FINC 485 Final: FN485- Exam I Review S09.docx
Document Summary
Once the total revenue estimate is available the next step is to calculate net operating. Debt service * loan balance = debt service- either monthly or annually: loan balance factor * loan balance = loan bal. after 1 year. Loan bal. after 1 year = principal retired in year 1. Retired in year 1 = year 1 interest payment. Atcf from operation: after tax cash flow from sale. It is used in capital budgeting to analyze how profitable a particular project is: npv compares the value of the dollar today to the value of the dollar in the future with inflation and returns consideration. If npv is negative then the project should probably be rejected b/c the cash flow will more likely be negative: tax considerations: Passive, active, and portfolio income and tax carry forwards. Passive- income from investment not classified as portfolio income in which you have no direct management responsibility. Active- income or salary from your primary business.
