RESUMENES CAPITULOS 1,5,6,7,8 Y 14 MATEMATICAS FINANCIERAS

RESUMENES CAPITULOS 1,5,6,7,8 Y 14.

Corporate finances are used for the company to create value. Fixed assets are those that will last a long time, such as buildings, machinery, equipment, patents, trademarks and inventories. Before a company can invest in an asset it must have the capital, so it must get the money to pay for the investment.

Companies issue known documents such as debt or shares of capital, these are considered long or short term.

ACTIVE = PASSIVE + CAPITAL

The financial administrator is responsible for the management of cash flows, decisions made with respect to capital and financial plans.

The physical person is a form of organization, it is the most common; it does not require a formal structure and the government regulations to follow are not demanding. Income is individual as well as debts and obligations. The money invested in the company depends solely on the owner.

The society is in which the partners commit themselves to contribute a part of the work and the cash, share profits and losses. Each partner is fully responsible for the debts of the company. There must be a contract or an agreement which can be oral or a formal document.

The corporation uses the bylaws as rules, in this way they regulate its existence and apply to its shareholders and members.

The company buys assets that generate more cash than they cost in this way creates value. For the company to raise money, it sells debt instruments and shares in the financial markets; which produces cash flows that go from the financial markets to the company. The shareholders acquire the bonds and the company uses this cash to finance the investment activities of the company. The cash that is generated by the company is paid to the shareholders and bondholders. The shareholders, as they bought a part of the company, receive interest and when the initial loan is liquidated, the principal is repaid.

The goal of financial management is to maximize the current value for each share of existing capital.

Chapter 5

Introduction to valuation: The value of money over time.

Future value: In this the question is asked: how much will an investment of 1000 dollars increase if a return of 6% is earned during 2 years? The amount of money to which an investment will grow at a certain time at a certain interest rate.

Capitalization: It is the process in which interest is accumulated for an investment for a time. Which means interest on interest.

The formula for the future value: VF = VP * (1 + r)t

Present value: This asks the question How much is needed to invest today to reach the goal? . It is the present value of future cash flows discounted at the appropriate discount rate.

The formula for VP = VF / (1 + r) t

Chapter 6

Valuation through discounted cash flow 

Present value of the annuity:

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This method is used when you have the situation in which the amount of cash flows is quite large.

Future value of annuities: [(1+r)t-1]/r

This formula is used to calculate the future value of an annuity. As is to be expected, there are factors for the future value of annuities, as well as for the present.

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