Formula Book FIN 2210

1 wacc 1 wacc1 1 wacc2 horizon value vcompany

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Unformatted text preview: te; or = + of return dividend yield capital gains yield D1 ^s = +g r P0 Growth rate = ð1 – Payout ratioÞROE D ^ Zero growth stock: P 0 = rs ^ Horizon value = P N = DN + 1 rs – g D1 D2 DN DN + 1 D∞ + + ... + + + ... + ð1+ rs Þ∞ ð 1 + rs Þ 1 ð 1 + rs Þ 2 ð1 +rs ÞN ð1 +rs ÞN + 1 ^ D1 D2 ... + DN + P N = 1+ 2+ N ð 1 + rs Þ ð 1 + rs Þ ð1 +rs Þ ð1 +rs ÞN ^ =PV of nonconstant dividends + PV of horizon value, P N ^ Nonconstant growth stock: P 0 = Appendix C Selected Equations and Tables Market value = VCompany = PV of expected future free cash flows of company FCF1 FCF2 FCF∞ + + ... + = ð1 + WACCÞ∞ ð1 + WACCÞ1 ð1 + WACCÞ2 Horizon value = VCompany at t = N = FCFN+1 =ðWACC – gFCF Þ Market value of equity = Book value + PV of all future EVAs Dp rp Dp ^p = r Vp Vp = CHAPTER 10 0 WACC 10 1 % After-tax = @ of A@ cost of A debt debt = w d rd ð 1 – T Þ 0 + 10 1 % of Cost of @ preferred A@ preferred A stock stock + w p rp After-tax cost of debt = Interest rate on new debt – Tax savings...
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This document was uploaded on 02/09/2014.

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