The goal of a financial manager is to
Maximize shareholder value while accounting for the impact of her decisions on all stakeholders of the firm
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| Term | Definition |
|---|---|
The goal of a financial manager is to | Maximize shareholder value while accounting for the impact of her decisions on all stakeholders of the firm |
Present value formula |  |
Present value formula for perpetuity | PV0= C/r
r: Interest rate on perpetuity
C: Cash payment
PVP: Present value of perpetuity |
Perpetuity | constant stream of cash flows that lasts forever |
PV of growing perpetuity |  |
Annuity | Equally spaced level stream of cashflows |
Present value of t year Annuity (PVA) |  |
Future Value of Annuity |  |
Net Present Value (NPV) | NPV=PV0(Cash inflows)-PV0 (Cash outflows) |