Page 8 - AFM Integrated Workbook STUDENT S18-J19
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Advanced Financial Management
Formulae and Tables
Modigliani and Miller proposition 2 (with tax)
V d
i
i
k = k + 1 –T k – k V e
e
d
e
e
The capital asset pricing model
E r = R + β E r – R
i
f
m
f
The asset beta formula
V e V 1 – T
d
β = β + β
a V + V 1 – T e V + V 1 – T d
e
e
d
d
The growth model
D (1 + g)
0
P =
0
r – g
e
Gordon’s growth approximation
g = br
e
The weighted average cost of capital
V V
WACC = e k + d k (1 – T)
V + V d e V + V d d
e
e
The Fisher formula
1 + i = 1 + r (1 + h)
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