($657.

52) <--- finding the pv formula

6.09% <--- finding the rate

$150,493.59 <--- finding the fv

10.89%

30.1223821456154 <--- finding the year

0.00%
$15,036.30

($1,409.92)

$259,374.25

($1,975.79)

($86,383.76) ($164,736.38)
($78,352.62)

If question has "today" in the question, do the formulas below

8%

($124,721.89)

$63,814.08
$89,542.38
 ($41,096.36)

($13,660.27)
($11,662.68)

$54,303.45
$29,282.00

If the question has "what is the FV of three payments…" do the formula below
($12,210.20)

($3,310.00)
$5,330.79 <--- if the years are split use this formula (check bar dumbass)

($4,212.36)
$5,637.09 <--- Check work fomula
$5,637.09 <--- Check work fomula

($16,710.50) <--- If half of the payment for the year is given (ex. Only 4,5,6 year wer
$8,934.12 <--- If half of the payment for the year is given (ex. Only 4,5,6 year wer

200 400 600 <--- cash flow shit

$1,004.42 <--- cash flow shit

0 5000 5000 5000 4000

$17,266.77

$6,245.23 <--- fixed payment

1500 <--- beginning balance
$1,266.57 <--- interest payment for second year (check bar above. Remember pe
$4,978.66 <--- principle payment
$5,576.10 <--- remaining balance

Questions for semiannually, daily, etc.

$110.38
$1,418.52 <--- semiannually (1000 12% semiannually)
$1,422.54 <--- compounded daily (1000 11.75% compounded daily) to find inter
 1 2 3 4
1,000 1,000 1,000 1,000
$6,952.59

$18,908.43 <--- to find year 13

0 1 2 3
6,000 6,000 6,000 6,000

$23,956.26
$29,956.26 <--- PV
$44,015.57
($64,673.32) <--- FV

0 1 2 3
4%
1000 1000 1000
$2,723.25
($5,196.05)

Chapter 7 (Stocks and Bonds):

Assume a company plans to issue $10 million in 5-year bonds. They plan to pay an annual coupon
PMT = coupon rate of 1000 (FV)
For ex. 8% of 1000 is 80
80 PMT ($924.18) <---- answer
1000 FV (Face Value, not Future Value. Always assume the
5N
10 I/YR
CPT PV

($965.29) <--- after 3 years have pass

Difference betweeb 1 year bond vs 30 year bond

Coupon is 10%
YTM 1 YR 30 YR
5% ($1,047.62) ($1,768.62)
10% ($1,000.00) ($1,000.00)
15% ($956.52) ($671.70)
20% ($916.67) ($502.11)

Assume you have a 5-year bond that pays 10% coupon semi-annually. If investors demand a 14% r

50 PMT (because of semi-annually) ($859.53)

7% I/YR (semi-annually)
10 N (semi-annually)
1000 FV

Example for quartley

25 PMT
3.5% I/YR
20 N
1000 FV

Assume a six-year bond paying 8% annual coupon Is trading for $955.14. What rate of return are inv

80 PMT 9% <--- answer

6N
955.14 PV
1000 FV

Assume a 10-year bond is paying 16% coupon semi-annually and is trading at $1,105.94 per face v

20 N 7% 7 x 2= 14% <---- answer

80 PMT (16/2)
1000 FV
1105.94 PV

If the expected inflation rate is 7% and the real rate is 3%, what should be the nominal rate o

Nominal rate=[(1+real rate)(1+inflation rate)]-1

1+0.03 = 1.03 x 1.07 - 1

 1+0.07 = 0.1021 x (10.21%) <--- answer

Chapter 8 (stocks):

Assume a stock is expected to pay a fixed dividend payment of $10 for the foreseeable future (g = 0

PV = $10/.20 = $50 <--- answer

Formula:
PV = FV/(1+R)^t
0 1 2 3
10 10 10
($8.33) <--- 1 year
($6.94) <--- 2 year
($5.79) <--- 3 year
($4.82) <--- 4 year
($4.02) <--- 5 year

Assume a stock paid a dividend of $2.30 recently and is expected to increase every year at a consta

p=d1/r-g p= 2.30 (1 + .05)/.13 - .05) 30.19 <--- answer

p= period
d1= dividend
r= return
g= constant rate

Gordon Growth Company will pay $4 in dividends next year and is expected to grow at 6% per year, foreve
 p= 4/(.16 - .06) 40 <--- answer

