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    BF - Fourmulae - 2013

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    Amitesh
    This document provides formulas for various financial concepts: 1) Formulas are given for after-tax cost of irredeemable debt capital, capital asset pricing model, correlation coefficient, cost of equity, cost of irredeemable debt capital, cost of preference shares, covariance, dividend growth, effective interest rates, expected return of a two asset portfolio, future value of a cash flow, internal rate of return, market value of debentures, market value for irredeemable debt, market value of a share, present value of a cash flow, present value of an annuity, present value of a perpetuity, price earnings ratios, sensitivity, share price in perpetuity, standard deviation of returns from a

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    BF - Fourmulae - 2013

    Uploaded by

    Amitesh
    61 views3 pages
    This document provides formulas for various financial concepts: 1) Formulas are given for after-tax cost of irredeemable debt capital, capital asset pricing model, correlation coefficient, cost of equity, cost of irredeemable debt capital, cost of preference shares, covariance, dividend growth, effective interest rates, expected return of a two asset portfolio, future value of a cash flow, internal rate of return, market value of debentures, market value for irredeemable debt, market value of a share, present value of a cash flow, present value of an annuity, present value of a perpetuity, price earnings ratios, sensitivity, share price in perpetuity, standard deviation of returns from a

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    This document provides formulas for various financial concepts: 1) Formulas are given for after-tax cost of irredeemable debt capital, capital asset pricing model, correlation coefficient, cost of equity, cost of irredeemable debt capital, cost of preference shares, covariance, dividend growth, effective interest rates, expected return of a two asset portfolio, future value of a cash flow, internal rate of return, market value of debentures, market value for irredeemable debt, market value of a share, present value of a cash flow, present value of an annuity, present value of a perpetuity, price earnings ratios, sensitivity, share price in perpetuity, standard deviation of returns from a

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    61 views3 pages

    BF - Fourmulae - 2013

    Uploaded by

    Amitesh
    This document provides formulas for various financial concepts: 1) Formulas are given for after-tax cost of irredeemable debt capital, capital asset pricing model, correlation coefficient, cost of equity, cost of irredeemable debt capital, cost of preference shares, covariance, dividend growth, effective interest rates, expected return of a two asset portfolio, future value of a cash flow, internal rate of return, market value of debentures, market value for irredeemable debt, market value of a share, present value of a cash flow, present value of an annuity, present value of a perpetuity, price earnings ratios, sensitivity, share price in perpetuity, standard deviation of returns from a

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    Foundation Level Exams

    Business Finance Formulae

    Description Formula

    After-tax cost of irredeemable debt I


    Kd = (1 t)
    capital P0

    Capital asset pricing model E(ri) = rf + i(rm rf)

    Covariance
    Correlation coefficient xy

    Cost of Equity =

    Cost of equity by Gordon growth D0 (1 g)


    ke +g
    model P0

    Cost of irredeemable debt capital

    d
    Cost of preference shares Kpref =
    P0

    Covariance p(x x)(y y)

    Dividend growth g = bR

    n
    r = (1 + ie) 1

    Effective interest rates or


    1/n
    ie = (1 +r) 1
    Expected return of a two asset r p xr a (1 x) r b
    portfolio

    Future value (FV) of a cash flow n


    FV = PV (1 + r)

    Internal rate of return (IRR)

    I I I Pn
    Market value of debentures P0 ...
    (1 Kb ) (1 Kb )2 (1 Kb )n

    I
    Market value for irredeemable debt P0 =
    Kb

    D 0 (1 g)
    Market value of a share P0
    (r g)

    Payback period

    1
    PV FV
    Present value (PV) of a cash flow (1 r) n

    Annual cash flow 1


    Present value (PV) of an annuity PV = 1 n
    r (1 r)

    Annual cash flow


    Present value (PV) of a perpetuity PV =
    r

    Price earnings ratios

    `
    Sensitivity

    Share price in perpetuity

    Standard deviation of the returns 2 2 2 2


    p = a x b (1 x) 2x (1 x)pab a b
    from a two-asset portfolio

    Return of capital employed (ROCE)

    Return on share

    Weighted average cost of capital E D


    WACC Ke Kd
    (WACC) E D E D

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