# test 3 formulas

 Value of a bond PV of Principal + PV of interestcan use TVoM on calculator all at once entering years, yield, interest payments, principal on bond solve for PVif semi annual years is x2, yield and interest payments are /2 yield to maturity formula to use calculator look to find yield preferred stock formula P=D/KP is priceD is dividentK is rate of return common stock P=D/(k-g)p is priced is dividendk is rate of returng is growth rate cost of debt - estimated Yield to Maturity interest + [(principal-price)/#years]divided by .6(bond price)+.4(principal payment) multiply answer by 100 to get % cost of debt - Yield to maturity after tax Yield to Maturity X (1-tax rate) cost of new preferred stock K = D/(P-F)K is rate of returnP is priceD is dividendF is flotation cost cost of new common equity K = [D/(P-F)]+gK is rate of returnP is priceD is dividendF is flotation costg is growth rate Payback of debt is the number of years to get back costif part of a year left needed/total payback for year NPV is the sum of the PV of each cash inflow minus the cash outflow (initial investment)oruse NPV on calculatorNPV(rate,-outlay,{inflows}{inflow counts}) IRR when NPV is equal to 0 so if NPV is positive raise the rateif NPV is negative lower the rateorcalculator IRR (-outlay,{cash inflows}, {inflow counts}) NPV w/ PI (NPV + outlay)/outlay Authorwsrdpc ID85951 Card Settest 3 formulas Descriptiontest 3 formulas Updated2011-05-15T19:34:18Z Show Answers