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    Formula

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    marwin73
    This document contains formulas for calculating financial metrics such as net present value (NPV), present value of an annuity, perpetuity, and growing perpetuity. It also includes formulas for calculating stock price based on dividends, earnings per share, and net present value of growth opportunities. Additional formulas shown calculate the price-to-earnings ratio, plowback ratio, growth rate, expected return and variance of a portfolio, Sharpe ratio, capital asset pricing model, weighted average cost of capital with and without taxes, and valuation with interest tax shields.

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    Formula

    Uploaded by

    marwin73
    100 views2 pages
    This document contains formulas for calculating financial metrics such as net present value (NPV), present value of an annuity, perpetuity, and growing perpetuity. It also includes formulas for calculating stock price based on dividends, earnings per share, and net present value of growth opportunities. Additional formulas shown calculate the price-to-earnings ratio, plowback ratio, growth rate, expected return and variance of a portfolio, Sharpe ratio, capital asset pricing model, weighted average cost of capital with and without taxes, and valuation with interest tax shields.

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    This document contains formulas for calculating financial metrics such as net present value (NPV), present value of an annuity, perpetuity, and growing perpetuity. It also includes formulas for calculating stock price based on dividends, earnings per share, and net present value of growth opportunities. Additional formulas shown calculate the price-to-earnings ratio, plowback ratio, growth rate, expected return and variance of a portfolio, Sharpe ratio, capital asset pricing model, weighted average cost of capital with and without taxes, and valuation with interest tax shields.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    100 views2 pages

    Formula

    Uploaded by

    marwin73
    This document contains formulas for calculating financial metrics such as net present value (NPV), present value of an annuity, perpetuity, and growing perpetuity. It also includes formulas for calculating stock price based on dividends, earnings per share, and net present value of growth opportunities. Additional formulas shown calculate the price-to-earnings ratio, plowback ratio, growth rate, expected return and variance of a portfolio, Sharpe ratio, capital asset pricing model, weighted average cost of capital with and without taxes, and valuation with interest tax shields.

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    Formula sheet

    CF1 CF2 CF3 CF4


    NPV = CF0 + + + + +L
    (1 + r) (1 + r) 2
    (1 + r) 3
    (1 + r) 4

    1 1 
    PV of an annuity = C ×  − T 
     r r(1 + r) 

    C
    PV of a perpetuity =
    r

    C
    PV of a growing perpetuity =
    r-g

    Div1 Div 2 Div 3 Div 4


    Stock price = + + + +L
    (1 + r) (1 + r) 2
    (1 + r) 3
    (1 + r) 4

    Div EPS
    Stock price = =
    r r

    Div1
    Stock price =
    r
    - g

    EPS

    Stock price = + NPVGO


    r

    1  price 
    P/E = × 
    r  price − NPVGO 

    Plowback ratio = Reinvestment / Earnings

    g = ROE × plowback ratio

    E[RP] = w1E[R1] + w2E[R2]

    var(RP) = w12⋅var(R1) + w22⋅var(R2) + 2 w1 w2 cov(R1, R2)


    = w12⋅var(R1) + w22⋅var(R2) + 2 w1 w2 corr(R1, R2) stdev(R1) stdev(R2)

    E[RP] = ∑ w E[R ]
    i
    i i

    var(RP) = ∑ w var(R ) + ∑∑
    i
    2

    i i i≠ j

    w i w jcov(R i , R j )

    = ∑ w var(R ) + ∑∑
    i
    2

    i i i≠ j
    w i w jρ x, y stdev x stdev y

    9
    E[R P ] - rf
    Sharpe ratio =
    σP

    ri = rf + βi (E[RM] - rf)

    No taxes:

    rA = (D/V) rD + (E/V) rE

    βA = (D/V) βD + (E/V) βE

    rE = rA + (D/E) (rA – rD)

    βE = βA + (D/E) (βA – βD)

    Taxes:

    PV(interest tax shields) = τ D

    after-tax WACC = (D/V) (1 – τ) rD + (E/V) rE

    rE = rA + (D/E) (1 – τ) (rA – rD)

    VL = VU + PV(interest tax shields)

    10

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