1. MGT 326 Formulas
ROR = Profit/Investment = (Sales Price –COGS)/COGS = (End Price – Begin Price) / Begin Price
= (New – Old) / Old
 Cost of Money
Nominal Interest Rate = r = r* + IP + DRP + LP + MRP
Time Value of Money
rperiodic = rnominal/m
n = m x T
FV = PV(1 + rnominal/m)n
PV = FV / (1 + rnominal/m)n
EAR = (1 + rnominal/m)m – 1
PVperpetuity = PMT / rperiodic
Bonds
Cpn = FV(rCPN/m)
Capital Gains Yield = ROR
Bond Holding Period Return/Total Yield = EARCoupon + Capital Gains Yield
Real ROR = [(1 + rnominal )/(1 + Inflation)] - 1
Stocks
P0 = D/ rs (zero growth dividend)
P0 = D0(1 + g) = D (constant growth dividend)
rs – g rs - g
P0 = PV0(CFst1-tx) + PV0(PVt=x, CFs 4-infinity) (non-constant growth dividend)
rs = D0/P-1 + (P0 - P-1)/P-1
rs = D1/P0 + g OR D1/P0 + (P1 - P0)/P0
P1 = P0(1 + g/m)n OR Vhorizon
Coefficient of Variation s /E(r) ≈ S/rrealized
CAPM