Semester 2 formulas Flashcards
Future Value
FV= C x (1+r)^t
where c is cash flow, r is discount/compound rate
Present Value
C / (1+r)^t
Net present value
Sum of: (Ct/(1+r)^t) -C0
Internal rate of return
- set NPV = 0 and calculate for r
- R1 + [NPV1/(NPV1-NPV2)]x(R2-R1)
Payback Period
1.add up cash flows till total inital investment reached
- (remaining ££ needed/cash flow in following year) x 12 months
Accounting rate of return
return on investment/capital employed
or
average annual profits/average investment (SL depreciation)
SL depreciation
0.5initial investment x 0.5scrap value
market value of a share
total company value in market/total no shares issued by company
book value of a share
- (total assets-total liabilities)/total number of shares
- (equity share capital+reserves+surplus)/total no shares issued by company
retained earnings
beginning period retained earnings + net income/loss - cash dividends - stock dividends
theoretical ex rights price
the new share price after the rights issue (weighted old and new)
market value of shares in issue+proceeds from new shares)/number of shares after rights issue
value of a right issue
TERP-issue price
CCC (cash conversion cycle)
inventory days +trade receivable days - trade payable days
WACC
proportion of debt capital x after-tax cost of debt
capital + proportion of equity capital x cost of equity capital
annual interest payment (for wacc)
nominal value x coupon rate
cost of debt (for wacc)
annual interest payment/market value
