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)

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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

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3
Q

What is the formula for the PV of an annuity?

A

Pmt X [ 1 - (PV factor)] / r

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4
Q

How do you calculate the PV of a perpetuity

A

PV = Div ( par X %) / R

where R is the required return

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5
Q

How do you calculate the PV of stock value p/share perpetuity?

A

P = D / R

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