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PRINCIPLE 1 THE RISK-RETURN TRADEOFF

PRINCIPLE 2 - THE TIME VALUE OF MONEY. A dollar received today is worth more than a dollar received in the future.. PRINCIPLE 3 - CASH NOT PROFIT IS KING. In measuring wealth or value use cash flows, not accounting profits.. PRINCIPLE 4 INCREMENTAL CASH FLOWS. It's only what changes that counts..

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PRINCIPLE 1 THE RISK-RETURN TRADEOFF

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    1. PRINCIPLE 1 THE RISK-RETURN TRADEOFF We wont take additional risk unless we expect to be compensated with additional return.

    2. PRINCIPLE 2 - THE TIME VALUE OF MONEY A dollar received today is worth more than a dollar received in the future.

    3. PRINCIPLE 3 - CASH NOT PROFIT IS KING In measuring wealth or value use cash flows, not accounting profits.

    4. PRINCIPLE 4 INCREMENTAL CASH FLOWS Its only what changes that counts.

    5. PRINCIPLE 5 THE CURSE OF COMPETITIVE MARKETS Why its hard to find exceptionally profitable projects.

    6. PRINCIPLE 6 - EFFICIENT CAPITAL MARKETS The markets are quick and the prices are right.

    7. PRINCIPLE 7 THE AGENCY PROBLEM Managers wont work for owners unless its in their best interest.

    8. PRINCIPLE 8 TAXES BIAS BUSINESS DECISIONS The cash flows that we use will be after tax incremental cash flows for the firm as a whole.

    9. PRINCIPLE 9 ALL RISK IS NOT EQUAL Some risk can be diversified away and some cannot.

    10. PRINCIPLE 10 ETHICAL BEHAVIOR IS DOING THE RIGHT THING Ethical behavior instills trust and public confidence.

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