Editing Corporate Finance (section)

== <span style="color: #FFFFFF;">Applying</span> ==
'''Modeling 'NPV' (The Golden Rule of Investment):'''
<syntaxhighlight lang="python">
def calculate_npv(initial_investment, cash_flows, discount_rate):
    """
    Shows if an investment creates value.
    """
    npv = -initial_investment
    for t, cash_flow in enumerate(cash_flows, start=1):
        # Discount each year's cash back to Year 0
        npv += cash_flow / ((1 + discount_rate) ** t)
    return npv

# Invest $1,000. Get $400 for 3 years. Interest rate is 10%.
investment = 1000
future_cash = [400, 400, 400]
rate = 0.10

result = calculate_npv(investment, future_cash, rate)
print(f"Project NPV: ${result:.2f}")
# If NPV > 0, the project creates wealth!
</syntaxhighlight>

; Corporate Landmarks
: '''The Modigliani-Miller Theorem''' → The famous (and controversial) proof that in a "perfect" world, it doesn't matter if a company uses debt or equity—the value stays the same.
: '''The 1929 Crash''' → Showing what happens when corporate debt levels become unsustainable.
: '''Leveraged Buyouts (LBOs)''' → When a company is bought using a massive amount of borrowed money, using the company's own assets as collateral.
: '''Share Buybacks''' → When a company uses its extra cash to buy its own stock, reducing the supply and (usually) increasing the price.
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