Although the Priority Rules for the Disbursement of the Principal

question 29

Multiple Choice

Although the priority rules for the disbursement of the principal payments are known, the precise amount of the principal in each period ________ known. This will depend on the cash flow and, therefore, on the principal payments of the collateral, which will depend on the ________ of the collateral. An assumed ________ allows the cash flow to be projected.

• A) is; actual prepayment rate; PSA speed
• B) is not; actual prepayment rate; PSA speed
• C) is; projected prepayment rate; CPR speed
• D) is not; actual prepayment rate; SMM speed

Grasp the concept of cost of debt and its role in WACC calculation.

Recognize the importance of cost of capital in a firm's financial decision-making process.

Be able to define Economic Value Added (EVA) and its significance.

Gain knowledge about the role of flotation costs in project financing and the calculation of weighted average flotation costs.

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Definitions:

Income Statement

A report detailing a business's income, expenditures, and net earnings or losses for a given time frame.

Adjusted Trial Balance

is a list of all accounts and their balances after making adjustments, used to verify the equality of debits and credits.

Net Income

The income a company retains following the subtraction of all costs and taxes from its total revenue.

Income Statement

A financial statement that shows a company’s revenues and expenses over a specific period, ending with net income or loss.