Exam 3 Formulas

Question 1

Future value equation:

Answer 1

Future value =
present value * future value factor

Question 2

Present value equation:

Answer 2

Present value =
future value * present value factor

Question 3

Future value factors equation:

Answer 3

Future value factor =
(1 + i)^n

Question 4

Present value factors equation:

Answer 4

Present value factor =
1 / [( 1 + i)^n]

Question 5

Future value of an ordinary annuity equation:

Answer 5

Future value of an ordinary annuity =
payment amount * FVAF

Question 6

Future value of an annuity due equation:

Answer 6

Future value of an annuity due =
payment * FVAF * (1 + i)

Question 7

Present value of an ordinary annuity equation:

Answer 7

Present value of an ordinary annuity =
payment amount * PVAF

Question 8

Present value of an annuity due:

Answer 8

Present value of an annuity due =
payment amount * PVAF * (1 + i)

Question 9

Straight line depreciation equation:

Answer 9

Straight line depreciation =
(cost - residual value) / useful life

Question 10

Book Value equation:

Answer 10

Book value =cost of asset - accumulated depreciation

Question 11

Sum of years digits depreciation expense equation:

Answer 11

Sum of years digits depreciation =
(cost - residual) * (life / SYD)

Question 12

Double declining balance annual depreciation expense equation:

Answer 12

Double declining balance annual depreciation expense =
Book value at beg of year * (2 / life)

Question 13

Units of production depreciation equation:

Answer 13

Units of production depreciation =
[(cost - residual) / total estimated usage ] * actual usage for current year

Question 14

Reduction of principle equation:

Answer 14

Reduction or principle =
Payment - interest

Question 15

End loan balance equation:

Answer 15

End loan balance =
beginning loan balance - reduction of principal

Question 16

Debt to equity ratio equation:

Answer 16

Debt to equity ratio =
Total liabilities / total stockholders equity

Question 17

Times interest earned equation:

Answer 17

Times interest earned =
Net income + income tax expense + interest expense / interest expense

Question 18

Earnings before interest and taxes equation:

Answer 18

Earnings before interest and taxes =
Net income + income tax expense + interest expense

Question 19

Preferred stock dividend equation:

Answer 19

Preferred stock dividend =
par value per share * %

Question 20

Total preferred stock dividend equation:

Answer 20

Total preferred stock dividend =
par value per share * % * # shares outstanding

Question 21

Treasury stock account balance equation:

Answer 21

Treasury stock account balance =
# of shares re-acquired * re-acquisition cost

Question 22

Return on equity equation:

Answer 22

Return on equity =
Net income / average equity

Question 23

Average equity equation:

Answer 23

Average equity =
Equity at Jan 1 + equity at Dec 31 / 2

Question 24

Earnings per share equation:

Answer 24

Earning per share =
Net income - preferred stock dividends / # of common shares outstanding

Question 25

Price earnings ratio equation:

Answer 25

Price earnings ratio =
Market price per share of stock / earning per share