BASICS

Addition:
208.12
412.12
612.06
202

Basic Calculator:
1
105922
1900
840

+
x
/

2
100684
2
12

=
=
=
=

1434.3

FUTURE VALUE/ PRESENT VALUE

FV = PV (1 + r)^T
PV
r
400
PV = FV / (1+r)^T
FV
r
1000000

T
0.01

FV
1

T
0.15

404

FV = Future Value
PV = Present Value
r = discount rate, opportu

PV
5
5 497176.735

PV = C1/(1+r)^t1 + C2/(1+r)^t2 + C3/(1+r)^t3

Selecting Interest Rate

Compunding frequency
Simple Compounding
Compounded FV = (1+(r/m))^mt

r = stated or nominal rate

re = effective annual rate
rs = stated annual rate

Compunded PV = FV/ ((1+(r/m))^mt)

FV
r
m
t
1000
0.12
2
Using re => re = ((1+(rs/m))^mt) -1
rs
m
t
re
0.106
1
1
Continuous Compounding
FV = PV * e^rt
PV
r
t

FV

PV
2 792.093663

1(A-D)
0.106 Check: http://www.calculatorsoup.com/c

e=

1000
PV = FV * e^-rt
FV
r
1000

0.12

2 1271.24895

t
0.12

PV
2 786.627988

Effective Annual Rate = (1+(r/p))^p-1

r
p
0.12
24 0.12715978
Continuous Rate/Infinity = e(2.71828^r-1)
r
0.12 0.12749676

1E

GROWING PERPETUITY
PV of Growing Perpetuity (PVgp) = C/(r-g)
4(A-D)
C
r
g
PVgp
1000
0.04
0.03
100000

BONDS
Zero Coupon Bonds
Price = PV = F/((1+r)^T)
F
r
T
1000
0.03
Annual Coupons

PV
10 744.093915

Have face value, coupon rate, payments per year an

Bond Pricing
PV(total) = PV(coupon) + PV(face)
Bond Value = [(C/r)*(1 - 1 / ((1+r)^t)))] + [F/((1+r)^t))]
F
C
t
r
Bond Value
1000
50
10
0.06 926.399129
IRR (Internal Rate of Return) = (FV/PV)-1
FV = PV(1+r)^t
(defined time)
FV = PV/r
(perpetuity - forever)
697.3762

-100
100
0
250
78.48%

-100
250
0
100

164.31%
670

850

1000

0.02469508
53.8595162

Income
10
5

End Value
Initial Value
670
850
670
670
850
670

r:
0.1
T Increase
Dividend
PV at t=0 (Calculated as D/((1+0.12)^T))
0
0
2
2
1
0.1
2.2 1.96428571
2
0.1
2.42 1.92920918
3
0.05
2.541 1.80863361
4
0.05
2.66805 1.69559401
5
0.05 2.8014525 1.58961938
SUM:
10.987342
6
0 2.8014525 1.419303 <- PV of annuity starting at t=6
Total PV:
12.406645

35.8006317

ICPS
Increase
Investment
Dividend

0.106667
16
0.1
0.6
0.4

ICPS
EPS
New inv
Dividend
Growth in dividend =

16
1.6
0.96
0.64

16.96
1.696
1.0176
0.6784
0.06

17.9776
1.79776
1.078656
0.719104

Price =

14.537039

3
5238
3800
70

= Future Value
= Present Value
discount rate, opportunity cost of capital, required rate of return, interest rate, capitalization rate

stated or nominal rate

= effective annual rate
stated annual rate
Compunded PV = FV/ ((1+(r/m))^mt)
FV
EAR
t
PV
1000
0.1255
2 789.421593

w.calculatorsoup.com/calculators/financial/effective-annual-rate-calculator.php

2.71828

Adjust rate and time based on annual/semi-annual

payments per year and maturity

C = (coupon rate / 2)*F

r = semi-annual yield
F = par value

100
120

1000
1000

(for semi-annual)

1100
1120

1056.60377

HPR
1.02408124
1.0487424

((1+0.12)^T))

starting at t=6

apitalization rate

Maturity
Credit worthiness of borrower