Formulas not provided Flashcards
Housing Expenses (PITI)
Principal, Interest, Taxes and insurance / Gross Income
Financial Needs
Cost of Attendance – Expected family Contribution
Amount Paid By Insurance
[(Insurance carried / Insurance required) x Loss] – Deductible
Insurance Basis
Premiums Paid – Dividends
Taxable Income From Insurance Withdrawal/Loan
Net Cash Value
+ Existing Loan
– Basis
Surrender Value
Cash Value – Existing Return x Payment
Annuity Amount Excluded (Exclusion Ratio)
Amount Invested / Expected Return x Payment
Exclusion Ratio
Amount Invested / Expected Return
Bond Conversion Value
(Par / Conversion Price) x Current Market Price of underlying Stock
Net Operating Income
Gross Rental Receipts
+ Non-rental income
- Vacancy and Collection losses
- Operating expenses
Intrinsic Value of Property
NOI / Capitalization Rate
Coefficient of Variation
Risk per unit of Return
Standard Deviation/Average of Mean
Standard Deviation of two Variable Portfolio (Shortcut)
Sum of Standard Deviation / 2
Choose the next lowest answer
Beta
(Correlation Coefficient x Standard Deviation of stock) / Standard deviation of Market
Risk Adjusted Return
Fund’s Realized Return / Fund’s Beta
Dividend Discount Model (Shortcut)
If 1st growth rate is lower than the second growth rate, calculate the price with 2nd growth rate and choose the next lowest answer
If 1st is higher than the second growth rate, calculate the price with the 2nd growth rate and choose the next highest answer
Current Market Price
Earnings x P/E Ratio
Price/Earnings Growth (PEG)
P/E Ratio / Annual EPS Growth
Return on Equity
Earnings available for common (EPS) / Common equity (net worth of book Value)
Dividend Payout Ratio
Common Dividends Paid / Earnings available for Common
Information Ratio
(Asset Return – Return on Benchmark Asset) / Standard Deviation of the Asset Return
Margin Formula
[(1 – Initial Margin %) / (1 – Maintenance Margin %)] x Purchase price of Stock
Margin Formula (Shortcut)
Purchase Price x 2/3
Look for the next highest number
Adjusted Gross Income
Gross Income – Adjustments
Taxable Income
Adjusted Gross Income - Deductions - Exemptions
Tax Liability
Taxable Calculation
- Credits
- Other Taxes
Taxable Calculation
Taxable Income x Appropriate Tax Rates
Net tax due / Refund
Tax liability
- Quarterly Payments
- Withholding
Self Employment Tax (Shortcut)
Self-Employment Income x .1413
Round Up
Profit % for Installment Sale
Gross Profit Percentage = Profit / Total Contract Price
Gain on Installment
Installment x Gross Profit Percentage
Partnership Basis & S Corp. Basis
Partnership Basis:
Cash Contributed
+ Direct loans made to partnership by partner
+ Loans made to partnership
S Corp. Basis:
Cash Contributed
+ Direct loans made to partnership by shareholder
Adjusted Basis for Property
Cost Basis - Cost Recovery
Realized Gain on Exchange
FMV of Property Sold
+ Boot Received
- Adjusted basis of property to be sold
- Boot Given
Recognized Gain on Exchange
The lesser of realized gain or boot received
Adjusted Basis of NEW Property
FMV of Property Received
- Realized gain
+ Recognized gain
Section 1245 Look Back
Lesser of Cost Recovery Deduction or Gain
Gain – Selling price – Basis
Alimony Recapture
1st Year + 2nd Year – ( $37,500 +2 x 3rd Year)
Excess Percentage (Social Security Integration)
Base Percentage + Permitted Disparity
Self Employed Qualified Plan Contribution (15% & 25%)
Net Schedule C Income x 12.12% (15%)
Net Schedule C Income x 18.59% (25%)
Adjusted Gross Estate
Gross Estate
- Funeral Expenses
- Admin Expenses
- Debts
- Taxes
- Casualty Losses
Taxable Estate
Adjusted Gross Estate
- Marital deduction
- Charitable deduction
Tax Base
Taxable Estate + Taxable Gifts
Tentative Estate Tax
Tax Base - $ Exemption) x %
Net Estate Tax
Tentative Tax – Gift taxes paid
Market Risk Premium
Market Return – Risk Free Rate
Stock Risk Premium
Market Risk Premium x Risk Free Rate
Intrinsic Value of a Preferred Stock
Current annual dividend / Required Rate of Return
Current Yield
Current Coupon / Current Selling Price
Coefficient of Variation
Standard deviation of asset / Expected return of asset
Geometric mean (Time weighted return)
Ex. Annual returns were 30%, 40%, -40% and -20%.
Add 1 and multiply
1.3 x 1.4 x -0.6 x -0.8 = 0.8736
Shortcut FV 0.8736 N 4 PV -1 Solve for I/YR
