FIN300 FORMULAS.docx - FIN300 FORMULAS 1 TVOM Rule of 72...

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FIN300 FORMULAS 1.) TVOM Rule of 72: 72/Interest Rate = # of years to 2x $ 72/# years = annual interest rate earned Sinking Fund Annuity (D-2)  FV/FVIFA Estimating Annual Loan Payment Loan/PVIFA Retirement Withdrawals: Savings/PVIFA = Annual Withdrawal Perpetual Annuity (W/ inflation)  Annuity/Interest Rate (-Inflation rt) = Retirement Savings 2.) Bonds Conversion Price = Par/ Conversion ratio Conversion Ratio = Par/ Conversion Price Conversion Value = stock price x conversion ratio Conversion Premium = Bond price – conversion value Tax Equivalent Yield = Interest rate / 1- tax rate Zero-Coupon Bond Value = Par (PVIF) Inverse relationship between the current market interest rate (investors’ required rate of return) and bond values.

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