Finc341

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  • 25 questions
  • 120 minutes
  • Formula sheet + financial calculator

Watch the overview, skim the map below, then start the first lesson. This page is free.

Chapters

What the Final covers

The Final is comprehensive: everything from Exams 1, 2 and 3, plus the two chapters taught after Exam 3. It runs 2 hours, and you get the formula sheet and a financial calculator. Our five Final practice exams use 25 questions in 2 hours, so you have more time per question than on the midterms, and more of the questions chain two or three steps together.

This section holds the whole course in one place, in five parts:

  1. Exam 1 review (12 lessons). Financial statements and cash flow, corporate taxes, ratios and DuPont, interest rates and the yield curve, and how financial markets work.
  2. Exam 2 review (15 lessons). Time value of money from lump sums to multi-step savings plans, bond prices and yields, stock valuation, and risk, beta and CAPM.
  3. Exam 3 review (12 lessons). Cost of capital and WACC, payback, NPV, IRR and MIRR, project cash flows, risk, and real options.
  4. Ch. 14: capital structure and dividends (4 lessons). Breakeven, operating, financial and total leverage, Hamada and the optimal capital structure, and dividend policy.
  5. Ch. 16: the cash budget (2 lessons). Collections and payments month by month, then the cumulative cash, loan and surplus lines.

The two new chapters are the only material you haven't been tested on yet. If you are short on time, start there, then let a practice exam tell you which older topics have gone rusty.

Why the Final feels different

On a midterm, you know every question comes from four or five chapters. On the Final, the hardest part is often recognizing which method a question needs before you touch the calculator. A WACC question can hide a bond-yield calculation, and a dividend question can start from an income statement. That's why everything in this section is mixed: the practice exams pull from all five parts, and the games deal cards from the whole course.

Where students usually get tripped up

  • Old formulas, new wrapper (all parts). Annuity timing (beginning or end of the year?), semiannual bonds, and after-tax costs come back inside longer problems. A slip in step one sinks the whole chain.
  • Leverage chains (Ch. 14). DOL, DFL and DTL multiply; they don't add. And a percentage change in sales flows to EBIT through DOL, then to EPS through DFL.
  • Hamada (Ch. 14). Unlever the beta at the current debt level first, then relever at the new one. Using the wrong debt-to-equity ratio in either step is the classic miss.
  • The cash budget (Ch. 16). Collections lag sales, purchases are paid later, and depreciation never touches cash. The loan line is cumulative, so read it carefully.
  • Rusty Exam 1 material. Free cash flow, taxes and ratios were a long time ago. A quick lesson and its quick check bring them back faster than rereading notes.

Each of these has its own lesson section, worked example and practice problems with feedback on the exact mistake you made.

A taste: one sales change, three ripples

A bike-rental company has sales of $800,000, variable costs of 45% of sales, fixed operating costs of $260,000 and interest of $60,000.

Step 1: the income statement down to EBT. Contribution margin = sales minus variable costs = $440,000. EBIT = $440,000 − $260,000 = $180,000. EBT = $180,000 − $60,000 = $120,000.

Step 2: operating leverage. DOL = contribution margin / EBIT = 2.44x. Fixed operating costs make EBIT swing harder than sales.

Step 3: financial leverage. DFL = EBIT / EBT = 1.50x. Fixed interest makes EPS swing harder than EBIT.

Step 4: total leverage. DTL = DOL × DFL = 3.67x. In percentage terms, EPS moves 3.67x as far as sales: if sales rise 1%, EPS rises 3.67%.

The tempting wrong answer adds the two degrees instead of multiplying them. The full lessons show why the chain multiplies, how to run it backward from a target EPS change, and how it connects to the cost of capital you studied for Exam 3.

Your study plan

The best plans space practice out and bring back what you missed. Keep a miss list: every question you get wrong goes on it, and you retry it a day or two later without looking at the solution first.

10 days out

  • Day 1: Take a practice exam cold (2 hours) to see where you stand. Add every miss to your list.
  • Days 2–3: Ch. 14 and Ch. 16 lessons, each with its video and quick check.
  • Day 4: Retry your misses. Exam 1 review lessons for the topics you missed.
  • Days 5–6: Retry misses. Exam 2 review lessons for the topics you missed, with extra time on TVM and bonds.
  • Day 7: Retry misses. Exam 3 review lessons for the topics you missed, then a game round to mix everything up.
  • Day 8: Second practice exam, timed. Read the walkthrough for every miss.
  • Day 9: Fix the three weakest topics from your results, then a third practice exam if you have time.
  • Day 10 (day before): Redo your miss list and stop early. Sleep beats one more chapter.

