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on 04-Jan-2017 (Wed)
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Flashcard 1426250665228
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Parent (intermediate) annotation
Open itReading 14 covers the theory of the consumer, which addresses the demand for goods and services by individuals who make decisions to maximize the satisfaction they receive from present and future
Original toplevel document
Study Session 4cribe the marketplace behavior of consumers and firms. Reading 13 explains the concepts and tools of demand and supply analysis—the study of how buyers and sellers interact to determine transaction prices and quantities. <span>Reading 14 covers the theory of the consumer, which addresses the demand for goods and services by individuals who make decisions to maximize the satisfaction they receive from present and future consumption. Reading 15 deals with the theory of the firm, focusing on the supply of goods and services by profit-maximizing firms. That reading provides the basis for understanding the c
Flashcard 1429079461132
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Parent (intermediate) annotation
Open ithead>The trivium is t he organon, or instrument, of all education at all levels because the arts of logic, grammar, and rhetoric are the arts of communicat ion itself in that they govern the means of communication—namely, reading, writing, speaking, and listening. Thinking is inherent in these four activities.<html>
Original toplevel document (pdf)
cannot see any pdfsFlashcard 1429338983692
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Parent (intermediate) annotation
Open itA practical, normative study is one that seeks to regulate, to bring into conformity with a norm or standard—for example, ethics. The norm of ethics is the good, and its purpose is to bring human conduct into
Original toplevel document (pdf)
cannot see any pdfsFlashcard 1431580314892
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
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| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itTo represent our consumer’s preferences graphically, not just mathematically, we have the concept of an indifference curve , which represents all the combinations of two goods such that the consumer is entirely indifferent among them.
Original toplevel document
3. UTILITY THEORY: MODELING PREFERENCES AND TASTESweaker measures than cardinal rankings because they do not allow the calculation and ranking of the differences between bundles. 3.3. Indifference Curves: The Graphical Portrayal of the Utility Function <span>It will be convenient for us to represent our consumer’s preferences graphically, not just mathematically. To that end, we introduce the concept of an indifference curve , which represents all the combinations of two goods such that the consumer is entirely indifferent among them. This is how we construct such a curve: Consider bundles that contain only two goods so that we can use a two-dimensional graph to represent them—as in Exhibit 1, where a particular bund
Flashcard 1436162067724
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
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| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itExamples of Explicit Costs Net income of a business reflects residual income remaining after all explicit costs have been paid. Explicit costs are the only costs necessary to calculate accounting profit. Expenses relating to advertising, supplies, utilities, inventory and equipment actually
Original toplevel document
Explicit Cost Definition | InvestopediaAn explicit cost is an expense that has occurred and has a clearly defined dollar amount. These expenses are incurred during business operations and are actual out-of-pocket cash outlays. The objective dollar amounts are subject to reporting. <span>Examples of Explicit Costs Net income of a business reflects residual income remaining after all explicit costs have been paid. Explicit costs are the only costs necessary to calculate accounting profit. Expenses relating to advertising, supplies, utilities, inventory and equipment actually purchased are examples of explicit costs. Although the depreciation of an asset is not an activity that can be tangibly traced, depreciation expense is an explicit cost because it relates to the cost of the underlying asset that the company owns. Explicit Costs vs. Implicit Costs Explicit costs arise based on what has actually been purchased as opposed to implicit costs that arise based on what has actually been given up other t
Flashcard 1438159080716
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Parent (intermediate) annotation
Open ithe post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: <span>Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span><body><html>
Original toplevel document
Subject 1. Capital Budgeting: Introductioninclude in the capital budget. "Capital" refers to long-term assets. The "budget" is a plan which details projected cash inflows and outflows during a future period. <span>The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. Project classifications: Replacement projects. There are two types of replacement d
Flashcard 1438328687884
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
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| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itNegative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the ol
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438371155212
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| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itUnlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's agg
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438373514508
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
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| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itcapital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to <span>maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all prof
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438424370444
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
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| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438426205452
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438428040460
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
