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Formula TVM and Bond valuation

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Formula TVM and Bond valuation

  1. 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. 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. 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. 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

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