Formulas Qm

Cashflow: The flow of where cash is directed. It can come in or out

NPV (Net Present Value)Present discounted value of cash flows!

IRR (internal rate of return) The rate where your NPV = 0 (Cannot judge scales)

1) NPV problem

Given (Periods) (Cashflows)

=NPV(Rate,Cashflows *Don’t include period ) + cashflow 0

2) How many IRRs

1. Get random numbers all the way to 1.

2. Then I calculate the NPV of the cashflows *except cashflow 0* =NPV(rate,valuesF4)

3. Then in the middle =the value I just got + the cashflow in period 0 with an F4

3) IRR (IRR is defined as the discount rate aka hurtle rate that makes the NPV of the project equal 0) To calculate =IRR(Cashflow values all of them)

4) Goal Seek Instructions: You must have NPV already calculated….Set cell: (cell containing NPV formula)….To value: 0 By changing cell: rate cell

5) Wacc

Wacc= (D/V x RD x (1-r)) + (rc/v

1) calculate D = bond * Per Bond Par Value * % of Par

2) EC (Common stock) = Shares of common stock * Common $ stock Share

3) EP (Preferred Stock) = Shares of Pre * Pre $ Stock Share

4) T = Tax Rate

5) Rd = Yield (“1/1/2000’.”1/1/2015”, semiannual % bonds outstanding , par rate, 100, frequency (2))

6) V=D+Ec + EP

7) Rc= t bill + beta (market rate – risk free)

8) Premium = (Market Rate – Risk Free )

9) Rp= dividends/ market value preferred stock per share

10) Wacc = ((D/V) *Rd *(1-t))+((Ec/v) * Rc ) + ((Ep/v) * Rp)