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Formula Sheet

This document contains formulas for valuing stocks, bonds, and other financial instruments. It includes calculations for present value, future value, internal rate of return, net present value, and weighted average cost of capital. Key formulas presented are for present value, future value, price to earnings ratio, expected return on a security, dividend yield, net present value, internal rate of return, and payback period.

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nick07052004
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67 views1 page

Formula Sheet

This document contains formulas for valuing stocks, bonds, and other financial instruments. It includes calculations for present value, future value, internal rate of return, net present value, and weighted average cost of capital. Key formulas presented are for present value, future value, price to earnings ratio, expected return on a security, dividend yield, net present value, internal rate of return, and payback period.

Uploaded by

nick07052004
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Financial Mathematics Valuation of Shares & Debt

C 1  Fn F
FVn = PV(1 + i) n PV = FVn /(1 + i) n PB = 1 − n
+ P=
i  (1 + i )  (1 + i )n 1+ y
n
365
m FVn
 i
PV = PV =
Fn
EAR = 1 +  −1
 m   i
m× n
(1 + i )n
1 +
 m  Share Price
 i  m× n P/E Ratio = EPS
FVn = PV 1 + 
 m
E ( R j ) = RF + β j [E (RM ) − RF ]
D
P0 =
R
PV =
PMT 
1−
1 
FVn =
PMT
[ ]
(1 + i ) n − 1
i  (1 + i) n  i

Capital Budgeting & Misc.


PMT  1 
PV = 1 −  × (1 + i )
i  (1 + i ) n 
 
n
CFt
NPV = ∑ (1 + k) t
PMT 
(1 + i ) n − 1 × (1 + i)
t =0
FVn =
i  
n
CFt
IRR ⇒ NPV = ∑ =0
t =0 (1 + irr ) t
CF0 (1 + g) 1+g n CF1 1+g n
PV = �1 − � � �= �1 − � � � Payback Period = Years before cost recovery
(i − g) 1+i (i − g) 1+i
Remaining cost to recover
+
Cash flow during the year
CF0 (1 + g) CF1
PV = = E D
(i − g) (i − g) WACC = ke + k
E+D E+D D

Real rate (simplified)


= nominal rate – inflation rate
𝑃𝑃𝑃𝑃𝑃𝑃
PV =
𝑖𝑖

(IR−IP)
IRM =
TA

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