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| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Flashcard 1438429875468
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438431710476
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438433807628
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438436691212
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438438788364
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438441409804
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438443244812
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438445079820
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
Flashcard 1438446914828
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itIndependent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingIn a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat
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1.6 Higher-Order Functions
t functions. These patterns can also be abstracted, by giving them names. To express certain general patterns as named concepts, we will need to construct functions that can accept other functions as arguments or return functions as values. <span>Functions that manipulate functions are called higher-order functions. This section shows how higher-order functions can serve as powerful abstraction mechanisms, vastly increasing the expressive power of our language. 1.6.1 Functions as Arguments
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1.6 Higher-Order Functions
153589902 1.6.2 Functions as General Methods Video: Show Hide We introduced user-defined functions as a mechanism for abstracting patterns of numerical operations so as to make them independent of the particular numbers involved. <span>With higher-order functions, we begin to see a more powerful kind of abstraction: some functions express general methods of computation, independent of the particular functions they call. Despite this conceptual extension of what a function means, our environment model of how to evaluate a call expression extends gracefully to the case of higher-order functions, withou
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1.6 Higher-Order Functions
func improve(update, close, guess) func golden_update(guess) func square_close_to_successor(guess) func approx_eq(x, y, tolerance) This example illustrates two related big ideas in computer science. First, <span>naming and functions allow us to abstract away a vast amount of complexity. While each function definition has been trivial, the computational process set in motion by our evaluation procedure is quite intricate. Second, it is only by virtue of the fact that w
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1.6 Higher-Order Functions
puter science. First, naming and functions allow us to abstract away a vast amount of complexity. While each function definition has been trivial, the computational process set in motion by our evaluation procedure is quite intricate. Second, <span>it is only by virtue of the fact that we have an extremely general evaluation procedure for the Python language that small components can be composed into complex processes. Understanding the procedure of interpreting programs allows us to validate and inspect the process we have created. As always, our new general method improve needs a test to check i
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1.6 Higher-Order Functions
tement is executed successfully. 1.6.3 Defining Functions III: Nested Definitions The above examples demonstrate how the ability to pass functions as arguments significantly enhances the expressive power of our programming language. <span>Each general concept or equation maps onto its own short function. One negative consequence of this approach is that the global frame becomes cluttered with names of small functions, which must all be unique. Another problem is that we are constrained by particular function signatures: the update argument to improve must take exactly one argument. Nested function definitions address both of these problems, but require us to enrich our environment model. Let's consider a new problem: computing the square root of a number. In programming languages, "square root" is often abbreviated as sqrt . Repeated application of the foll
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1.6 Higher-Order Functions
de the body of other definitions. >>> def sqrt(a): def sqrt_update(x): return average(x, a/x) def sqrt_close(x): return approx_eq(x * x, a) return improve(sqrt_update, sqrt_close) <span>Like local assignment, local def statements only affect the current local frame. These functions are only in scope while sqrt is being evaluated. Consistent with our evaluation procedure, these local def statements don't even get evaluated until sqrt is called. Lexical scope. Locally defined functions also have access to the name bindings in the scope in which they are defined. In this example, sqrt_update refers to the name a , which is
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1.6 Higher-Order Functions
ed. Lexical scope. Locally defined functions also have access to the name bindings in the scope in which they are defined. In this example, sqrt_update refers to the name a , which is a formal parameter of its enclosing function sqrt . <span>This discipline of sharing names among nested definitions is called lexical scoping. Critically, the inner functions have access to the names in the environment where they are defined (not where they are called). We require two extensions to our environment model to enable lexical scoping. Each user-defined function has a parent environment: the environment in which it was defined. When a us
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1.6 Higher-Order Functions
enclosing function sqrt . This discipline of sharing names among nested definitions is called lexical scoping. Critically, the inner functions have access to the names in the environment where they are defined (not where they are called). <span>We require two extensions to our environment model to enable lexical scoping. Each user-defined function has a parent environment: the environment in which it was defined. When a user-defined function is called, its local frame extends its parent environment. Previous to sqrt , all functions were defined in the global environment, and so they all had the same parent: the global environment. By contrast, when Python evaluates the first tw
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1.6 Higher-Order Functions
