[Verse 1] Money travels through time like a magnet pulling backward Present value shrinks what future dollars are worth Compound interest builds towers while discounting tears them down Calculate the bridge between tomorrow and today's earth [Chorus] NPV beats IRR when projects clash and contradict Free cash flows to firm, then bridge to equity WACC weighs the cost of capital in the mix From beta times the premium to tax shields we can see [Verse 2] Terminal value captures all the years beyond our model Perpetuity growth or exit multiples decide Trading comps and precedent transactions tell the story Enterprise minus net debt equals equity's ride [Chorus] NPV beats IRR when projects clash and contradict Free cash flows to firm, then bridge to equity WACC weighs the cost of capital in the mix From beta times the premium to tax shields we can see [Verse 3] Modigliani-Miller says structure doesn't matter In perfect markets debt and equity trade places But taxes favor debt while bankruptcy brings disaster Pecking order theory ranks the financing races [Bridge] Risk-free rate plus beta times the market's excess return CAPM calculates but limitations always lurk Levered beta amplifies what unlevered beta earned Agency problems make the governance framework work [Chorus] NPV beats IRR when projects clash and contradict Free cash flows to firm, then bridge to equity WACC weighs the cost of capital in the mix From beta times the premium to tax shields we can see [Outro] Real options capture flexibility's hidden treasure Dividend signals while repurchases return the gold Corporate finance quantifies what markets cannot measure Every decimal point's a story waiting to be told
← Financial Accounting (ACCT 6110 or 6130) | Macroeconomics and the Global Economic Environment (FNCE 6130 or 6230) →