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TYBBA

AFM

“TIME VALUE OF MONEY”

FORMULAS
1. COMPOUNDING VALUE OF A LUMPSUM AMOUNT

‘OR’

F = P(FVIF)
2. COMPOUNDING VALUE OF AN ANNUITY IF INVESTMENT MADE AT END
OF THE YEAR

‘OR’

F = A(FVIFA)
3. COMPOUNDING VALUE OF AN ANNUITY IF INVESTMENT MADE AT
BEGENNING OF THE YEAR

‘OR’

F = A(FVIFA)(1+i)
4. PRESENT VALUE OF A SINGLE AMOUNT

‘OR’

‘OR’

P = F(PVIF)
H.D.PAWAR 9824315606
TYBBA

AFM

5. PRESENT VALUE OF AN ANNUITY IF AMOUNT TO BE RECEIVED AT THE
END OF YEAR

OR
P = A(PVIFA)
6. PRESENT VALUE OF AN ANNUITY IF AMOUNT TO BE RECEIVED IN THE
BIGINNING OF THE YEAR

OR
P = A(PVIFA) (1+i)
7. PRESENT VALUE OF PERPECTUITY

8. EFFECTIVE INTEREST RATE

9. MULTIPERIOD COMPOUNDING

H.D.PAWAR 9824315606
TYBBA

AFM

FORMULAS
VALUATION OF BOND AND SECURITIES
1. VALUATION OF PERPECTUAL/IRREDEEMABLE BOND(DEBENTURE):

2. VALUATION OF REDEEMABLE BOND (DEBENTURE):

‘OR’
V = I (PVIFA) + MV (PVIF)
3. APPROXIMATE YIELD TO MATURITY(YTM):

‘OR’
TRIAL AND ERROR METHOD
4. BOND VALUE AMORTISATION:

5. VALUATION OF PERPCTUAL PREFERENCE SHARE:

6. VALUATION OF REDEEMABLE PREFERENCE SHARE:

H.D.PAWAR 9824315606
TYBBA

AFM

7. VALUATION OF EQUITY SHARE:
CONSTENT GROWTH MODEL

TWO STAGE GROWTH MODEL

8. H- MODEL

Were: P0 = Intrinsic value of the share
D0 =Current dividend per share
r = Rate of return expected by investors
gn = Normal long run growth rate
ga = Current growth rate
H = One half of the period during which ga will level off to gn

H.D.PAWAR 9824315606

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Formula TVM and Bond valuation

  • 1. TYBBA AFM “TIME VALUE OF MONEY” FORMULAS 1. COMPOUNDING VALUE OF A LUMPSUM AMOUNT ‘OR’ F = P(FVIF) 2. COMPOUNDING VALUE OF AN ANNUITY IF INVESTMENT MADE AT END OF THE YEAR ‘OR’ F = A(FVIFA) 3. COMPOUNDING VALUE OF AN ANNUITY IF INVESTMENT MADE AT BEGENNING OF THE YEAR ‘OR’ F = A(FVIFA)(1+i) 4. PRESENT VALUE OF A SINGLE AMOUNT ‘OR’ ‘OR’ P = F(PVIF) H.D.PAWAR 9824315606
  • 2. TYBBA AFM 5. PRESENT VALUE OF AN ANNUITY IF AMOUNT TO BE RECEIVED AT THE END OF YEAR OR P = A(PVIFA) 6. PRESENT VALUE OF AN ANNUITY IF AMOUNT TO BE RECEIVED IN THE BIGINNING OF THE YEAR OR P = A(PVIFA) (1+i) 7. PRESENT VALUE OF PERPECTUITY 8. EFFECTIVE INTEREST RATE 9. MULTIPERIOD COMPOUNDING H.D.PAWAR 9824315606
  • 3. TYBBA AFM FORMULAS VALUATION OF BOND AND SECURITIES 1. VALUATION OF PERPECTUAL/IRREDEEMABLE BOND(DEBENTURE): 2. VALUATION OF REDEEMABLE BOND (DEBENTURE): ‘OR’ V = I (PVIFA) + MV (PVIF) 3. APPROXIMATE YIELD TO MATURITY(YTM): ‘OR’ TRIAL AND ERROR METHOD 4. BOND VALUE AMORTISATION: 5. VALUATION OF PERPCTUAL PREFERENCE SHARE: 6. VALUATION OF REDEEMABLE PREFERENCE SHARE: H.D.PAWAR 9824315606
  • 4. TYBBA AFM 7. VALUATION OF EQUITY SHARE: CONSTENT GROWTH MODEL TWO STAGE GROWTH MODEL 8. H- MODEL Were: P0 = Intrinsic value of the share D0 =Current dividend per share r = Rate of return expected by investors gn = Normal long run growth rate ga = Current growth rate H = One half of the period during which ga will level off to gn H.D.PAWAR 9824315606