Formulas Flashcards

1
Q

PV of an Annuity

A

PV = A * (1 – 1 / ( 1 + r )n) / r

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2
Q

FV of an Annuity

A

FV = A * ( ( 1 + r ) n – 1 ) / r

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3
Q

PV of Perpetuity

A

PV = P * 1 / r

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4
Q

VF

A

Value of the Firm

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5
Q

VS

A

Value of Equity

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6
Q

VB

A

Value of Debt

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7
Q

RS

A

Required Rate on Equity

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8
Q

RB

A

Required Rate on Debt

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9
Q

WACC

A

Weighted Average Cost of Capital

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10
Q

CFF

A

Cash Flow before Interest

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11
Q

CFS

A

Cash Flow to Shareholders (CF after interest)

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12
Q

CFB

A

Cash Flow to Debtholders

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13
Q

Formula Value of the Firm

A

VF = CFF / WACC

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14
Q

Formula Value of Equity

A

VS = CFS / RS

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15
Q

Formula Value of Debt

A

VB = CFB / RB

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16
Q

Formula WACC

A

( VS / VF ) * RS + (VB / VF) * RB

17
Q

Payback Period

A

Initial Investment / Annual Cash Flow

18
Q

Accounting Rate of Return

A

Average Annual profit / Average Investment