Corp fin

Question 1

Price (dividends)

Answer 1

P = D1 / (re-g)

Question 2

Price (EPS)

Answer 2

P = EPS1 / re + PVGO

Question 3

Growth

Answer 3

g = ROE * plowback

Question 4

EPS1

Answer 4

EPS1 = Div1 / Payout

Question 5

Dividend payout ratio

Answer 5

Div pay. = DPS / EPS

Question 6

Div yield

Answer 6

Div yield = DPS / P

Question 7

re (div yield)

Answer 7

re = D1/P0 + g

Question 8

P/E

Answer 8

P/E = P0/EPS1

Question 9

Dividend and Cap gain eq. condition

Answer 9

(Pcum - Pex)(1-tg) = Div(1-td)

Question 10

Free CF

Answer 10

FCF = EBIT*(1-t) + depr. - CAPEX - increase in NWC

Question 11

Gordon’s growth

Answer 11

V = FCF*(1+g) / (Wacc - g)

Question 12

Beta_e 1,2

Answer 12

Beta_e = Beta_u*(1+D/E)
Beta_e = Beta_a + D/E*(Beta_a - Beta_d) | *(1-t) if Fixed debt

Question 13

Beta_u

Answer 13

Beta_u = (ru - rf) / (rm - rf)
Beta_u = E/V*Beta_e + D/V*Beta_d

Question 14

Ve (value of the firm to stockholder)

Answer 14

Ve = FCFe / re

Question 15

2 formulas if fixed debt (TS and re)

Answer 15

PV(TS) = D*t
re = ra + D/E*(ra-rd)*(1-t)

Question 16

2 formulas if D/E ratio (TS and re)

Answer 16

PV(TS) = t*rd*D
re = ra + D/E*(ra-rd)

Question 17

WACC valuation method

Answer 17

WACC = E/V*re + D/V*rd*(1-t)
VL = FCF1/(1+WACC) + FCF2/(1+wacc)^2 + .. + FCFn*(1+g)/(WACC-g) * 1/(1+WACC)^n

Question 18

rp - preferred stock

Answer 18

rp = Div on preferred stock / Preferred stock price

Question 19

Restructuring formulas

Answer 19

ru = E/V * re + D/V * rd
re(new) = ru + D/E*(ru-rd)*(1-t)
WACC = re*E/V + rd*D/V*(1-t)

Question 20

APV method

Answer 20

Vu = FCF1/(1+ru) + FCF2/(1+ru)^2 + .. + FCFn*(1+g)/(ru-g) * 1/(1+ru)^n
VL = Vu + PV(TS) - PV(default costs) - PV(other costs)

Question 21

ru for fixed and D/E (APV)

Answer 21

ru = E/V*re + D/V*rd    (D/E)
ru = (rd*D/E*(1-t)+re) / (1+D/E*(1-t))   (fixed)

Question 22

PV(TS) for fixed and D/E (APV)

Answer 22

PV(TS) = TS1/(1+rd) + TS2/(1+rd)^2 + ...    (rd if fixed)
PV(TS) = TS2/(1+ru) + TS2/(1+ru)^2 + ...    (ru if D/E)

Question 23

FCF to equity method

Answer 23

FCFE = NI + depr - CAPEX - IncNWC + Net borrowing
NI = (EBIT-interest)*(1-t)
NPV(FCFE) = FCFE1/(1+re) + FCFE2/(1+re)^2 + ... + FCFEn*(1+g)/(re-g) * 1/(1+re)^n

Question 24

Buyback # of shares

Answer 24

Buyback # of shares = Change in Debt / buyback price (with premium)

Question 25

FCFE

Answer 25

FCFE = FCF - (1-t)*Interest payment + Net borrowing

Question 26

Net income

Answer 26

NI = (EBIT - interest payment) * (1-t)

Question 27

Equity book value

Answer 27

ROE = EPS1 / Equity book value

Question 28

Market to book ratio

Answer 28

M-t-b = P / Equity book value