CASH IS FLOWING
The kind of cost when your cash is gone, and it ain't comin' back
What is a sunk cost?
OCF, at cash break-even
What is zero?
The asset which earns the risk-free rate
What are Treasury bills?
The relationship between expected return and beta
What is the SML?
The cost of capital for the firm as a whole
What is the WACC?
The kind of cost when an asset has valuable alternative uses
What is opportunity cost?
OCF, at accounting break-even
What is depreciation?
Asset class that earns 0.5% more than LT government bonds
What are corporate bonds?
What is beta?
The dividend we use to find cost of equity
What is D1?
The taxable event when salvage yields more cash than book value
What is a capital gain?
OCF, at financial break-even
What is a discounted value equal to investment?
Asset class that earns 4% less than small-company stock
What is large-company stock?
Principle that positive unexpected returns offset negative ones
What is the diversification principle?
How we find the market value of equity
What is multiply price times shares outstanding?
The extra cash that depreciation puts in our pocket
What is the depreciation tax shield?
The denominator for all types of break-even
What is contribution margin?
The name we give excess returns over the SML
What is alpha?
The slope of the SML
What is positive?
The result when we use WACC as RRR for every project
What is the firm's risk increases?
When the cash from one project is eating the cash from another project
What is cannibalism?
For break-even, the other item in the numerator besides OCF
What is FC?
The amount of alpha we should expect, according to EMH
What is zero?
Two synonyms for systematic risk
What are market risk and undiversifiable risk?
The cost of equity, from the investor's viewpoint
What is the return on equity (RE)?