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    Formula Sheet Final

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    Formula Sheet Final

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    Formula Sheet Final

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    monate5420
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    © All Rights Reserved
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    FINA6331/Final

    Formula Sheet
    𝐹𝐹𝐹𝐹
    𝑃𝑃𝑃𝑃 =
    (1 + 𝑟𝑟)𝑡𝑡

    𝐹𝐹𝐹𝐹 = 𝑃𝑃𝑃𝑃(1 + 𝑟𝑟)𝑡𝑡

    Perpetuity: 𝑃𝑃𝑃𝑃 = 𝐶𝐶/𝑟𝑟

    𝐶𝐶 1 𝑇𝑇
    Annuity: 𝑃𝑃𝑃𝑃𝑃𝑃 = �1 − � � �
    𝑟𝑟 1+𝑟𝑟

    Growing Perpetuity: PV = C / (r – g)

    𝐶𝐶 1+𝑔𝑔 𝑇𝑇
    Growing Annuity: 𝑃𝑃𝑃𝑃𝑃𝑃 = �1 −� � �
    𝑟𝑟−𝑔𝑔 1+𝑟𝑟

    APR 𝑚𝑚
    EAR = �1 + � − 1
    𝑚𝑚

    1�
    APR = m �(1 + EAR) 𝑚𝑚 - 1�

    Finding Number of periods: t = ln(FV / PV) / ln(1 + r)

    (𝑅𝑅1 − 𝑅𝑅� )2 + (𝑅𝑅2 − 𝑅𝑅� )2 + ⋯ + (𝑅𝑅𝑇𝑇 − 𝑅𝑅� )2


    𝑆𝑆𝑆𝑆 = √𝑉𝑉𝑉𝑉𝑉𝑉 = �
    𝑇𝑇 − 1
    𝑛𝑛

    𝜎𝜎 2 = � 𝑝𝑝𝑖𝑖 (𝑅𝑅𝑖𝑖 − 𝐸𝐸(𝑅𝑅))2


    𝑖𝑖=1

    𝐶𝐶𝐶𝐶𝐶𝐶[𝑋𝑋, 𝑌𝑌] = 𝐸𝐸[(𝑋𝑋 − 𝐸𝐸[𝑋𝑋])(𝑌𝑌 − 𝐸𝐸[𝑌𝑌])]

    𝐶𝐶𝐶𝐶𝐶𝐶(𝑋𝑋, 𝑌𝑌)
    𝜌𝜌(𝑋𝑋, 𝑌𝑌) = ∈ [−1, +1]
    𝜎𝜎(𝑋𝑋)𝜎𝜎(𝑌𝑌)
    𝑉𝑉𝑉𝑉𝑉𝑉[𝑎𝑎𝑎𝑎 + 𝑏𝑏𝑏𝑏] = 𝑎𝑎2 𝑉𝑉𝑉𝑉𝑉𝑉[𝑋𝑋] + 𝑏𝑏 2 𝑉𝑉𝑉𝑉𝑉𝑉[𝑌𝑌] + 2𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎[𝑋𝑋, 𝑌𝑌]

    𝐶𝐶𝐶𝐶𝐶𝐶(𝑅𝑅𝑀𝑀 , 𝑅𝑅𝑞𝑞 )
    𝛽𝛽𝑞𝑞 =
    𝑉𝑉𝑉𝑉𝑉𝑉(𝑅𝑅𝑀𝑀 )

    𝐷𝐷1 𝐷𝐷1
    𝑃𝑃0 = → 𝑅𝑅𝐸𝐸 = + 𝑔𝑔
    𝑅𝑅𝐸𝐸 − 𝑔𝑔 𝑃𝑃0

    Cost of Preferred Stocks: RP = D / P0

    Page 1 of 2
    FINA6331/Final

    ACFA = EBIT × (1 – TC) + Depreciation – Change in NWC – Capital spending


    Actual Initial Cost = Required Investment/(1 - flotation cost)

    CAPM: 𝑅𝑅𝑒𝑒 = 𝑅𝑅𝑓𝑓 + 𝛽𝛽(𝑅𝑅𝑚𝑚 − 𝑅𝑅𝑓𝑓 )

    Portfolio Beta:𝛽𝛽𝑃𝑃,𝑀𝑀 = ∑𝑁𝑁


    𝑖𝑖=1 𝑤𝑤𝑁𝑁 𝛽𝛽𝑖𝑖,𝑀𝑀

    Enterprise Value = PV(Future Free Cash Flow)

    Enterprise Value = Value of Equity + Value of Net Debt = (#Shares)*(Share Price) + (Debt – Cash)

    Share price = (EV + Cash – Debt)/(# Shares)

    𝐷𝐷 𝐸𝐸
    𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊 = (1 − 𝑡𝑡𝑐𝑐 )𝑟𝑟𝐷𝐷 + 𝑟𝑟 ,
    𝐷𝐷+𝐸𝐸 𝐷𝐷+𝐸𝐸 𝐸𝐸

    𝐷𝐷 𝐸𝐸 𝑃𝑃
    or 𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊 = (1 − 𝑡𝑡𝑐𝑐 )𝑟𝑟𝐷𝐷 + 𝐷𝐷+𝐸𝐸+𝑃𝑃 𝑟𝑟𝐸𝐸 + 𝐷𝐷+𝐸𝐸+𝑃𝑃 𝑟𝑟𝑝𝑝
    𝐷𝐷+𝐸𝐸+𝑃𝑃

    𝐷𝐷
    M&M II without Tax: 𝑅𝑅𝑒𝑒 = 𝑅𝑅𝑢𝑢 + (𝑅𝑅𝑢𝑢 − 𝑅𝑅𝐷𝐷 )
    𝐸𝐸

    𝐷𝐷
    M&M II with Tax: 𝑅𝑅𝑒𝑒 = 𝑅𝑅𝑢𝑢 + (𝑅𝑅𝑢𝑢 − 𝑅𝑅𝐷𝐷 ) (1 − 𝑡𝑡𝑐𝑐 )
    𝐸𝐸

    Value of a permanent tax shield: tc*D

    Value of annual tax shield: interest expense * tc

    𝑉𝑉𝐿𝐿 = 𝑉𝑉𝑈𝑈 + 𝑃𝑃𝑃𝑃(𝑇𝑇𝑇𝑇𝑇𝑇 𝑆𝑆ℎ𝑖𝑖𝑖𝑖𝑖𝑖𝑖𝑖) − 𝑃𝑃𝑃𝑃(𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶)

    Cost of issuance: Net Proceeds = Gross Proceeds * (1 – Spread) – Indirect Cost

    Page 2 of 2

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