MGMT 543 Study Guide - Final Guide: Common Stock, Operating Leverage, Random Walk
Document Summary
Present value formula compounded m times a year: pv = C r (always starts with cash flow 1 period from now) Present value of annuity: pv = c* [ 1 r(1+r)t] r 1. Present value of growing annuity: pv = c* [ 1 (1+g. Future value of annuity: fv = c* [(1+r)t 1. Duration formula: d= t c (1+r )t +t f /(1+r)t. Common stock price formula using pvgo approach: p=eps1/r+pvgo. Payback period: time to recover investment (can be during year) Discounted payback period technique: time at which the pv of future cf"s=initial investment. Npv formula, set npv=initial investment and solve for n. Return on investment: roi=average forecasted profit/average net investment. Mirr: calculate fv of all cash inflows at last year of project"s life. Then, determine the discount rate that causes the fv of all cash inflows to be equal to the firm"s investment at time zero.
