Formula sheet

DCF Analysis

ln(

Single cash flow: FV = PV(1 + ) ; = (1+) ; = ln(1+)

; = ( )1/ 1.

Multiple cash flows:

1+

Annuity: = [1 (1+) ] ; = [(1 + ) 1]; Growing annuity = [1 ( 1+ ) ].

Annuity due value = ordinary annuity value * (1 + r).

Perpetuity: = ; Growing perpetuity: = .

Interest Rates:
APR = period rate * number of periods in a year.
1
APR m
EAR = (1 +
) 1; APR = m [(1 + EAR)m 1].
m
Continuous compounding: = 1; = ln(1 + ).
Bond Valuation

Bond value: B= [1 (1+) ] + (1+) ; Fisher Effect: 1 + = (1 + )(1 + ).

1

Constant growth model: 0 = ; =

1
0

Stock Valuation
+ ;+1 = (1 + ).

Non-constant growth model:

1
2

+1
0 =
+
++
+
, =
.
1
2

(1 + )
(1 + )
(1 + )
(1 + )

Two-stage growth model:

1
1 + 1

+1
[1 (
0 =
) ]+
, =
.

1
1+
(1 + )
2