What should be its price in 4 years, i.e. P4 ?

p4= 4 (1 + .06)^4 5.0499

$5.05 <-- excel formula

p4= d5/r-g
d5=5.05
5.05/.16-.06 50.5 <--- answer

Faster way: $50.50 (put 40 instead of 4 for pv)

Valuing stocks:

Assume a stock does not expect to pay any dividends for four years. In year 5, a dividend of $0.50 is

5 FV p4= .50/.20-.10 5 4 FV
4N 3N
20 I/YR ($2.41) <-- answer .15 I/YR
0 PMT 0 PMT

A company expects to pay $1.00. $1.50, $2.50 for the next three years and thereafter increase it by

d1= 1 2.50 x 1.05 = 2.625

d2= 1.50
d3= 2.50
d4= 2.625

p3=d4/r-g
2.625/.10-.05= 52.50

excel way:
$39.44
Highfield Company’s dividend is expected to grow at 20% for the next 5 years. Thereafter it will settle to a

r= 0.1
Gs = 0.2
$2.00 $2.40 d1
$2.88 d2
$3.46 d3
$4.15 d4
$4.98 d5
$5.18 d6 (remember .04 after 5 years)
p5=d6/r-g $86.26

($24.00) <-- should be negative

Chapter 12:

Assume Jones has 80 shares. and Smith has 20 shares. A total of four directors have to be appointed. Assu
The rule is that is you have 1/(N+1) percent plus one vote, you can elect on director, where N= num
In this example N=4. Therefore 1/(4+1) percent x 100 shares = 20 shares plus 1 = 21 shares will ensure th

Assume you buy a share at $37 each today. You receive $1.85 in dividends per share and sell the s

r=d1/p0+g g= capital gains g=p1-p0/p0

d1= 1.85
total dividends earned: 1.85 p0= 37
capital gains earned: 40.33-37= 3.33 p1= 40.33

Total earned:
(1.85+3.33)/37=5.18
5.18/37= .14 = 14%

If you purchase 40 shares for $25 and sell it a year later for $35, what is your total return per share if

d1= 2.00
p0= 25
p1= 35
r=d1/p0+g 35-25/25=.40 .08+.40= 48%
2.00/25= .08
k bar dumbass)

(ex. Only 4,5,6 year were given and not 1,2,3 through a 6 year span)
(ex. Only 4,5,6 year were given and not 1,2,3 through a 6 year span)

-- cash flow shit

-- cash flow shit

3000 2000

ar above. Remember per is the number of period and nper is the total of years)

unded daily) to find interest rate divide 11.75/365, to find N 365 x 3, so check the top bar
 5 6 7 8 9 10 11
1,000 1,000 0 1,000 1,000 1,000 1,000

4 5 6
6,000 6,000

4 5 6
5%
1000 1000 1000

ay an annual coupon rate of 8% . The market is expected to demand a rate of return of 10%. What should be the pr

alue. Always assume the FV is 1000)

-- after 3 years have passed (last 2 years)

stors demand a 14% rate of return (YTM), what should be the price of the bond?

<--- answer

at rate of return are investors demanding from this bond? Face Value = $1,000.

t $1,105.94 per face value of $1,000

e the nominal rate of a risk-free government bond?

eseeable future (g = 0) . The required rate of return is 20%. How much should you pay for the stock?

4 5
10 10

every year at a constant rate of 5%. If the required rate of return is 13%, what should be the price of the stock?

at 6% per year, forever. What should be the price of the stock if investors seek 16%?
, a dividend of $0.50 is expected and is forecasted to increase at 10% thereafter. What should you pay for this stock

ereafter increase it by 5%. If you demand a 10% return, how much should you pay for the stock?
eafter it will settle to a steady rate of 4%. What should be the price of the stock if the dividend paid recently (d 0) is $2.

be appointed. Assume six names are nominated.

rector, where N= number of directors to be voted.
1 shares will ensure the selection of 1 out of 4 directors

er share and sell the stock at $40.33 at the end of one year. What is the total net return?

otal return per share if you also received $2 in dividends.

 12 13
1,000 FV=?

of 10%. What should be the price of the bond?

y for the stock?

be the price of the stock?

t should you pay for this stock if you demand a 20% return?

the stock?
vidend paid recently (d 0) is $2.00 and investors demand a return of 10%. Note d 1 = d0 x (1+g) =$2.00 (1.20) = $2.40
x (1+g) =$2.00 (1.20) = $2.40