FV

PV =
(1 + r)n
CF
P V (perpetuity) =
r
1 1
P V (annuity) = CF
r r (1 + r)n
m
AP R
1 + EAR = 1+
m
AER
pp =
m
m
AP R AP R
1 + EAR = 1+ ; where = pp (the per-period rate)
m m
n m
or C 1 1 1
B0 = P V (bond) = +F :
m r r (1 + r)n m
1+r
F B
C=m + number of periods
Y TM F +B
; m is the frequency (m = 1 if annual)
2