c average(x, y) [parent=Global] func improve(update, close, guess) [parent=Global] func approx_eq(x, y, tolerance) [parent=Global] func sqrt(a) [parent=Global] func sqrt_update(x) [parent=f1] func sqrt_close(x) [parent=f1] <span>Function values each have a new annotation that we will include in environment diagrams from now on, a parent. The parent of a function value is the first frame of the environment in which that function was defined. Functions without parent annotations were defined in the global environment. When a user-defined function is called, the frame created has the same parent as that function. Subseque
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1.6 Higher-Order Functions
=f1] Function values each have a new annotation that we will include in environment diagrams from now on, a parent. The parent of a function value is the first frame of the environment in which that function was defined. <span>Functions without parent annotations were defined in the global environment. When a user-defined function is called, the frame created has the same parent as that function. Subsequently, the name sqrt_update resolves to this newly defined function, which is passed as an argument to improve . Within the body of improve , we must apply our update fun
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1.6 Higher-Order Functions
name finds the first value bound to that name in the current environment. Python checks first in the sqrt_update frame -- no a exists. Python checks next in the parent frame, f1 , and finds a binding for a to 256. Hence, we realize <span>two key advantages of lexical scoping in Python. The names of a local function do not interfere with names external to the function in which it is defined, because the local function name will be bound in the current local environment in which it was defined, rather than the global environment. A local function can access the environment of the enclosing function, because the body of the local function is evaluated in an environment that extends the evaluation environment in which it was defined. The sqrt_update function carries with it some data: the value for a referenced in the environment in which it was defined. Because they "enclose" information in this way
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1.6 Higher-Order Functions
r than the global environment. A local function can access the environment of the enclosing function, because the body of the local function is evaluated in an environment that extends the evaluation environment in which it was defined. <span>The sqrt_update function carries with it some data: the value for a referenced in the environment in which it was defined. Because they "enclose" information in this way, locally defined functions are often called closures. 1.6.4 Functions as Returned Values Video: Show Hide We can achieve even more expressive power in our programs by creating functions whose returned values are themselves funct
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1.6 Higher-Order Functions
ocally defined functions are often called closures. 1.6.4 Functions as Returned Values Video: Show Hide We can achieve even more expressive power in our programs by creating functions whose returned values are themselves functions. <span>An important feature of lexically scoped programming languages is that locally defined functions maintain their parent environment when they are returned. The following example illustrates the utility of this feature. Once many simple functions are defined, function composition is a natural method of combination to include in our progr
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1.6 Higher-Order Functions
d is a powerful general computational method for solving differentiable equations. Very fast algorithms for logarithms and large integer division employ variants of the technique in modern computers. 1.6.6 Currying Video: Show Hide <span>We can use higher-order functions to convert a function that takes multiple arguments into a chain of functions that each take a single argument. More specifically, given a function f(x, y) , we can define a function g such that g(x)(y) is equivalent to f(x, y) . Here, g is a higher-order function that takes in a single argument x and returns another function that takes in a single argument y . This transformation is called currying. As an example, we can define a curried version of the pow function: >>> def curried_pow(x): def h(y): return pow(x, y) return h >>&g
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1.6 Higher-Order Functions
1.6.7 Lambda Expressions Video: Show Hide So far, each time we have wanted to define a new function, we needed to give it a name. But for other types of expressions, we don't need to associate intermediate values with a name. That is, <span>we can compute a*b + c*d without having to name the subexpressions a*b or c*d , or the full expression. In Python, we can create function values on the fly using lambda expressions, which evaluate to unnamed functions. A lambda expression evaluates to a function that has a single return expression as its body. Assignment and control statements are not allowed. >>> def compose1(f, g): return lambda x: f(g(x)) We can understand the structure of a lambda expression by constructing a corresponding English sentence:
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1.6 Higher-Order Functions
compose1(f, g) [parent=Global] func λ(x) [parent=Global] func λ(y) [parent=Global] func λ(x) [parent=f1] Some programmers find that using unnamed functions from lambda expressions to be shorter and more direct. However, <span>compound lambda expressions are notoriously illegible, despite their brevity. The following definition is correct, but many programmers have trouble understanding it quickly. >>> compose1 = lambda f,g: lambda x: f(g(x)) In general, Python style pr
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1.6 Higher-Order Functions
ver, compound lambda expressions are notoriously illegible, despite their brevity. The following definition is correct, but many programmers have trouble understanding it quickly. >>> compose1 = lambda f,g: lambda x: f(g(x)) <span>In general, Python style prefers explicit def statements to lambda expressions, but allows them in cases where a simple function is needed as an argument or return value. Such stylistic rules are merely guidelines; you can program any way you wish. However, as you write programs, think about the audience of people who might read your program one day.
