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    Formula Sheet - PDF For Week 10

    Uploaded by

    Nat Siow
    This document contains formulas for calculating present and future values using simple and compound interest, effective annual rates, annuities, perpetuities, bond pricing, dividend valuation models, and more. Some key formulas include the Fisher equation for calculating real interest rates, the future and present value formulas for a single payment with simple and compound interest, and the constant growth dividend discount model for valuing stocks based on expected future dividend payments and growth rate.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Formula Sheet - PDF For Week 10

    Uploaded by

    Nat Siow
    100 views2 pages
    This document contains formulas for calculating present and future values using simple and compound interest, effective annual rates, annuities, perpetuities, bond pricing, dividend valuation models, and more. Some key formulas include the Fisher equation for calculating real interest rates, the future and present value formulas for a single payment with simple and compound interest, and the constant growth dividend discount model for valuing stocks based on expected future dividend payments and growth rate.

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    formula sheet week 10 finance

    Original Title

    Formula Sheet.pdf for week 10

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    This document contains formulas for calculating present and future values using simple and compound interest, effective annual rates, annuities, perpetuities, bond pricing, dividend valuation models, and more. Some key formulas include the Fisher equation for calculating real interest rates, the future and present value formulas for a single payment with simple and compound interest, and the constant growth dividend discount model for valuing stocks based on expected future dividend payments and growth rate.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    100 views2 pages

    Formula Sheet - PDF For Week 10

    Uploaded by

    Nat Siow
    This document contains formulas for calculating present and future values using simple and compound interest, effective annual rates, annuities, perpetuities, bond pricing, dividend valuation models, and more. Some key formulas include the Fisher equation for calculating real interest rates, the future and present value formulas for a single payment with simple and compound interest, and the constant growth dividend discount model for valuing stocks based on expected future dividend payments and growth rate.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    ICT Formula Sheet

    Description Formula

    Fisher equation (Exact or Precise) Real rate = (1 + i ) / (1 + ∆Pe ) – 1


    (Approximate) Real rate ≈ i - ∆Pe

    Future Value (simple interest) FVn = PV0 ∗ (1 + i ∗n)

    PV0 = FVn / (1+i)


    n
    Present value single amount (compound interest)

    FVn = PV0 * (1+i)


    n
    Future value single amount (compound interest)

    Future value (compounding more frequently than once


    per period)
    FVn = PV0 * (1 + i / m) (m * n)

    m
     j
    EAR  1    1 where j = quoted rate
    Effective Annual Rate  m

     1 
    1  (1  i ) n 
    Present value of an ordinary annuity PVAn  CF   
     i 
     
     
     1 
    1  (1  i) n 
    Present value of an annuity due PVA Due,n  CF   1  i ) 
     i 
     
     

     (1  i) n  1
    Future value of an ordinary annuity FVAn  CF   
     i 

     (1  i ) n  1
    Future value of an annuity due FVA Due, n  CF   1  i 
     i 

    𝐶𝐹
    Present value of a perpetuity 𝑃𝑉0 =
    𝑖
    𝐶𝐹1
    Present value of a growing perpetuity 𝑃𝑉0 =
    (𝑖 − 𝑔)

     1 
    1  (1  i ) n  F
    Price of a bond BP0  C   
     (1  i )
    n
     i
     
     1 
    1  (1  i/m ) mn  F
    Price of a bond making multiple payments per year BP0  C / m   
     i/m  (1  i/m ) mn
     
     
    Price of Bond = Fmn/(1 + i/m)mn
    Price of a zero coupon bond
    (with pricing based on m compounding periods per year)

    Equivalent Annual Yield (EAY) EAY = (1 + Quoted rate/m)m - 1

    ∞
    𝐷𝑡
    General dividend valuation model 𝑃0 = ∑
    (1 + 𝑅)𝑡
    𝑡=1

    D
    Value of share – zero growth P0 
    R

    Value of share using Constant growth dividend discount D1 D 1  g 


    P0   0
    model (DDM) Rg Rg

    Value of share time t using Constant growth dividend Dt 1


    Pt 
    discount model (DDM) Rg

    Dt  D0 1  g 
    t
    Dividend at time t, based on constant growth, g

    Value of share using mixed (supernormal/multistage) 𝐷1 𝐷2 𝐷𝑡 𝑃𝑡


    𝑃0 = 1
    + 2
    + ⋯+ 𝑡
    +
    growth model (1 + 𝑅) (1 + 𝑅) (1 + 𝑅) (1 + 𝑅)𝑡

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