Formulas

Formulas - ) ( r r M RF s RP + = Cost of Common Equity DCF:...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Loan Payment PV = PMT 1 - 1__ (1+I) I Market Interest Rate r = r* + IP + DRP + LP + MRP T-Bond yield = r* + IP + MRP Corporate bond yield = r* + IP + MRP + DRP + LP V B = INT 1 - 1 1 + (1+r) r Current Yield : INT/Price of Bond Bond with Semiannual coupon V B = INT 1 - 1 1 + M (1+r ) (1+r) r Constant Growth Stock & Declining Growth Stock : g) - (r D g) - (r ) g (1 D P s 1 s 0 0 ^ = + = Zero Growth Stock : r D P 0 ^ s = Expected rate of return : g P D r 0 1 s ^ + = WACC = w d r d (1-T) + w p r p + w c r s Cost of Debt: After-tax cost of debt = r d (1-T) Cost of Preferred Stock : r p = p p P D Cost of Common Equity : CAPM Approach:
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ) ( r r M RF s RP + = Cost of Common Equity DCF: g P D r 1 s ^ + = Cost of Common Equity BYRP: Bond Yield + Equity or Stock risk Premium NPV = CF + CF 1 + CF 2 + . + CF N (1+r) (1+r) (1+r) Payback = # of years prior to full recovery + Unrecovered cost at the start of the year Cash Flow during full recovery year Know how to calculate the discounted payback. N N N ) r (1 M + N x2 N x2 2 2 1 2 N- Bond Valuation...
View Full Document

Ask a homework question - tutors are online