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1.6 Higher-Order Functions
ns explicitly as elements in our programming language, so that they can be handled just like other computational elements. In general, programming languages impose restrictions on the ways in which computational elements can be manipulated. <span>Elements with the fewest restrictions are said to have first-class status. Some of the "rights and privileges" of first-class elements are: They may be bound to names. They may be passed as arguments to functions. They may be returned as the results of functions. They may be included in data structures. Python awards functions full first-class status, and the resulting gain in expressive power is enormous. 1.6.9 Function Decorators Video: Show Hide Python provides special syntax to apply higher-order functions as part of executing a def statement, called a decorator. Perhaps
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Flashcard 1438498032908
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438499867916
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438504324364
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438506159372
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438509829388
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438511664396
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438513499404
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438515334412
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438517169420
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438519004428
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
Flashcard 1438520839436
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itties create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are <span>a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. 
Original toplevel document
Subject 2. Basic Principles of Capital Budgetingd in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. <span>Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which cannot be recovered regardless of whether a project is accepted or rejected. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis. For example, a small bookstore is considering opening a coffee shop within its store, which will generate an annual net cash outflow of $10,000 from selling coffee. That is, the coffee shop will always be losing money. In the previous year, the bookstore spent $5,000 to hire a consultant to perform an analysis. This $5,000 consulting fee is a sunk cost; whether the coffee shop is opened or not, the $5,000 is spent. Incremental cash flow is the net cash flow attributable to an investment project. It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Forget sunk costs. Subtract opportunity costs. Consider side effects on other parts of the firm: externalities and cannibalization. Recognize the investment and recovery of net working capital. Opportunity cost is the return on the best alternative use of an asset or the highest return that will not be earned if funds are invested in a particular project. For example, to continue with the bookstore example, the space to be occupied by the coffee shop is an opportunity cost - it could be used to sell books and generate a $5,000 annual net cash inflow. Externalities are the effects of a project on cash flows in other parts of a firm. Although they are difficult to quantify, they should be considered. Externalities can be either positive or negative: Positive externalities create benefits for other parts of the firm. For example, the coffee shop may generate some additional customers for the bookstore (who otherwise may not buy books there). Future cash flows generated by positive externalities occur with the project and do not occur without the project, so they are incremental. Negative externalities create costs for other parts of the firm. For example, if the bookstore is considering opening a branch two blocks away, some customers who buy books at the old store will switch to the new branch. The customers lost by the old store are a negative externality. The primary type of negative externality is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the project, so they are non-incremental. Such cash flows represent a transfer from existing projects to new projects, and thus should be subtracted from the new projects' cash flows. Conventional versus non-conventional cash flows. A conventional cash flow pattern is one with an initial outflow followed by a series of inflows. In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. Some project interactions: Indepe
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| last reprioritisation on | suggested re-reading day | |||
| started reading on | finished reading on |
1.7 Recursive Functions
1.7.1 The Anatomy of Recursive Functions 1.7.2 Mutual Recursion 1.7.3 Printing in Recursive Functions 1.7.4 Tree Recursion 1.7.5 Example: Partitions 1.7 Recursive Functions Video: Show Hide <span>A function is called recursive if the body of the function calls the function itself, either directly or indirectly. That is, the process of executing the body of a recursive function may in turn require applying that function again. Recursive functions do not use any special syntax in Python, but t
