ADMS3530-MidtermFormulaSheet

ADMS3530-MidtermFormulaSheet - payments equals the price...

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AK/ADMS 3530.03 Finance Midterm Exam Formula Sheet Time Value of Money FV = ( 29 t r 1 Investment + × PV = ( 29 t r 1 Value Future + PV of a perpetuity = r C PV of a growing perpetuity = g r C 1 - PV of an annuity = + - × t ) r 1 ( r 1 r 1 C = + - × - r ) r 1 ( 1 C t (easier to calculate) FV of an annuity = - + × r 1 ) r 1 ( C t PV of a growing annuity = + + - × - t 1 r 1 g 1 1 g r C Annuity factor = + - t ) r 1 ( r 1 r 1 = + - - r ) r 1 ( 1 t (lower version is easier to calculate) PV of an annuity due = (1+r) × (PV of an annuity) FV of an annuity due = (1+r) × (FV of an annuity) 1 + Real rate = rate Inflation 1 rate Nominal 1 + + APR = Period Rate × m EAR = ( 29 1 Rate Period 1 m - + Period Rate = 1 ) EAR 1 ( m 1 - + where m = number of periods per year Bonds and Stocks Price of a bond = PV (Coupons) + PV (Face Value) = t t ) r 1 ( Value Face ) r 1 ( r 1 r 1 C + + + - × 1
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Current yield = price Bond payment coupon Annual Yield to maturity (YTM) = interest rate for which the present value of the bond’s
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Unformatted text preview: payments equals the price The approximate formula for the yield to maturity: 2 price) current value (face maturity to years price) current -value (face payment coupon Annual YTM + + = Rate of return = price Initial loss or gain Capital Income + Dividend yield = price Stock payment Dividend Sustainable growth rate: g = ROE Plowback ratio Dividend Discount Model : H H H H 2 2 1 ) r 1 ( P ) r 1 ( DIV ... ) r 1 ( DIV r 1 DIV P + + + + + + + + = where H is the horizon date, and P H is the expected price of the stock at date H Constant-Growth Dividend Discount Model : ) g 1 ( DIV DIV where , g r DIV P 1 1 + =-= Expected Rate of Return Formula : 1 1 P P P P DIV r or , g P r-+ = + = 1 DIV 2...
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ADMS3530-MidtermFormulaSheet - payments equals the price...

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