Formuales

Question 1

What is the straight line depreciation formulae?

Answer 1

Deprecation =
cost - scrap value)/ life
220,000 - 10,000/ 5(yrs) =42,000 p.a

Question 2

What is the cost of equity Capital Asset Pricing Model (CAPM) formulae?

Answer 2

Re = rf + B(rm - rf)

Return on equity = risk free interest + Beta (market return - risk free rate)

Question 3

What is the dividend growth model formulae?

Answer 3

Ke = [Do (1 + g) / Po] + g

Ke = cost of equity
Po = current share price
Do = current level of dividend
G = estimated growth rate in dividends

Question 4

Cost of debt formulae?

Answer 4

Kd = I (1-t) / Sd

Cost of debt = Interest Expense (tax rate) / total debt

Question 5

What is the cost of equity dividend growth model formulae?

Answer 5

Ke = [ Do (1+g) / Po ] + g

Cost of equity = [Dividend current per share (1+expected constant growth rate of dividends) / Current market price of stock

Question 6

What is the WACC formulae?

Answer 6

Question 7

Reducing balance method of depreciation formulae?

Answer 7

Depreciation = Net Book Value × Depreciation Rate

Example: £10,000 asset has a 20% depreciation rate, the first year’s depreciation would be £2,000. In the second year, the depreciation would be calculated on the remaining £8,000, resulting in a £1,600 charge. This pattern continues, with the depreciation amount decreasing each year.

Question 8

Straight-line depreciation method formulae?

Answer 8

Depreciation = (Cost of the asset - Salvage Value) / Useful Life

Example:
Cost of the asset: $100,000
Cost of the asset – Estimated salvage value: $100,000 – $20,000 = $80,000 total depreciable cost
Useful life of the asset: 5 years
Divide step (2) by step (3): $80,000 / 5 years = $16,000 annual depreciation amount

Question 9

Working Capital Cycle in Days formulae

Answer 9

Inventory Days + Receivable Days - Payable Days