P2 Formulas

Question 1

TPAR

Answer 1

return / fact hr (TP cont / time needed on bottleneck)
_______________________________________________________
cost / fact hr (total fact costs / total time on bottleneck)

Question 2

Compound Interest

Answer 2

end total = initial investment x (1+r)^n

Question 3

Discount factor

Answer 3

1
________
(1+r)^n

Question 4

Annuity factor

Answer 4

1- (1+r)^n
____________
r

Question 5

Perpetuity

Answer 5

annual cashflow
__________________
r

Question 6

IRR =

Answer 6

R1 + (R2 - R1) x NPV1
_______
NPV1-NPV2

Question 7

MIRR =

Answer 7

(PV inflows / outflows)^1/n x (1+r) - 1

Question 8

ARR =

Answer 8

av. annual profits (cash inflow - depn / no. yrs)
________________________________________________
av. value of investment (initial inv + res value / 2)

Question 8

Profitability Index =

Answer 8

NPV / initial investment

Question 9

To convert cost of capital between money & real

Answer 9

(1+m)=(1+r)(1+i)

Question 10

Price Elasticity of Demand (PED) =

Answer 10

% change demand
___________________
% change price

Question 11

Optimum price

Total contribution

Answer 11

P = a - bq

MR = a - 2bq

total cont = (P - MC) x q

Profit = total cont - fixed costs

Question 12

operating profit margin =

Answer 12

op profit / turnover x 100%

Question 13

Asset turnover =

Answer 13

turnover / cap employed

Question 14

ROCE / ROI =

Answer 14

Op profit / cap employed x100%

Question 15

Residual Income (RI) =

Answer 15

controllable profit - (cap employed x cost of cap)

Question 16

Economic Value Added (EVA)

1. NOPAT
2. Econ value of Assets
3. EVA =

Answer 16

1. NOPAT
   +op profit
   + dev costs
   - 1 yr amortisation dev costs
   + accounting depn
   - econ depn
2. Econ value of assets
   + replacement costs
   - econ depn
   + remaining dev costs amortisation
   + working capital
   + total provision for doubtful debts
3. EVA = NOPAT - (econ value of assets x cost of cap)