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|---|---|---|---|---|
| last reprioritisation on | suggested re-reading day | |||
| started reading on | finished reading on |
1.7 Recursive Functions
til eventually a single-digit input is reached. This example also illustrates how functions with simple bodies can evolve complex computational processes by using recursion. 1.7.1 The Anatomy of Recursive Functions Video: Show Hide <span>A common pattern can be found in the body of many recursive functions. The body begins with a base case, a conditional statement that defines the behavior of the function for the inputs that are simplest to process. In the case of sum_digits , the base case is any single-digit argument, and we simply return that argument. Some recursive functions will have multiple base cases. The base cases are then followed by one or more recursive calls. Recursive calls always have a certain character: they simplify the original problem. Recursive functions express computation by simplifying problems incrementally. For example, summing the digits of 7 is simpler than summing the digits of 73, which in turn is simpler than summing the digits of 738. For each subsequent call, there is less work lef
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1.7 Recursive Functions
the standard definition of the mathematical function for factorial: (n−1)!n!n!=(n−1)⋅(n−2)⋅⋯⋅1=n⋅(n−1)⋅(n−2)⋅⋯⋅1=n⋅(n−1)!(n−1)!=(n−1)⋅(n−2)⋅⋯⋅1n!=n⋅(n−1)⋅(n−2)⋅⋯⋅1n!=n⋅(n−1)! While we can unwind the recursion using our model of computation, <span>it is often clearer to think about recursive calls as functional abstractions. That is, we should not care about how fact(n-1) is implemented in the body of fact ; we should simply trust that it computes the factorial of n-1 . Treating a recursive call as a
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1.7 Recursive Functions
putation, it is often clearer to think about recursive calls as functional abstractions. That is, we should not care about how fact(n-1) is implemented in the body of fact ; we should simply trust that it computes the factorial of n-1 . <span>Treating a recursive call as a functional abstraction has been called a recursive leap of faith. We define a function in terms of itself, but simply trust that the simpler cases will work correctly when verifying the correctness of the function. In this example, we trust that fact(n-1) will correctly compute (n-1)! ; we must only check that n! is computed correctly if this assumption holds. In this way, verifying the corre
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| last reprioritisation on | suggested re-reading day | |||
| started reading on | finished reading on |
1.7 Recursive Functions
. The state of the computation is entirely contained within the structure of the environment, which has return values that take the role of total , and binds n to different values in different frames rather than explicitly tracking k . <span>Recursive functions leverage the rules of evaluating call expressions to bind names to values, often avoiding the nuisance of correctly assigning local names during iteration. For this reason, recursive functions can be easier to define correctly. However, learning to recognize the computational processes evolved by recursive functions certainly requires practice. 1.7.2 Mutual Recursion Video: Show Hide When a recursive procedure is divided among two functions that call each other, the functions are said to be mutually recursive. As an
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| last reprioritisation on | suggested re-reading day | |||
| started reading on | finished reading on |
1.7 Recursive Functions
For this reason, recursive functions can be easier to define correctly. However, learning to recognize the computational processes evolved by recursive functions certainly requires practice. 1.7.2 Mutual Recursion Video: Show Hide <span>When a recursive procedure is divided among two functions that call each other, the functions are said to be mutually recursive. As an example, consider the following definition of even and odd for non-negative integers: a number is even if it is one more than an odd number a number is odd if it is one more tha
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| started reading on | finished reading on |
1.7 Recursive Functions
Global This recursive definition is tremendously appealing relative to our previous attempts: it exactly mirrors the familiar definition of Fibonacci numbers. <span>A function with multiple recursive calls is said to be tree recursive because each call branches into multiple smaller calls, each of which branches into yet smaller calls, just as the branches of a tree become smaller but more numerous as they extend from the trunk. We were already able to define a function to compute Fibonacci numbers without tree recursion. In fact, our previous attempts were more efficient, a topic discussed later in the text.
