formulae sheet(1)
DESCRIPTION
hvjhjh j j j h h hj kjTRANSCRIPT
FORMULA SHEET (to be provided with the exam paper)
A future sum (S) from principal (P) invested at simple interest rate (r) for time period (t):
S = P(1 + rt)
As above except that interest (i) is paid and reinvested after each period:
S = P(1 + i)n
Future value (continuous compounding)
Present value of future sum:
Present value (continuous compounding)
Effective rate of interest:
Effective rate of interest (continuous compounding)
Mean geometric rate of return
or
Present Value of an Ordinary Annuity where C is the periodic cash flow:
Loan term (solving the present value of an ordinary annuity formula for n)
Present Value of an Annuity Due, where C is the periodic cash flow:
or
Present Value of a Deferred Annuity:
Present Value of an Ordinary Perpetuity:
Future Value of an Ordinary Annuity:
Future Value of an Annuity Due:
Real Rate of Interest (i*)
Zero growth model:
Constant growth model:
Variable growth model:
Bond Value
or
Net Present Value
Net Present Value in Perpetuity:
Equivalent Annual Value:
Accounting Rate of Return:
Benefit-Cost Ratio:
Expected return on an individual asset:
Variance of returns on an individual asset:
Expected Return for Portfolio:
Variance of the return on portfolio of two securities:
Capital Market Line
Beta:
Capital Asset Pricing Model
Value of a Right
Value of Ex-Right Shares
Promissory notes
Value of a levered firm
Weighted Average Cost of Capital
Economic Order Quantity
Total cost of acquisition and carrying
Target cash balance
Upper limit of cash balance
U* = 3T*
jn
P= Se
-
i
=
(1
+
j
m
m
)
-
1
1
-
j
i= e
(
)
(
)
(
)
[
]
1
r
1
...
...
r
1
+ r
1
i =
n
1
n
2
1
-
+
+
1
1
0
-
n
n
P
P
i =
+
-
n
i)
(
i
C
P =
1
1
1
[
]
i)
(
Pi
C
C/
n =
+
-
1
log
)
(
log
+
-
1
1
1
1
n-
i)
(
i
C
P = C +
)
1
(
1
1
1
i
i)
(
i
C
P =
n
+
+
-
+
-
+
n
1
-
k
i)
1
(
1
1
i
C
i)
(1
1
=
P
P
=
C
i
[
]
S
=
C
i
i)
n
(
1
1
+
-
)
1
(
1
i)
1
(
C
=
S
n
i
i
+
-
+
1
1
1
*
-
+
+
=
p
i
i
e
0
0
k
D
P
=
g
k
)
1
(
D
P
or
g
k
D
P
e
0
0
e
1
0
-
+
=
-
=
g
-
+
+
+
+
+
+
=
=
g
k
g
g
D
k
k
g
D
P
e
n
n
e
n
t
t
e
t
)
1
(
)
1
(
)
1
(
1
)
1
(
)
1
(
0
1
0
0
n
n
n
i
P
i
i
C
P
)
1
(
]
)
1
(
1
1
[
0
+
+
+
-
=
n
n
n
t
t
t
i
P
i
I
P
)
1
(
)
1
(
1
0
+
+
+
=
=
0
n
n
2
2
1
C
-
k)
+
(1
C
...
k)
+
(1
C
k
+
1
C
=
NPV
+
+
+
-
1
k)
+
(1
k)
+
(1
NPV
=
NPV
n
n
0
(
)
+
-
=
=
k
k
n
n
)
1
(
1
1
NPV
EAV
or
k)
,
A
NPV
EAV
0
0
r
=
average an
nual earni
ngs
initial in
vestment
or
average an
nual earni
ngs
average in
vestment
a
outlay
cash
initial
flows
cash
net
of
lue
present va
=
ratio
cost
-
Benefit
i
i
P
R
)
E(R
i
n
1
i
=
S
=
jn
S = Pe
=
-
=
n
i
i
i
P
R
E
R
1
2
2
)]
(
[
s
)
E(R
x
w
)
E(R
i
i
n
1
p
=
S
=
i
2
1
2
,
1
2
1
2
2
2
2
2
1
2
1
2
2
s
s
r
s
s
s
w
w
w
w
p
+
+
=
p
M
f
M
f
p
R
R
E
R
R
E
s
s
-
+
=
)
)
(
)
(
2
)
,
(
M
M
i
i
R
R
Cov
s
b
=
]
)
(
[
)
(
f
m
i
f
i
R
R
E
R
R
E
-
+
=
b
1
N
S)
-
N(M
R
+
=
1
N
S
NM
X
+
+
=
)
365
/
)(
(
1
F
P
d
r
+
=
D
t
V
V
c
U
L
+
=
n
i)
(1
S
=
P
+
-
+
=
V
D
t
k
V
E
k
k
e
d
e
o
)
1
(
c
aD
Q
2
*
=
2
cQ
Q
aD
TC =
+
*
*
L
i
a
T
limit,
lower
the
above
4
3
3
2
=
*
L
limit,
lower
the
above