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    Basic Finance Formulas

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    mafe mora
    This document provides an overview of key concepts in corporate finance and valuation. It defines terms like net present value, rate of return, future value, present value, compounding, discounting, perpetuity, annuity, and growing perpetuity. Formulas are given for net present value, future value, present value, perpetuity, annuity, and growing perpetuity to calculate cash flows over time.

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    Basic Finance Formulas

    Uploaded by

    mafe mora
    52 views1 page
    This document provides an overview of key concepts in corporate finance and valuation. It defines terms like net present value, rate of return, future value, present value, compounding, discounting, perpetuity, annuity, and growing perpetuity. Formulas are given for net present value, future value, present value, perpetuity, annuity, and growing perpetuity to calculate cash flows over time.

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    This document provides an overview of key concepts in corporate finance and valuation. It defines terms like net present value, rate of return, future value, present value, compounding, discounting, perpetuity, annuity, and growing perpetuity. Formulas are given for net present value, future value, present value, perpetuity, annuity, and growing perpetuity to calculate cash flows over time.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    52 views1 page

    Basic Finance Formulas

    Uploaded by

    mafe mora
    This document provides an overview of key concepts in corporate finance and valuation. It defines terms like net present value, rate of return, future value, present value, compounding, discounting, perpetuity, annuity, and growing perpetuity. Formulas are given for net present value, future value, present value, perpetuity, annuity, and growing perpetuity to calculate cash flows over time.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    Corporate

    Finance Professional Certificate MOOC


    Course 1, Introduction to Corporate Finance MOOC
    Module 1, Basic Finance Concepts
    Valuation Basics Net Present Value
    Rate of Return Net Present Value
    The gain experienced over a period of time The present value of all the cash flows
    expressed in terms of the initial investment. including all the costs.
    Future Value (FV) Net Present Value Formula
    The value of a given amount of money today at 𝐶,
    some point in the future. 𝑁𝑃𝑉 = 𝐶/ + ⋯
    (1 + 𝑟)1
    Present Value (PV) PV = Present Value
    The amount of money today. 𝐶/ = Initial Investment
    Ct = Cash Flow at Time t
    Future Value (FV) Formula r = rate
    𝐹𝑉 = 𝑃𝑉 × (1 + 𝑟) T = time
    FV = Future Value Perpetuity
    PV = Present Value A cash flow stream in which all the cash flows
    r = rate
    are the same and go on forever.
    Compounding Perpetuity Formula
    Earning a return on past returns 𝐶
    General Future Value Formula 𝑃𝑉 =
    𝑟
    𝐹𝑉 = 𝑃𝑉 × (1 + 𝑟), PV = Present Value
    FV = Future Value C = Cash Flow
    PV = Present Value r = rate
    r = rate
    Annuity
    t = time
    A cash flow stream in which all cash flows are
    Discounting the same and last for a fixed number of
    The process of computing the present value of a periods
    future cash flow.
    Annuity Formula
    Present Value (PV) Formula 𝐶 1
    𝐹𝑉 𝑃𝑉 = 21 − 4
    𝑃𝑉 = 𝑟 (1 + 𝑟)1
    (1 + 𝑟), PV = Present Value
    FV = Future Value C = Cash Flow
    PV = Present Value r = rate
    r = rate T = time
    t = time
    Growing Perpetuity
    Valuation Cash flows growing at a constant rate and last
    Appraising or estimating the worth of something forever.
    having economic or monetary value.
    Growing Perpetuity Formula
    𝐶
    𝑃𝑉 =
    𝑟−𝑔
    PV = Present Value

    C = Cash Flow
    r = rate
    g = growth rate of cash flows

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