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1.7 Recursive Functions
-m, m) + count_partitions(n, m-1) >>> count_partitions(6, 4) 9 >>> count_partitions(5, 5) 7 >>> count_partitions(10, 10) 42 >>> count_partitions(15, 15) 176 >>> count_partitions(20, 20) 627 <span>We can think of a tree-recursive function as exploring different possibilities. In this case, we explore the possibility that we use a part of size m and the possibility that we do not. The first and second recursive calls correspond to these possibilities. Im
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Flashcard 1438542597388
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Flashcard 1438546005260
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Flashcard 1438547840268
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Flashcard 1438553607436
| status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
|---|---|---|---|---|---|---|---|
| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open ithe post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: <span>Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span><body><html>
Original toplevel document
Subject 1. Capital Budgeting: Introductioninclude in the capital budget. "Capital" refers to long-term assets. The "budget" is a plan which details projected cash inflows and outflows during a future period. <span>The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. Project classifications: Replacement projects. There are two types of replacement d
Flashcard 1438555704588
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Parent (intermediate) annotation
Open ithe post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: <span>Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span><body><html>
Original toplevel document
Subject 1. Capital Budgeting: Introductioninclude in the capital budget. "Capital" refers to long-term assets. The "budget" is a plan which details projected cash inflows and outflows during a future period. <span>The typical steps in the capital budgeting process: Generating good investment ideas to consider. Analyzing individual proposals (forecasting cash flows, evaluating profitability, etc.). Planning the capital budget. How does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing. The post-audit is a follow-up of capital budgeting decisions. It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision-makers can: Improve forecasts (based on which good capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. Project classifications: Replacement projects. There are two types of replacement d
Flashcard 1438569336076
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| repetition number in this series | 0 | memorised on | scheduled repetition | ||||
| scheduled repetition interval | last repetition or drill |
Parent (intermediate) annotation
Open itA practical, normative study is one that seeks to regulate, to bring into conformity with a norm or standard—for example, ethics. The norm of ethics is the good, and its purpose is to bring human conduct into
Original toplevel document (pdf)
cannot see any pdfsFlashcard 1438573006092
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Open itTo represent our consumer’s preferences graphically, not just mathematically, we have the concept of an indifference curve , which represents all the combinations of two goods such that the consumer is entirely indifferent among them.
Original toplevel document
3. UTILITY THEORY: MODELING PREFERENCES AND TASTESweaker measures than cardinal rankings because they do not allow the calculation and ranking of the differences between bundles. 3.3. Indifference Curves: The Graphical Portrayal of the Utility Function <span>It will be convenient for us to represent our consumer’s preferences graphically, not just mathematically. To that end, we introduce the concept of an indifference curve , which represents all the combinations of two goods such that the consumer is entirely indifferent among them. This is how we construct such a curve: Consider bundles that contain only two goods so that we can use a two-dimensional graph to represent them—as in Exhibit 1, where a particular bund
Article 1438579035404
Subject 3. Investment Decision Criteria
#analyst-notes #cfa-level-1 #corporate-finance #has-images #reading-35-capital-budgeting #study-session-10
When a firm is embarking upon a project, it needs tools to assist in making the decision of whether to invest in the project or not. In order to demonstrate the use of these four methods, the cash flows presented below will be used. Net Present Value (NPV) This method discounts all cash flows (including both inflows and outflows) at the project's cost of capital and then sums those cash flows. The project is accepted if the NPV is positive. where CF t is the expected cash flow at period t, k is the project's cost of capital, and n is its life. Cash outflows are treated as negative cash flows since they represent expenditures of the company to fund the project. Cash inflows are treated as positive cash flows since they represent money being brought into the company. The NPV represents the amount of present-value cash flows that a project can generate after repaying the invested capital (project cost) and the required rate of return on that capital. An NPV of z
Flashcard 1438590569740
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Open itccounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's <span>after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. <span><body><html>
Original toplevel document
Subject 2. Basic Principles of Capital BudgetingCapital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which