1)In the AFN calculation, why is short-term bank debt (Notes Payable)not a part of "spontaneous liabilities"?

2)Explain the difference between NOPAT and Net Income. Which is a better measure of the performance of thefirm's operations?

3)Describe the risk/return relationship in the context of finance. Why do you think that relationship exists?

4)Company ABC had $10 Million in retained earnings on its balance sheet at the end of the year. Does this mean that ABC can pay $10 Million in dividends to its shareholders? Explain.

5)What does "interest rate risk"mean for a (fixed coupon rate) bond? Which types of bonds tend to have high interest rate risk?

6)When is it most appropriate to calculate the E.A.R. on a loan or on an investment?

Answer rating: 100% (QA)

1 Shortterm bank debt such as notes payable is not typically considered part of spontaneous liabilities in the AFN Additional Funds Needed calculation because spontaneous liabilities are usually assoc... View the full answer