Docsity
Docsity

Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity


Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan


Guidelines and tips
Guidelines and tips

Strategic Finance: Simple & Compound Methods, Annuity, Loan Amortization, Bond Valuation, Exams of Finance

Formulas and methods for calculating present value (pv) and future value (fv) in finance, including simple interest, compound interest, annuities, loan amortization, and bond valuation. It covers topics such as ordinary and due annuities, loan payments, and bond market values.

What you will learn

  • What is the trial and error method and how is it used in bond valuation?
  • How can I calculate the present value using the compounding method?
  • What is the formula for calculating the future value using the simple method?

Typology: Exams

2017/2018

Uploaded on 05/08/2018

wasi-mughal
wasi-mughal 🇵🇰

1 document

1 / 2

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
STRATEGIC FINANCE
Simple Method
Future Value (FV) = PV. (1 x N)
Present Value (PV)= FV / (1 x N)
Compounding Method
Future Value (FV) = PV. (1+i)^n
Present Value (PV)= FV / (1+i)^n
N = log FV – Log PV / Log (1+i)^n
EAR = (1 + i/m)^m – 1
Annuity
Ordinary (Payment at End n =1)
Due (Payment at Start n =0)
Loan Amortization
PMt = PV / {(1/i) + (1 / i(1+i)^n)}
Trial & Error Method
1 2 3 4 6 7 8
Bounding
pf2

Partial preview of the text

Download Strategic Finance: Simple & Compound Methods, Annuity, Loan Amortization, Bond Valuation and more Exams Finance in PDF only on Docsity!

STRATEGIC FINANCE

Simple Method Future Value (FV) = PV. (1 x N) Present Value (PV)= FV / (1 x N) Compounding Method Future Value (FV) = PV. (1+i)^n Present Value (PV)= FV / (1+i)^n N = log FV – Log PV / Log (1+i)^n EAR = (1 + i/m)^m – 1 Annuity

  • Ordinary (Payment at End n =1)
  • Due (Payment at Start n =0)

Loan Amortization

PMt = PV / {(1/i) + (1 / i(1+i)^n)}

Trial & Error Method

1 2 3 4 6 7 8

Bounding

  • Par Value Bond MV = FV
  • Premium Bond MV > FV
  • Discount Bond MV < FV Vb = INT / (1 + Kd)
  • Return = Income + Capital Gain
  • Bond = Interest/Price + Capital Gain/Price
  • (^) Total Return = Capital Yield + Capital Gain Yield

Dividend Growth Model Value of Security (Vs) = PV^n1+ PV^n2+ PV^n3-------- PV^nxx Present/Appropriate Value P 0 =