CFA Formulas

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Terms in this set (...)

Future Value
FV=PV(1+I/Y)^N
Present Value
PV=FV/(1+I/Y)^N
PV of a Perpetuity
PV=PMT/discount rate
Risk Premium
E(R)=(1+RFRreal)(1+IP)(1+RP)-1
Risk Premium Estimate
E(R)~RFR+IP+RP
Geometric Mean Return
Rbar=[(1+R)...(1+Rn)]^(1/N)-1
WACC
WACC = (cost of equity)(% equity) + (cost of debt)(% of debt)(1-tax rate) + (cost of preferred stock)(% preferred stock)
DuPont Identity breakdown
ROE = NI/TE

ROE = (NI/TE)(TA/TA)
=(NI/TA)(TA/TE)=ROAxEM

ROE=(NI/TA)(TA/TE)(S/S)
=(NI/S)(S/TA)(TA/TE)

ROE=PMxTATxEM