CFA L1 Formula推荐.pdfVIP

Corporate Finance and Portfolio management CF CF CF 1. Net Present Value NPV CF  1  2  n 0 1 2 n (1r) (1r) (1r) Invest if : NPV 0 Do not invest if: NPV 0 n CF 2. Internal Rate of Return  t t 0 t 0 (1IRR) Invest if: IRR r Do not invest if: IRR r Average net income 3. Average Accounting Rate of Return (AAR)= Average book value PV of future cash flows NPV 4. Profitability Index PI= 1 Initial Invesments Initial Invesment Invest if: PI 1.0 Do not invest if: PI 1.0 5. Cost of Capital (WACC) w r (1t) w r w r d d p p e e where wd = target debt proportion in total capital rd = the before-tax marginal tax rate t = the company’s marginal tax rate wp = target preferred stock proportion in total capital rp = the marginal cost of preferred stock re = the marginal cost of equity we = target common stock proportion in total capital     6. Capital Asses Pricing Model Approach E(R ) R β E R R i F i M F where βI = the return correlation of stock i to chang