Professional Documents
Culture Documents
Formula Sheet
page #
Assets = Liabilities + Shareholders equity
[2.1]
28
[2.2]
32
[2.3]
34
[3.1]
64
[3.2]
65
[3.3]
65
[3.4]
65
[3.5]
66
[3.6]
66
[3.7]
66
[3.8]
66
Long-term debt
Long-term debt ratio =
Long-term debt + Total equity
[3.9]
67
[3.10]
67
[3.11]
67
[3.12]
68
[3.13]
68
[3.14]
68
[3.15]
68
[3.16]
69
[3.17]
69
[3.18]
69
[3.19]
69
[3.20]
70
[3.21]
70
[3.22]
71
[3.23]
71
[3.24]
73
[4.1]
93
[4.2]
98
[4.3]
99
[4.4]
99
[4.5]
100
[4.6]
100
[4.7]
100
[4.8]
102
[4B.1]
116
ROA R
Internal growth rate =
1 ROA R
p(S/A)(1 + D/E) R
g* =
1 p(S/A)(1 + D/E) R
EFN = Increase in total assets Addition to retained earnings
New borrowing
= A(g) p(S)R (1 + g) pS(R) (1 + g)[D/E]
2
[4B.2]
116
[5.1]
121
[5.2]
129
PV (1 + r)t = FVt
PV = FVt/(1 + r)t = FVt [1/(1 + r)t]
[5.3]
131
[6.1]
147
[6.2]
152
[6.3]
153
[6.4]
154
[6.5]
154
C
PV =
rg
[6.6]
156
[6.7]
159
EAR = eq 1
[6.8]
161
[7.1]
180
1 + R = (1 + r) (1 + h)
[7.2]
197
1 + R = (1 + r) (1 + h)
R=r+h+rh
[7.3]
197
Rr+h
[7.4]
197
[7B.1]
211
P0 = (D1 + P1)/(1 + r)
[8.1]
217
P0 = D/r
[8.2]
218
[8.3]
219
t
+1
= t
Pt =
rg
rg
[8.4]
219
(r g) = D1/P0
r = D1/P0 + g
[8.5]
222
[10.1]
281
D (1 + g)
0
1
=
P0 =
rg
rg
D (1 + g)
OCF = (S C D) + D (S C D) Tc
= (S C D) (1 Tc) + D
= Project net income + Depreciation
= $120 + 600
= $720
[10.2]
281
OCF = (S C D) + D (S C D) Tc
= (S C) (S C D) Tc
= Sales Costs Taxes
= $1,500 700 80 = $720
[10.3]
281
OCF = (S C D) + D (S C D) Tc
= (S C) (1 Tc) + D Tc
[10.4]
282
S VC = FC + D
P Q v Q = FC + D
(P v) Q = FC + D
Q = (FC + D)/(P v)
[11.1]
319
OCF = [(P v) Q FC D] + D
= (P v) Q FC
[11.2]
321
Q = (FC + OCF)/(P v)
[11.3]
322
[12.1]
340
[12.2]
340
[12.3]
350
[12.4]
355
[13.1]
371
E(R) = Oj Pj
[13.2]
371
[13.3]
372
[13.4]
374
[13.5]
376
[13.6]
381
where
Oj = value of the jth outcome
Pj = associated probability of occurrence
= the sum over all j
j
2 = [Oj E(R)]2 Pj
j
=
2
P =
2P
[13.7]
382
[13.8]
383
[13.9]
386
E(Ri) = Rf + [E(RM) Rf ] i
[13.10]
397
[13.11]
399
[13.12]
399
[13A.1]
407
2P xjij
[13A.2]
408
N
2P
xji2 = 2[x1COV(R1,R2) + x222 + x3 COV(R3,R2)
=
2
x2
j=1
[13A.3]
408
[13A.4]
408
RE = (D1/P0) + g
[14.1]
414
RE = Rf + E [RM Rf]
[14.2]
416
RP = D/P0
[14.3]
419
V=E+D
[14.4]
420
[14.5]
420
[14.6]
421
fA = (E/V) fE + (D/V) fD
= 60% .10 + 40% .05
= 8%
[14.7]
428
[14A.1]
441
[14A.2]
442
[14A.3]
442
[15.1]
466
[15.2]
466
N N
i=1 j=1
+ . . . + xNCOV(RN,R2)]
COV(R ,R )
2 M
2 =
2(R )
M
Debt
Debt
Portfolio = Levered firm =
Debt + Equity
Equity
Equity
+
Debt + Equity
Equity
Equity
Unlevered firm =
Debt + Equity
Equity
Ro = (Mo S)/(N + 1)
[15.3]
468
Me = Mo Ro
[15.4]
469
Re = (Me S)/N
[15.5]
469
[16.1]
482
EBIT
DFL =
EBIT Interest
[16.2]
483
Vu = EBIT/REu = VL = EL + DL
[16.3]
486
[16.4]
487
E = A (1 + D/E)
[16.5]
489
[16.6]
491
VL = VU + TC D
[16.7]
491
[16.8]
492
[16A.1]
512
[18.1]
547
[18.2]
547
[18.3]
547
[18.4]
549
[18.5]
549
[18.6]
561
[19.1]
586
where
Mo = common share price during the rights-on period
S = subscription price
N = number of rights required to buy one new share
where
Vu = Value of the unlevered firm
VL = Value of the levered firm
EBIT = Perpetual operating income
REu = Equity required return for the unlevered firm
EL = Market value of equity
DL = Market value of debt
(1 T ) (1 T )
C
S
VL = VU +
1
B
(1 T )
b
[19A.1]
600
[19A.2]
600
[19A.3]
600
C* =
(2T F)/R
[19A.4]
601
C* = L + (3/4 F 2/R)1/3
[19A.5]
603
U* = 3 C* 2 L
[19A.6]
603
[19A.7]
603
[20.1]
608
[20.2]
613
[20.3]
614
[20.4]
614
[20.5]
614
[20.6]
614
[20.7]
615
NPV = v + (1 )P/(1 + R)
[20.8]
617
[20.9]
618
[20.10]
620
[20.11]
627
[20.12]
629
[20.13]
629
[20.14]
629
2T F
Q*2 =
CC
[20.15]
629
2T F
Q* =
CC
[20.16]
629
2T F
Q* =
CC
[20.17]
629
[20A.1]
642
NPV = PQ + PQ (d )/R
[20A.2]
642
[21.1]
656
[21.2]
656
[21.3]
656
[21.4]
659
[21.5]
659
F1 = S0 [1 + (RFC RCDN)]
[21.6]
659
Ft = S0 [1 + (RFC RCDN)]t
[21.7]
659
[21.8]
660
[21.9]
660
[21.10]
660
C1 = 0 if (S1 E) 0
[25.1]
760
C1 = S1 E if (S1 E) > 0
[25.2]
760
C0 S0
[25.3]
760
C0 0 if S0 E < 0
C0 S0 E if S0 E 0
[25.4]
761
S0 = C0 + E/(1 + Rf)
C0 = S0 E/(1 + Rf)
[25.5]
763
Call option value = Stock value Present value of the exercise price
C0 = S0 E/(1 + Rf)t
[25.6]
764
[25A.1]
790
[25A.2]
792