3 days out

  • Day 1: Practice exam cold, then the Ch. 14 and Ch. 16 lessons.
  • Day 2: Your three weakest topics from the results, then a second practice exam.
  • Day 3 (day before): Redo your miss list, one game round, and stop early.

Short on time? Practice exams first. They show exactly which topics need work and link each missed question to the lesson section and video chapter that fix it.

What's in the full course

Lessons. 45 lessons of 10–15 minutes, one per topic, grouped by part. Each opens with why it matters, builds the idea in plain language, works a simple example and then an exam-style one step by step, hands you a similar problem to try, shows the TI-84 keystrokes, and lists the common mistakes. Behind them sits a problem bank of practice problems for every topic, and every wrong answer tells you which mistake produces it and links to the section that fixes it.

Videos. A captioned explainer for every topic in the same visual style throughout, plus a free overview video for the Final.

Games. Three games built on the whole course: Method Match (free) trains you to spot the right method, Speed Round drills fast calculations weighted like our Final practice exams, and Timeline Builder has you place every cash flow before you solve.

Practice exams. Five 25-question Final practice exams, timed (2 hours) or untimed, mixing all five parts. Every question has a full walkthrough: what it's really asking, how to spot the method, the setup, the solution, a quick sanity check, and the trap to avoid. Each exam has its own explainer video with a chapter for every question, and your score breaks down by topic so you know where to spend your remaining time.

Start here: watch the free overview video, then try the free game.

The 45 topics, chapter by chapter

Exam 1 reviewStatements, Taxes, Ratios & Rates12 topics

  1. Goals, Agency & Business FormsHow the five business forms differ on liability, life, transfer and taxes, why managers should maximize long-run intrinsic value, and how the two agency conflicts are kept in check.
  2. The Income Statement & Net Cash FlowWalk the income statement down from sales to net income, climb back up to find interest or depreciation, tie it to retained earnings, and turn net income into net cash flow.
  3. Free Cash Flow, NOPAT, MVA & EVAFind the cash a firm can hand to its investors after funding its growth, and measure whether managers created value with MVA and EVA.
  4. Corporate Income TaxesMarginal vs average rates, the 2017 bracket schedule vs today's flat rate, what is deductible, and how a corporation is taxed on dividends it receives.
  5. Loss Carryovers, Personal Taxes & MunisUse a loss to shelter other years' income under the 2017 and current rules, then the individual-tax ideas behind investing choices: capital gains and losses, munis, IRAs and S corporations.
  6. Liquidity, Asset Management & Debt RatiosUse the statements to judge whether a firm can pay its bills, how hard its assets work, and how much debt it carries, then run the current ratio backward.
  7. Profitability Ratios & the DuPont EquationMeasure returns on sales, assets, equity and invested capital, split ROE into margin, turnover and leverage, and climb the income statement from ratios.
  8. Market Value Ratios & Using Ratios WellSee what investors pay for earnings, cash flow, book value and growth, then learn how to compare firms fairly and where ratios mislead.
  9. The Cost of Money & the Rate Build-UpWhat sets interest rates, and how to build any quoted rate from r*, an inflation premium, and maturity, default and liquidity premiums.
  10. Yield Curves & the Expectations TheoryRead the shape of the yield curve, then use the expectations theory to pull out the future rates and future inflation the market is pricing in.
  11. The Fed & What Moves Interest RatesHow the Fed's three tools, the business cycle, deficits, the trade balance and global risks push interest rates up or down, and why short and long rates can move differently.
  12. Financial Markets & InstitutionsHow capital flows from savers to firms, who moves it, how stocks are issued and traded, how price-weighted and value-weighted indexes move, and what market efficiency claims.

