{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

FINC 322 - TVM Formula Sheet

# FINC 322 - TVM Formula Sheet - order to find the value of...

This preview shows pages 1–2. Sign up to view the full content.

FINC 322 Financial Management 1 Formulas for TVM, Bond and Stock Pricing, and Capital Budgeting (C. Lee) Chapter 5: Single CF TVM Unknown of Interest Discrete Compounding FV = amount PV = principal i = the rate over compounding period () r = nominal annual rate () m = number of compounding periods per year (# of compounding in a year) t = the number of years n = the number of conversion periods () EAR (Effective Annual Rate) Chapter 6: Multiple CFs TVM Uneven CFs ( h =0,1,2,3…, n ) Ordinary Annuity ( CF = periodic payment ) Unknown PV formula based FV formula based FV PV CF n i We do not have an equation such as “ i = “. The only possible setup is above, PV formula. We will leave i unknown. We do not have an equation such as “ i = “. The only possible setup is above, FV formula. We will leave i unknown. Annuity Due Perpetuity Growing Annuity Growing Perpetuity, Where g is the constant growth rate CF t=1 is CF at t =1 PV is the present value at t =0 “Riding the Timeline” Once you find the PV or FV of multiple CFs, you can move it along the timeline using a single CF formula in

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: order to find the value of those multiple CFs at any point in time. Value at time k would be: FINC 322 Financial Management 1 Formulas for TVM, Bond and Stock Pricing, and Capital Budgeting (C. Lee) Where FV is the future value at time n PV is the present value at time 0, 0 < k < n Chapters 7 and 8: Bond and Stock Pricing • Bond Pricing ( “ m =2” ) or; Where = price of bond = semiannual coupon = face value = annual yield to maturity (YTM= r ; YTM/2= i ) where ACR is an annual coupon rate • Stock Pricing Constant Dividend Model Dividend Growth Model where g =growth rate R =required return (equivalent to i ) P i =stock price at time i ; , 0< j < n Chapter 9: Capital Budgeting Net Present Value (NPV) Internal Rate of Return (IRR) When you have a single cash outflow at t =0: At IRR, PV(CF inflow )=PV(CF outflow ) When you have a single cash outflow at t =0:...
View Full Document

{[ snackBarMessage ]}