In Class Test Formulae Flashcards
What is the formula for ARR?
average annual profit/average investment x 100
How is average annual profit calculated for ARR?
Total profit/no. years
How is average investment calculated for ARR?
Initial investment + residual value/2
How is future value calculated?
PV x (1+r)^n
How is present value calculated?
FV x 1/(1+r)^r
How is NPV calculated?
ΣCFi/(1+r)^i - investment costs
How is profitability index calculated?
NPV/Initial investment
How is IRR estimated?
r1 + NPV1 /NPV1 - NPV2 (r2 - r1)
How is the present value for a single cash flow calculated?
1/(1 + r)^n
How is the present value for an annuity calculated?
1/r (1 - 1/(1 + r)^n)
How is the present value for a perpetuity calculated?
1/r
How can the nominal rate be calculated if you have the real and inflation rates?
rNominal = ( 1 + rReal)(1 + rInflation) - 1
How can the real rate be calculated if you have the nominal and inflation rates?
rReal = (1 + rNominal) / (1+ rInflation) - 1
How can the inflation rate be calculated if you have the nominal and real rates?
rInflation = (1 + rNominal) / (1 + rReal) - 1
How is the sub annual rate calculated when there are p periods per year?
r = r Annual/p
How is the truly equivalent sub annual rate calculated?
r = p√ 1 + r (annual) - 1
How is the value of rights per new share calculated?
(MV of share existing rights) - (subscription price)
How is the value of rights per pre existing share calculated?
Value of rights per new share/No. of shares to buy one new share
What is the second way of calculating the value of rights per pre existing share?
(MV of cumrights) - (subscription price) / no. shares to buy one new share + 1
What is the formula for the constant dividend model?
Ke = d/S.oxd
What are the formulas for the constant dividend growth model?
ke = d1/Soxd + g
or
ke = d0 (1 + g)/S.oxd + g
What is the formula for the constant growth rate?
g = (n√Dt + n/Dt - 1
How is the sustainable growth rate calculated?
(1 - PR) x ROCE
What is the formula for the capital asset pricing model?
ke = Rf + βe (E[Rm] - Rf)
What is the formula for the constant dividend model for preference shares?
kp = d/P.oxd
What is the constant perpetual debt model?
kd = I(1-tc)/B.oxd (Kd after tax)
What is the formula for WACC?
Ke (S/V) + Kp (P/V) + Kd (B/V)
What are the formulas for M&M1?
V = NOI (1 - tc)/p + Btc . or . VL = VU + Btc
What is the formula for M&M2?
Ke = p + (1 - tc)(p - kd) B/S
What is the formula for M&M3?
WACC = p(1 - tc B/B+S)
How is the market value of debt calculated?
B = rdD/Kd
