0% found this document useful (0 votes)
95 views1 page

Finance Final Cheat Sheet

- The document discusses various financial concepts related to valuation, including discounted cash flow valuation, perpetuity valuation, weighted average cost of capital (WACC), capital asset pricing model (CAPM), and options pricing. - Formulas are provided for calculating the present value of an annuity, perpetuity, growth perpetuity, and various options prices and payoffs. - Additional concepts covered include cost of capital, beta calculation, diversification, and the security market line.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
95 views1 page

Finance Final Cheat Sheet

- The document discusses various financial concepts related to valuation, including discounted cash flow valuation, perpetuity valuation, weighted average cost of capital (WACC), capital asset pricing model (CAPM), and options pricing. - Formulas are provided for calculating the present value of an annuity, perpetuity, growth perpetuity, and various options prices and payoffs. - Additional concepts covered include cost of capital, beta calculation, diversification, and the security market line.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 1

Interest Rates

-1 -> m # compound/yr

Quiz 1 & 2

F
F
1 / 1 r
DF
T

1 r

Quiz 3

P~E

P
EPS

-1 -> x interval CFs fraction/yr


T

rT (1 / DFT )T 1

real

1 rnom -> nom without inf


1 Inf

Continuous compounding

1
1
1 g
PV C *

*

r

g
r

g
1 r

CF1
r

Peer group

Industry, size, geo, age of firm

Valuation

Perpetuity w/t growth


CF1
(infinite)
PV
rg

Scale

Quiz 2 Valuation CFs


1. Discounted CFs
1
0
FCF1
FCF0
1. Find each FCF
Op Prof

2
FCF2

3
FCF3

FCFN

FCFt (Re v Cost Dep ) * (1 Tax c ) Dep WC INV SpecialIte ms


EBIT

Earn/NI

2. Bring back to PV0

PV ( FCF )

FCFt
(1 r )t

Both Debt &


Equity

Price, Mkt Cap,


Mkt Value of
Equity

Enterprise Val

Earnings (NI),
Book Equity,
EPS

EBIT, EBITDA,
Revenue

CT
PT

= T t
ST-K
-(ST-K)
0
0
ST
-ST
K
-K

Call

Put

Rf
ST

Cov(i, m)
m2

EPS1 DIV1

EPS1

= ( *

Erngs0
Re v0 Costs0

# Shares
# Shares

) /m

EPS1 EPS0 * (1 g )
DIV 0 EPS0 * 1 PB

Risk Free Debt

E ( Rm R f )

) * p

Securities vs market portfolio

CapGain Sale Pr ice ( Sale Pr ice BookValue ) * Tax

Cov( Ri R j ) Corr ( Ri R j ) i j

g ROE * PB ROE *

CML E ( R p ) R f (

InitialCos t Salvage
LifeOfAsset

Payoffs
Action ST<K
ST>K
Call (Buy)
0
Call (Sell)
0
Put (Buy)
K-ST
Put (Sell)
-(K-ST)
Stock (Buy)
ST
Stock (Sell)
-ST
Lend/Buy PV(K) K
Borrow/Sell PV(K) -K
Buy K
K(1+r)t K(1+r)t
Sell K
-K(1+r)t -K(1+r)t

Portfolio with n-stocks

Diversified Portfolios

Dep

Remember to discount the bond this way

Equity
Holders

2. PV(Div)
Quiz 4
Assumes constant growth:
DIVt
P0 PV DIV
(r g )t

EPS0

Put/Call Parity
-P

Perpetuity (infinite)
PV

Writer = Seller
C

If not all values (assume


opposite):
1. C
3. C-PV(K)
2. C-K
C-K
C-PV(K)
C
Buy Cheap Buy Call (Ct) Buy Call (Ct)
Sell Stock
Sell Stock
(St)
(St)
(St)
Sell Pricy
t
-> K(1+r)
Buy Bond
Buy
Bond -K
(Ct)
PV(K)

Annuity (finite)

1
PV CF1 / r * 1
T

Annuity w/t growth (finite)


T

Options

SML (CAPM ) E ( Ri ) R f E ( Rm R f ) ) * i
To Find the efficient combinations of X 1&X2

WACC

WACC = RA = D/V * RD + E/V * R


E Same goes for
RE = RA + D/E * (RA-RD)

You might also like