Exam 2 reviewTVM, Bonds, Stocks & Risk15 topics

  1. Lump Sums: FV, PV, Rate & TimeMove one amount forward or back in time, and solve for the growth rate or the number of years it takes to reach a goal.
  2. Annuities: Ordinary vs DueValue a stream of level payments, solve for the payment or the number of periods, and know when to switch the calculator to BEGIN.
  3. Uneven Streams & PerpetuitiesValue cash flows that change size or start late with the NPV frequency list, grow uneven deposits forward, and price payments that never stop.
  4. Compounding Frequency & EARTurn any quoted rate into the rate per period and the effective annual rate, compare offers fairly, and handle annual deposits in accounts that compound monthly or quarterly.
  5. Loans & AmortizationFind a loan payment, split any payment into interest and principal, and track the balance, including loans with extra principal.
  6. Inflation & Growing StreamsRestate future balances in today's dollars, size withdrawals that keep their purchasing power, and value growing perpetuities and finite growing streams.
  7. Multi-Step Savings PlansFind the level deposit that funds a future goal (tuition, a home, retirement or a gift that lasts forever) and compare two savings plans fairly.
  8. Bond Pricing & Interest-Rate RiskPrice annual and semiannual bonds, tell premium from discount, and predict how a bond's price moves when rates or time change.
  9. Bond Yields & FeaturesTurn a bond price into YTM, YTC, current yield and capital gains yield, know which yield to expect, and read call provisions, sinking funds, zeros and ratings.
  10. Constant Growth, Zero Growth & Preferred StockValue a stock whose dividend grows at a steady rate (or not at all), split its expected return into dividend yield and capital gains, and decide whether it's a buy.
  11. Nonconstant GrowthPrice a stock that grows fast for a few years and then settles down, using year-by-year dividends and a horizon value.
  12. Corporate Valuation (FCF Model)Value a whole company from its free cash flows, then subtract the claims ahead of stockholders to get a price per share.
  13. Stand-Alone Risk: r̂, σ, CV & SharpeTurn a probability distribution into an expected return, a standard deviation, a coefficient of variation and a Sharpe ratio, and use them to compare investments.
  14. Portfolios, Diversification & BetaFind a portfolio's beta and expected return from dollar holdings, read what beta says about market moves, swap one holding, and see why only market risk earns a reward.
  15. CAPM & the Security Market LineTurn beta into a required return with the SML, shift the line for inflation and risk aversion, and decide whether a stock is worth buying by comparing its expected and required returns.

Exam 3 reviewCost of Capital & Capital Budgeting12 topics

  1. Component Costs of CapitalFind what each source of money costs the firm: after-tax debt, preferred stock, retained earnings (three ways), and new common stock.
  2. WACC, the Break Point & the MCCBlend component costs into WACC1 and WACC2, find where retained earnings run out, and size the new stock a budget needs.
  3. The Optimal Capital BudgetRank projects by IRR, stack them against the MCC step, and price a project that straddles the break point.
  4. Payback & Discounted PaybackFind how long a project takes to earn back its cost, with and without discounting, and know what that number hides.
  5. NPV & IRRCompute NPV and IRR, turn a quarterly IRR into an annual rate, and know which rule to trust when they disagree.
  6. Modified IRR (MIRR)Compute MIRR by discounting costs and compounding inflows at the cost of capital, even with several negative cash flows, and know how it relates to IRR and NPV.
  7. NPV Profiles, Crossover & Multiple IRRsRead an NPV profile, find where two profiles cross, and decide what to do when NPV and IRR disagree or a project has two IRRs.
  8. Relevant Cash Flows, MACRS & Expansion ProjectsDecide which cash flows count, depreciate with MACRS or 100% bonus depreciation, and build a full expansion project's cash flows and NPV.
  9. Replacement ProjectsBuild a replacement project's incremental cash flows: the initial outlay, depreciation differences, the missed sale and missed tax effect, and the NPV decision.
  10. Unequal Lives & Optimal Economic LifeCompare mutually exclusive projects with different lives using the EAA, and find how long to keep an asset before selling it.
  11. Stand-Alone Risk: Sensitivity, Scenarios, Monte CarloMeasure how uncertain a project's NPV is with sensitivity analysis, scenario analysis (expected NPV, σ, CV) and Monte Carlo simulation, and know what each one misses.
  12. Investment Timing Options & Capital RationingValue the choice to wait with a decision tree, recognize the main real options, and pick the best set of projects under a fixed budget.

Ch. 14Leverage, Capital Structure & Dividends4 topics

  1. Breakeven & Operating LeverageFind a firm's breakeven point in units and dollars, its profit at any volume, and how hard its fixed costs make EBIT swing.
  2. Financial & Total LeverageMeasure how debt magnifies EPS swings (DFL), combine it with operating leverage (DTL), and chain percentage changes from sales to EBIT to EPS.
  3. Hamada, the Optimal Capital Structure & TheoryUnlever and relever beta to price equity at any debt level, find the WACC-minimizing mix, and know the theories behind real financing choices.
  4. Dividend Policy: Residual Model, Splits & BuybacksSize a residual dividend, explain the dividend theories, and work out what splits, stock dividends and buybacks really change.

Ch. 16The Cash Budget2 topics

  1. Cash Budget I: Collections & PaymentsTurn a sales forecast into the cash that actually comes in and goes out each month: collections with lags and discounts, purchases paid later, and every other payment.
  2. Cash Budget II: Net Cash Flow, Loans & SurplusFinish the cash budget: carry cumulative cash forward, compare it with the target balance, and read the surplus or loan line, including how big a line of credit must be.
First lesson: Goals, Agency & Business Forms