Flashcards in Formulas Deck (27):

1

## Present value of an Annuity

###
Either:

PV = C x (1/r - 1/r x (1+r)^t )

Or PV= c x annuity factor

C = cash flow

R = interest rate

T= time

2

## Future Value (FV)

### FV = PV x (1+r)^t

3

## Present value with annual compounding

### PV = FV / (1+R)^t

4

## Using discount factor

### PV = FV x discount factor

5

## Using annuity

### PV= C x annuity factor

6

## Annuity due

### C x (1/r - 1/r x (1+r)^t ) x (1+r)^t

7

## Present value today

### PV = FV/ (1+r)^t

8

## Future value of annuity

### PV annuity x (1+r)^t

9

## Effective interest rate

### Effective interest rate = (1 + r/n) ^n -1

10

## NPV of project

###
NPV of project = CF0 + CF x annuity factor

CF0 = initial investment

CF = cash flow

11

## Profitability index

### Profitability index = NPV / initial investment

12

## NPV of year t today

### NPV of year t today = NPVt / (1+r)^t

13

## Pre tax profit

### Pre tax profit = earnings - depreciation

14

## Taxes

### Taxes = tax rate x pre tax profit

15

## Profit after tax

### Profit after tax = pre tax profit - taxes

16

## Operating cash flow

### Operating cash flow = profit after tax + depreciation

17

## Net cash flow

### Net cash flow = ( rev- expenses) x (1- tax rate) + (tax rate x dep) + (additional investment in working capital, if pos minus it, if neg add it )

18

## WACC(opportunity cost of capital)

### WACC = ((equity / equity + debt) x Te) + (debt / debt + equity) x Td x (1 - Tr))

19

## PV of growing perpuity or value of firm

###
PV of growing perpuity or value of firm = PV = c / r - g

Or annual free cash flow / WACC - constant rate

20

## Underwriting spread

### Underwriting spread = offered shares price - underwriter share

21

## Subscription price

### Subscription price = how much they need to raise / how many they’re offering

22

##
Value of merged firm

### Value of merged firm = value of acquiring + value of target + economic gains

23

## Value of acquiring / value of firm

### Value of acquiring / value of firm = price per share x no. Of shares

24

## Value of target

### Value of target = shares outstanding x share price

25

## Earnings of merged firms

### Earnings of merged firms = earning of acquiring + earnings of target

26

## Mm prop 1 - for when there are no taxes and you’re working out WACC

### R assets = r debt x D/+E + r assets x E/D+E

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