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    Fin Formula Cheat Sheet

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    Anonymous ODAZn6VL6
    The document contains examples of financial calculations including: - Calculating book value of equipment using MACRS depreciation rates - Calculating initial cash flows of a project including land, equipment, and other costs - Calculating standard deviation and average returns for stocks over time - Calculating net present value and equivalent annual cost of projects - Calculating real rates of return and inflation adjusted returns for bonds - Solving for the last dividend paid given required return, growth rate, and stock price

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    © All Rights Reserved
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    Fin Formula Cheat Sheet

    Uploaded by

    Anonymous ODAZn6VL6
    163 views4 pages
    The document contains examples of financial calculations including: - Calculating book value of equipment using MACRS depreciation rates - Calculating initial cash flows of a project including land, equipment, and other costs - Calculating standard deviation and average returns for stocks over time - Calculating net present value and equivalent annual cost of projects - Calculating real rates of return and inflation adjusted returns for bonds - Solving for the last dividend paid given required return, growth rate, and stock price

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    Fin Formula Cheat Sheet

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    The document contains examples of financial calculations including: - Calculating book value of equipment using MACRS depreciation rates - Calculating initial cash flows of a project including land, equipment, and other costs - Calculating standard deviation and average returns for stocks over time - Calculating net present value and equivalent annual cost of projects - Calculating real rates of return and inflation adjusted returns for bonds - Solving for the last dividend paid given required return, growth rate, and stock price

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    163 views4 pages

    Fin Formula Cheat Sheet

    Uploaded by

    Anonymous ODAZn6VL6
    The document contains examples of financial calculations including: - Calculating book value of equipment using MACRS depreciation rates - Calculating initial cash flows of a project including land, equipment, and other costs - Calculating standard deviation and average returns for stocks over time - Calculating net present value and equivalent annual cost of projects - Calculating real rates of return and inflation adjusted returns for bonds - Solving for the last dividend paid given required return, growth rate, and stock price

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    AFTER TAX SALVAGE=MV-T*(MV-BV) TOATL %RETURN=(SELLING PRICE-PURCHASE

    PRICE+DIVIDEND)/PURCHASE PRICE

    AFTER TAX SALVAGE=MV-T*(MV-BV) TOATL %RETURN=(SELLING PRICE-PURCHASE


    PRICE+DIVIDEND)/PURCHASE PRICE

    MACRS 5-year property at a cost of $216,000. The MACRS rates are .2, .32, and .192 for years 1 to 3, respectively. Which one of the
    following will correctly give you the book value of this equipment at the end of year 2? 216,000 (1 - .2 - .32)
    LAND VALUED TODAY AT 395000, UNUSED EQUIPMENT VALUED AT 38000, COULD BE USED FOR 12000$ AWNINGS, OTHER
    EQUIPMENT COSTS 138000. WHAT IS PROJECT INITIAL CF? CF0=-395000-38000-12000-138000=583000
    stock that had returns of 4 percent, -5 percent, -15 percent, and 16 percent for four of the last five years. The average return of the
    stock for the past year-year period was 8 percent. What is the standard deviation of the stock's returns for the 5-year period?

    Return5 = (.08 5) (.04 - .05 - .15 + .16) = .40, or 40 percent

    AFTER TAX SALVAGE=MV-T*(MV-BV) TOATL %RETURN=(SELLING PRICE-PURCHASE


    PRICE+DIVIDEND)/PURCHASE PRICE
    Std dev = [1/(5 - 1)] [(.04 - .08)2 + (-.05 - .08)2 + (-.15 - .08)2 + (.16 - .08)2 + (.40 - .08)2 = .2122, or 21.22 percent

    A stock had annual returns of 16 percent, 8 percent, -17 percent, and 21 percent for the past four years. Based on this information,
    what is the 95 percent probability range of returns for any one given year?

    Average return = (.16 + .08 - .17 + .21)/4 =.07, or 7 percent

    = [1/ (4 - 1)][(.16 -.07)2 +(.08 -.07)2+ (-.17 -.07)2+ (.21 -.07)2].5= .1687, or 16.87 percent

    95% probability range = .07 (2 16.87 percent) = -26.74 to 40.74 percent (2 STDEVS FROM MEAN)
    Over the past four years a stock had prices of $15.40, $15.85, $16.30, and $15.70, respectively. The stock pays an
    annual dividend of $.50 a share. What is the geometric average return on this stock?

    Over the past four years a stock had prices of $15.40, $15.85, $16.30, and $15.70, respectively. The stock pays an annual dividend of
    $.50 a share. What is the geometric average return on this stock?
    PGH, Inc. is considering a new six-year expansion project that requires an initial fixed asset investment of $3.102 million. The fixed
    asset will be depreciated straight-line to zero over its six-year tax life, after which time it will be worthless. The project is estimated to
    generate $1,987,000 in annual sales, with costs of $1,102,200. The tax rate is 35 percent and the required return on the project is 16
    percent. What is the net present value for this project?

    OCF = ($1,987,000 - 1,102,200)(1 - .35) + ($3,102,000 / 6)(.35) = $756,070

    NPV = -$3,102,000 + $756,070({1 - [1 / (1.16)6]} / .16) = -$316,081.72

    A 5-year project has an initial fixed asset investment of $522,600, an initial net working capital investment of $13,200, and an annual
    operating cash flow of -$51,480. The fixed asset is fully depreciated over the life of the project and has no salvage value. The net
    working capital will be recovered when the project ends. The required return is 13.8 percent. What is the project's equivalent annual
    cost, or EAC?

    NPV = -$522,600 - 13,200 - $51,480({1 - [1 / 1.1385]} / .138) + $13,200 / 1.1385

    NPV = -$706,471.75

    EAC = -$706,471.75 / ({1 - [1 / 1.1385]} / .138)

    EAC = -$204,795.33

    The common stock of Air United had annual returns of 13.7 percent, 4.8 percent, -6.7 percent, and 27.9 percent over the last four years, respectively. What is the
    standard deviation of these returns?

    Average return = (.137 + .048 - .067 + .279)/4 = .09925, or 9.925 percent

    AFTER TAX SALVAGE=MV-T*(MV-BV) TOATL %RETURN=(SELLING PRICE-PURCHASE


    PRICE+DIVIDEND)/PURCHASE PRICE
    = [1/(4 - 1)] [(.137 - .09925)2 + (.048 - .09925)2 + (-.067 - .09925)2 + (.279 - .09925)2] = .1461, or 14.61 percent
    Suppose you bought a 6 percent coupon bond one year ago for $950. The face value of the bond is $1,000. You
    sold the bond today for $994. If the inflation rate last year was 3.1percent, what was your total real rate of return
    on this investment?
    Nominal return = ($994 - 950 + 60)/$950 = .1095. or 10.95 percent
    Real return = [(1 + .1095)/(1 + .031)] - 1 = .0761, or 7.61percent

    The common stock of Metal Molds has a negative growth rate of 1.2 percent and a required
    return of 17.5 percent. The current stock price is $12.20. What was the amount of the last
    dividend paid?
    RE=[D*[1+G]]/PRICE+G
    The common stock of Metal Molds has a negative growth rate of 1.2 percent and a required
    return of 17.5 percent. The current stock price is $12.20. What was the amount of the last
    dividend paid? WHERE I =REQ RETURN

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