AFM274 Study Guide - Comprehensive Final Exam Guide - Weighted Average Cost Of Capital, Leverage (Finance), Tax Shield

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM274
• Professor: Tu Nguyen

Document Summary

Pv of an annuity: pv = c * 1/r * (1 1/(1+r) n) Fv of an annuity: fv = c * 1/r * ((1+r) n 1) Pv of a growing perpetuity: pv = c/(r g) Pv of a growing annuity: pv = c/(r -g) * [1 ((1+g)/(1+r)) n] Fv of a growing annuity: fv = c/(r -g) * [(1+r) n (1+g)n] Moving cash flows: c n = c 1(1 + g) n - 1. Irr for perpetuity: irr = c/p + g. Effective annual rate: indicates the total amount of interest that will be earned after one year. Equivalent n-period effective rate = (1+r) n 1. Indicates the amount of simple interest earned in one year. r = apr/k periods per year. Ear = (1 + apr/k) k 1 r = apr/m = ((1+ear)^1/m 1) E[ri] = risk-free rate + risk premium = r f + bi * (e[r m k t] rf)