## Forecast components of free cash flow

Components of free cash flow What I want to do in this lecture is talk about forecast drivers, or the assumptions required to forecast each component of the free cash flow formula…

## Return on investment – ROI

Return on investment - ROI Today I want to talk about return on investment and in particular, what I want to discuss is the strengths and weaknesses of the internal rate of…

## Term structure of interest rates

Term structure of interest rates Last time we talked about interest rates. In particular, we talked about how interest rates are quoted versus how interest rates are used to discount cash flows. We…

## APR and EAR

In this topic, interest rates, I want to start off by talking about interest rate quoting conventions and I want to talk about how to compute the present value and future value…

## Impact of inflation on time value of money

Impact of inflation on time value of money I want to talk about inflation and its impact on our real returns or our consumption. Let's get started. Hey, everybody. Welcome back to…

## Why does money have a time unit?

Why does money have a time unit and why do we need to account for it? The answer is that there is an opportunity cost associated with not having money…

## EVA a good measure of value creation

Is EVA a good measure of value creation? We have one more thing to do here, and that thing is let' s agree for just a minute that EVA is a good measure…

## EVA Example

EVA Example But very simple example just to round up the idea of whether a company is creating or destroying value. Let us consider a company that is generating a NOPAT of…

## What is EVA?

What is EVA or Economic value added? EVA or Economic Value Added is a measure of profitability. As a measure of profitability, it is just another way to calculate profits. Therefore, this…

## Creating or Destroying Corporate Value

Creating or Destroying Corporate Value Two managerial mistakes that we tend to see a lot in practice, and believe it or not there's actually the both of them have been very widely…

## Corporate Value Creation

Corporate Value Creation Corporate Value Creation is one of those two issues that are not only important and critical for all companies, but this is also related to that extremely critical variable that…

## Shortcomings of the IRR

Shortcomings of the IRR Now here is another example. Project B and Project B again you get $100 million today, you expect to put down $300 million a year from now, and…

## Saving for Retirement

Early Saving for Retirement Start saving for retirement early, even if you can only afford to put a small amount into your retirement fund each month. Mutual Fund A Mutual…

## NPV Analysis

NPV Analysis What is Discount Rate? The discount rate, in general, is the cost of capital but there might be exceptions to this. So more often than not, we can think of…

## Project Evaluation

Project Evaluation As you will remember that cost of capital is the minimum required return on the company's investments and now we will discuss a little bit about how to build that…