F301 – Financial Management
FINAL EXAM FORMULA SHEET
(page 1 of 2)
PV 
FV = PV(1+r)t
APV = C *
[
FV
(1  r ) t
1
1  PVIF
] =
r
C*
[
1
(1  r ) t
]
r
Perpetuity PV at perpetuity’s Time Zero = PMT1/r =
First cash flow
r
m
E.A.R.
 quotedrate 
no.of periodsper year 
 1 
1
  1  1  periodic rate
m


m
 APR as decimal 
 1 
 1
m


APR = R × m
Stock Price Formulas:
General:
P0 =
D1
D2
D3
D4
D5




..........
2
3
4
(1  r ) (1  r )
(1  r )
(1  r )
(1  r ) 5
Zero Dividend Growth:
P0 = D/r
Constant Dividend Growth:
P0 =
D0 (1  g )
D1
Next Dividend


(r  g )
(r  g )
(r  g )
Pt =
Dt (1  g )
Dt 1

;
(r  g )
(r  g )
r=
D1
g
P0
Non-constant Dividend Growth:
P0 =
D1
D2
Dt
Pt

..........

2
t
(1  r ) (1  r )
(1  r )
(1  r ) t
Inflation - Fisher Effect:
)
F301 Final Exam Formula Sheet
Page 1 of 2
F301 Formula Sheet
(page 2 of 2)
EBIT = Sales – Costs – Depreciation
OCF = EBIT – taxes on EBIT + depreciation
Or
OCF = [(Sales -Cost)*(1-T)] + (Depreciation * tax rate)
Capital investment
terminal cash flow
=
=
Selling price minus tax on gain
Selling price – [(selling price – book value) * tax rate]
CFA = OCF – increase in NWC – net capital spending
NPV = CF0 + CF1/(1+r) + CF2/(1+r)2 + … + CFT/(1+r)T
Internal Rate of Return: 0 = NPV when IRR is the discount rate
Arithmetic mean =
Sum of terms
n
(
)
)
)
))
CAPM: E(RE) = Rf + E [E(RM ) – Rf ] or, in a slightly oversimplified form: RE = Rf + β(RM – Rf)
WACC = (E/V) * RE + (D/V)*RD*(1-TC) + (P/V)*Rp
= (weight of equity × cost of equity) + (weight of debt × cost of debt × (1 – T))
+ (weight of preferred stock × cost of preferred stock)
MACRS depreciation tables:
Year
1
2
3
4
5
6
7
8
3-year
33.33%
44.44%
14.82%
7.41%
F301 Final Exam Formula Sheet
5-year
20%
32%
19.2%
11.52%
11.52%
5.76%
7-year
14.29%
24.49%
17.49%
12.49%
8.93%
8.93%
8.93%
4.45%
Page 2 of 2