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ACCA AFM Formulae Sheet + Sunil's Notes

Formulae Sheet for AFM

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Jaabir Jeeawody
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676 views5 pages

ACCA AFM Formulae Sheet + Sunil's Notes

Formulae Sheet for AFM

Uploaded by

Jaabir Jeeawody
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
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Formulae Modigliani and Miller Proposition 2 (with tax) Wi Used to find Ke of a geared Co instead of CAPM 2 “UT ginserting an equity beta. Could rearrange to find Kei for APY, but since the CBE came in never been requested to do so. The Capital Asset Pricing Model EQ=R, 1 BEG) Bp Cost of Equity = Rf + Beta(Rm - Rf) Asoet Beta will give Kel The asset beta formula a || ee We also rearrange this to Vee svil- m= find equity beta given an asset beta All questions to date have stated debt beta is ‘ Dividend The Growth Model (assuming a constant ‘g") 0.08) This is more used in FM. Very very rarely see this in AFM. Gordon's growth approximation Used in business valuations maii The weighted average cost of capital or RAWACC. We simplify this: ((Ve x Ke) +(Vd x Kd(1-t)) ee The Fisher formula 1id=Qindan Not seen much in AFM Purchasing power parity and interest rate parity 1+) 2S 3 Forward Rate spot nates Most importantly here ‘hb’ is the inflation rate for the currency that is being valued and is locked at 1. Eg $1.5000/£1 then ‘hb’ is UK Inflation Rate. £0.6667/$1 then ‘hb’ is USA Inflation Rate 10 Modified Internal Rate of Return Don't need this as we = ho have a spreadsheet suse yr function. _ ARE (=p N Don't need this as we have the BSOP Calculator li IPTO. Present Value Table Present value of Lie, (1 =” We use this formula to compute the simple discount factors in the spreadsheet {= discount ate 1h = number of periods until payment o(r) Don't need the tables 0-847 0-833 1 aris oe 2 0-609 0579 3 0493 0482004 O49 0402 6 Seow Annuity Table — > Annuity Discount Factors we Present value of an annuity of 1 i.e, Stee have a spreadsheet function Where 1 = discount rate rerio Don't need the tables 6% 7% 8% 9% 10% 0935 0-926 1833 1808 1-783 2673 2-624 2-577 3465 3387 3312 2 3-993 ogi? 6 4623 8 9 10 u o787 12 10-575 13 11348 4 12-106 5 12-849 in) 12% 1 0-893 2 1-690 3 2-402 4 3-037 5 3605 ain 1s IPTO. Need only for VaR and only need three values. 90% = 1.28 95% = 1.65 90% = 23 standatd ndtinat distribution table O01 002 00a (0, 0-0080 09-0398 0.0478 9-07 90871 O11 O1179 0.1255 01331 01368 O1sl? 1554 O1700 01736 01879 0-229 02611 02910 300-4987 This table can be used to calculate NG), the connate cf option pricing. Ife, > 0, acd 0-5 to the relevant number lf, < 0, subtract the relevant number above from 0-5, End of Question Paper

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