Financial Valuation Flashcards
1
Q
How do you calculate the PV factor?
A
FV / ( 1 + r )^n
Future Value divided by
1 + Interest Rate exponent # of periods (n)
2
Q
How do you calculate the PV factor of an annuity?
A
Step 1:
Compute the PV factor for 1 = 1/ (1+r)^n
Step 2:
( 1 - PV Factor ) / Interest Rate
3
Q
What is the formula for the PV of an annuity?
A
Pmt X [ 1 - (PV factor)] / r
4
Q
How do you calculate the PV of a perpetuity
A
PV = Div ( par X %) / R
where R is the required return
5
Q
How do you calculate the PV of stock value p/share perpetuity?
A
P = D / R
