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cheat sheet for final exam...

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Time Value of Mo Money ney 1 Interest: INT = PV x i x n Future Value (SI) : FV = PV (1 + i x n) Present value (SI): PV = FV/(1+ixn) Eg: future value of 100,000 invested 180 days 10% pa SI = 100,000(1+10%x180/365)= 100,000(1+0.049315068) Future Value (CI)= FV=PV(1+i)n Eg: deposit $5317 with interest 5%pa what is interest in 4 yrs =5317(1+0.05)4 Present Value (CI)= PV= FV/(1+i)n Eg: Bank term deposit pays 230,000 in 6yrs time. What $ receive today? Discount rate 20% pa. =230,000(1+0.20)-6 = 77,026.53 Eg 2: need 2,500,000 20yrs. Return of 9% comp ¼. What amount will you need to invest today? =FV(1-i)-n = i= 9%/4=2.25 =2,500,000 (1+0.0225)-80 Time Value of Mo Money ney 2 Annuity-multiple cash flow. No of equal cash flows occurring at equal time intervals. Future Value (Ord An)=FV=PMT (1+i)n-1/i PMT- annuity payment n- no payments I- per period int rate Equ Equiity an and dV Val al alu uat atio io ion n Share Price(nogrowth)- p=d/r Constant growth- Po=D1/(r-g) or Po=D0(1+g)/(r-g)

Capit Capital al Budg Budgeting eting 1- selecting projects that maximise shareholder wealth

NPV:

r-required rate return. Cf- cash flow time period t reject projects NPV bv- diff is taxable profit If sv...