to calculate the E.A.R. on a loan or on an investment?
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1 Shortterm bank debt such as notes payable is not typically considered part of spontaneous liabilities in the AFN Additional Funds Needed calculation because spontaneous liabilities are usually assoc...
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
12th Edition
978-0030243998, 30243998, 324422695, 978-0324422696
