Deposits

This episode focuses on the role of debt and equity in a company's capital structure, and how the cost of equity and the cost of debt are derived and come together in the WACC equation.  WACC = (Equity/Equity+Debt)*(Cost of Equity) + (Debt/Equity+Debt) * (Cost of Debt)*(1-Tax Rate)

In this episode we explore annuities and perpetuities, and some of the differences between annuity due and ordinary annuity. We then talk about Capital budgeting and how NPV, IRR, and Payback Periods compare ——— Formulas—— NPV= Sum PV of inflows - Initial Cost ——- PV of perpetuity = C/r

Topics Covered: Time Value of Money - Inflation - Opportunity Cost - Compounding - Future Value and Present Value - Intrinsic Value TVM Equation : FV = PV (1+r/n)^t*n where FV=Future Value; PV= Present Value; r=rate; t=time (years); n=compounding periods