 # cheet sheet FIN.docx - where rf is the riskfree rate βi is...

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Assuming a 7% rate of increase over the next 5 years, what is the present value of the income stream? Your discount rate is 12%, rent for the first year is expected to be \$8,500, and the paymentsoccur at the end of the year.5, n. 5.00Stores number of payments.BUS, OLD 1.07, NEW 1.12Enters increase rate plus 1.%CH , I 4.67Stores adjusted rate into i.8500, 1.07, ÷, PMT7,943.93Stores adjusted payment.PV -34,706.26 Calculates present value.Example: We also know that the cash flows will grow at a rate of -3% per year so g=-0.03. Finally, the value for C should be the firstcash flow so it will be \$2,000,000.where rf is the risk-free rate, βi is the beta of the asset and MRP is the market risk premium. Recall that CAPM is actually the equation to the SML.Remember that the beta of a portfolio is a weighted average of the individual betas:where D represents the market value of debt, E is the market value of equity, V is the market value of the firm (debt plus equity), Rd is the cost of debt, Re is the cost of equity, and τ is thecorporate tax rate.
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