gS x (A/S) = [m x (S + gS) x (1-d)] + [m x (S+gS) x (1-d) x (D/E)]

gS x (A/S) = (S + gS) x [m x (1-d) + m x (1-d) x (D/E)]

gS x (A/S) = (S + gS) x [(m x (1-d)) x (1 + (D/E)]

gS = (S + gS) x [(m x (1-d)) x (1 + (D/E)]

(A/S)

g = S x (1 + g) x [(m x (1-d)) x (1 + (D/E)]

S x (A/S)

g x (A/S) = (1 + g) x [(m x (1-d)) x (1 + (D/E)]

g x (A/S) = [(m x (1-d)) x (1 + (D/E)] + g x [(m x (1-d)) x (1 + (D/E)]

g x (A/S) - g x [(m x (1-d)) x (1 + (D/E)] = [(m x (1-d)) x (1 + (D/E)]

g x {(A/S) - [(m x (1-d)) x (1 + (D/E)]} = [(m x (1-d)) x (1 + (D/E)]

g = [(m x (1-d)) x (1 + (D/E)]

{(A/S) - [(m x (1-d)) x (1 + (D/E)]}

Two Approach to Financial Decision Making

Financial Statement Approach

Valuation Approach

NPV Calculations

Valuation : Simple Interest Case

Valuation : Compound Interest Case

Basic Valuation Model

Applying The Model

Cash Flow Estimation

Valuation Using the NPV Model

1. Present Terms2. Proposed Terms3. Decision Rule4. Risk Factor

Valuing Changes in The Cash Conversion Period

Corporate Cash Holding and Value

Concluding Comment on Valuation

Choosing The Discount Rate

Discount Rate Selection and Project Lifespan

One Shot Versus Enduring or Multiyear Projects

Risk and the Discount Rate

Project Life and the Risk- Adjusted Discount Rate

Capital Allocation Decision Making In Practice