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Financial Formulae and Calculations Guide

The document contains formulae for calculating: 1) Expected return, which is the sum of each possible return multiplied by its probability. 2) Standard deviation and variance, which measure how spread out returns are around the expected value. 3) Present value, which discounts future cash flows to calculate their value today. 4) Net present value and internal rate of return, which are used to analyze the profitability of investments. 5) The cost of preferred shares and weighted average cost of capital, which are ratios used to measure the overall financing costs for a company.

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Khanh Linh
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387 views2 pages

Financial Formulae and Calculations Guide

The document contains formulae for calculating: 1) Expected return, which is the sum of each possible return multiplied by its probability. 2) Standard deviation and variance, which measure how spread out returns are around the expected value. 3) Present value, which discounts future cash flows to calculate their value today. 4) Net present value and internal rate of return, which are used to analyze the profitability of investments. 5) The cost of preferred shares and weighted average cost of capital, which are ratios used to measure the overall financing costs for a company.

Uploaded by

Khanh Linh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Formulae Sheet

12
n
Expected return E ( R)  pR
i 1
i i

n
  Standard deviation   Variance   2   (k
i 1
i  kˆ) 2 Pi

T T
PV0  (1Cr1 )1  (1Cr2)2  ....  (1Crt )t NPV0  C0   (1Crt )t IRR  NPV0  0  C0   (1Crt )t
t 1 t 1

The cost of preferred, Rp = D/P0

WACC = (D/V) × Rd (1 – T) + (P/V) × Rp + (E/V) × RE

13

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