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1 AP/ADMS 3530.03 Finance Final Exam Formula Sheet Time Value of Money FV = () n r + × 1 Investment PV = () n r + 1 Value Future PV of a perpetuity = r C PV of a growing perpetuity = g r C PV of an annuity = + × n r r r C ) 1 ( 1 1 = + × r r C n ) 1 ( 1 (easier to calculate) FV of an annuity = + × r r C n 1 ) 1 ( PV (Growing Annuity) = + + × n r g g r C 1 1 1 FV (Growing Annuity) = () ( ) [] n n g r g r C + + × 1 1 Annuity factor = + n r r r ) 1 ( 1 1 = + r r n ) 1 ( 1 (lower version is easier to calculate) PV (Annuity Due) = PV(Simple Annuity) × (1+r) FV (Annuity Due) = FV (Simple Annuity) × (1+r) 1 + Real rate = rate Inflation 1 rate Nomimal 1 + + APR = Period Rate × m EAR = () 1 Rate Period 1 + m Period Rate = 1 ) EAR 1 ( 1 + m where m = number of periods per year

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2 Bonds and Stocks Price of a bond = PV (Coupons) + PV (Face Value) = n n r r r r C ) 1 ( Value Face ) 1 ( 1 1 + + + × Current yield = price Bond payment Coupon Annual Rate of return = price Initial loss or gain Capital Income + Dividend yield = price Stock payment Dividend
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