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Formulae Sheet
Economic order quantity
Miller – Orr Model
The Capital Asset Pricing Model
The asset beta formula
The Growth Model
Gordon’s growth approximation
The weighted average cost of capital
The Fisher formula
Purchasing power parity and interest rate parity ity = 2C D
C o
H
Return point = Lower limit + (1
3x sppread)
Spread = 3 x transaction cost x va 3
4 rriance of cash flows
interest rate
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¾ First discount the cash flows to present value and then calculate the payback period ¾ This takes into account the time value of money.. 2.2.2
If the share only gives a return of 12.5% (on an 80 cents share price) then investors will sell and the price will fall.. ¾ The dividend valuation model gives a theoretical
¾ However in a geared company the equity shareholders face not only business risk, measured by the asset beta, but also a degree of financial risk. ¾ Therefore in a geared company
(i) Current assets comprise over half the assets of some companies (ii) A failure to control working capital, and therefore liquidity, is a major.. cause of
The syllabus for Paper F9, Financial Management , is designed to equip candidates with the skills that would be expected from a finance manager responsible for the finance function
No part of this training material may be translated, reprinted or reproduced or utilised in any form either in whole or in part or by any electronic, mechanical or other means,
(n) By solving a quadratic equation, calculate the internal rate of return of a project requiring an initial investment of $1,440 and generating cash flows of $700 at the end of
From the perspective of an increase in interest rates, the financial risk of Gorwa Co has increased and may continue to increase if the company does not take action to halt the
