Guide for the CFA exam by TimePrep ize their study – TimePrep for CFA Exam. ception of level 1 exam which takes place both in June and in Decem- ber. Disclaimer: The SchweserNores should be used in conjunction with the original readings as set forth by. CFA Institute in their CFA Level I Study Guide. Download CFA Level 1 Books, Study Material & Notes in PDF format for free. CFA Books are available here for download. We've provided best.
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for your CFA exam with FinQuiz! Download our CFA study material for Levels 1 , 2 and 3. Mock exams, study plans, formula sheets, notes & question banks! Level I FinQuiz played a with our Study Plan. PDF & Editable Excel file. This quiz has hundreds of questions for each level (and more than a thousand for Level 1) so this is a no-brainer for a free question resource. CFA Level 1 Schweser Quciksheet pdf. CFA Level 1 wiley 11th Hours Guide. Wiley CFA Level 1 Study Guide. CFA Level.
The "budget" is a plan which details projected cash inflows and outflows during future period. The typical steps in the capital budgeting process: 1. Generating good investment ideas to consider. Analyzing individual proposals - forecast cash flows, evaluate profitability, etc. Planning the capital budget - how does the project fit within the company's overall strategies? What's the timeline and priority? Monitoring and post-auditing - The post-audit is a follow-up of capital budgeting decisions.
It is a key element of capital budgeting. By comparing actual results with predicted results and then determining why differences occurred, decision makers can: Improve forecasts, based on which you can make good capital budgeting decisions.
Otherwise, you will have the GIGO garbage in, garbage out problem; Improve operations, thus making capital decisions well implemented. Copyright www. There are two types of replacement decisions. The issue is two-fold: should you continue the existing operations? If yes, should you continue to use the same processes?
Maintenance decisions are usually made without detailed analysis. Cost reduction projects determine whether to replace serviceable but obsolete equipments. These decisions are discretionary, and a detailed analysis is usually required.
The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Expansion projects.
Expansion into new products, services or markets. These projects involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Some projects need special considerations other than the traditional capital budgeting analysis, for example, a very risky research project in which cash flows cannot be reliably forecast.
Basic Principles Of Capital Budgeting. CFA - Corporate Finance E-book 1 of 7 Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capita.
Assumptions of capital budgeting are: Capital budgeting decisions must be made on cash flows, not accounting income. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Financing costs are ignored in computing economic income.
Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project.
Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed.
Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Since sunk costs are not increment costs, they should not be included in the capital budgeting analysis.
That is, the coffee shop will always be losing money. Incremental cash flow is the net cash flow attributable to an investment project.
It represents the change in the firm's total cash flow that occurs as a direct result of accepting the project. Externalities are the effects of a project on cash flows in other parts of the firm. Although they are difficult to quantity, they which can be either positive or negative should be considered.
For example, the coffee shop may generate some additional customers for the bookstore who otherwise may not download books there.
Future cash flows generated by positive externalities occur if with the projects and do not occur if without the project, so they are incremental. For example, if the bookstore is considering to open a branch two blocks away, some customers who download books at the old store will switch to the new branch.
The customers lost by the old store are a negative externality. The primary type of negative externalities is cannibalization, which occurs when the introduction of a new product causes sales of existing products to decline. Future cash flows represented by negative externalities occur regardless of the projects, so they are nonincremental. Such cash flows represent a transfer from the existing projects to the new projects, and thus should be subtracted from the new projects' cash flows.
Mutually exclusive are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete with the firm's resources.
A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects through time since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing.
Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period.
In such situations, capital is scarce and should be allocated to the best projects to maximize the firm's aggregate NPV.
The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Investment Decision Criteria CFA - Corporate Finance E-book 1 of 7 When a firm is embarking upon a project, it needs tools to assist in making the decision of whether to invest in the project or not. They are best study material one can get for CFA.
Schweser material is well known in the CFA space. If you are stuck with a doubt in your mind than videos of these resources will help you clear your doubt and not only that they also clear your concept as well.
They are known for their adaptive practice engine and a huge question bank for CFA level 1. They also have an app so you can practice anywhere. Numerous options of study material are available for CFA preparation. Most popular ones include-. Any one or two from the list will suffice.
Practising lots of question will definitely increase your chances. Make sure that you complete Schweser cover to cover. Tech Admissions Please who can share the Kaplan Schweser level 1 question bank.
Email address: Thanks a lot. Hi Shubhame can you share it to me also. If you have slide note for Ifran too please. Hi Shubhame can you share it to me please.
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