Formulas Flashcards
(32 cards)
1
Q
Valuation Principle
A
NetValue(NV) = MarketValueofBenefits − MarketValueofCosts
- If NV > 0, do it.
2
Q
Present Value (PV)
A
- FV: Future Value
- rf: risk-free interest rate (as a decimal, e.g., 7% = 0.07)
- n number of periods (years, unless stated otherwise)
3
Q
Future Value (FV)
A
4
Q
Discount Factor
A
5
Q
Net Present Value Decision Rule
A
6
Q
No Arbitrage and Security prices
A
7
Q
Calculating the Risk-free Rate from prices
A
8
Q
Risk Premium Formula
A
9
Q
Pricing Risky Securities
A
10
Q
Value Additivity
A
11
Q
Net Present Value (NPV)
A
11
Q
Present Value and Future Value for Multiple Periods
A
12
Q
Perpetuity Formulas
A
13
Q
Annuity
A
14
Q
Growing Perpetuity
A
15
Q
Growing Annuity
A
16
Q
Internal Rate of Return (IRR)
A
17
Q
Effective Anual Rate (EAR)
A
18
Q
Annual Percentage Rate (APR)
A
19
Q
Compounding Frequency Conversion
A
20
Q
Continuous Compounding
A
21
Q
Fisher Effect
A
22
Q
Compounding PV using a Yield Curve
A
23
Q
Zero-Coupon Bonds Formulas
A
24
Coupon Bonds Formulas
25
Yield To Maturity
26
Coupon Bond with N annual payments
27
Investment Decision Rules
28
Internal Rate of Return (IRR) Rule
29
Payback Rule
30
Topic 6 cont
30
Profitability Index (PI) & Resource Constraints
