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Formula Sheet Chapters 1-12

# Formula Sheet Chapters 1-12 - Finance 100 Fall 2007 Final...

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Finance 100 Fall 2007 Final Exam Formula Sheet Chapter 7 - Interest Rates and Bond Valuation Coupon Rate 20% = Annual Coupon Payment/Bond Face Value Bond Value = Present Value Coupon Annuity + Present Value Bond Face Value BV = C [(1-{1/(1+r) t })/r] + Face Value/(1 + r) t Yield to Maturity 14% = Solve above equation for “r” via trial and error OR via financial calculator. 0 coupon 6.76% Fisher Effect: 1+ Nominal Return (R) = Real Return (1+r) x Inflation (1+h) - or - 1+R = (1+r) x (1+ h) = 1+(r+h) + rh Chapter 8 - Stock Valuation Zero Dividend Growth = P 0 = D/R Constant Dividend Growth = P 0 = D 1 /R-g Required Return = %R = D 1 /P 0 + g Dividend Growth Model = P t = [D t x (1+g)]/(r-g) = D t+1 /(r-g) Cumulative Votes Needed to Win Election = 1/(1+N) + one share % Dividend Yield = Annual Cash Dividend/Current Stock Price = D 1 /P 0 Chapter 9 - NPV and Other Investment Criteria Payback = Length of time until summation of project’s cash flows = original cost. IRR 18.8 = Discount Rate (r) That Makes NPV = Zero. NPV 1446 = - Initial Cash Outflow + CF t /(1+r) t Chapter 10 - Making Capital Investment Decisions

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Formula Sheet Chapters 1-12 - Finance 100 Fall 2007 Final...

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