2 3 4 5 6 7 Future Value Present Value Rate Number of periods Payment Excel TVM formulas Time Value of Money Formulas-FV (rate, nper, pmt, pv)-PV (rate, nper, pmt, fv) = RATE (nper, pmt, pv, fv) =NPER (rate, pmt, pv, fv) = PMT (rate, nper, pv, fv) Constant (Gordon) Growth Model Equations R=D/P Po=D/(rs-g) or r = (D/ Po) + g **To get D, to D, multiplythe dividend by (1+growth rate) Preferredf Stock Equation or P = D/R After Tax Cost of Debt Before Tax Cost * (1 - tax rate) Growth Rate of Dividends Use the RATE formula in Excel or (FV/PV)/-1 CAPM Equation r = Rp + [b* (rm - Rp)] NPER RATE PV PMT FV CPT (Compute) ? NPER RATE PV PMT FV CPT (Compute) ? NPER RATE PV PMT FV CPT (Compute) ? NPER RATE (Coupon Rate) PV (Coupon Price) PMT RATE (Mkt Rate) PV (Mkt Price) FV Compounding CPT (Compute) NPER RATE (Coupon Rate) PV (Coupon Price) PMT RATE (Mkt Rate) PV (Mkt Price) FV Compounding CPT (Compute) $ S S $ S S $ 5.50% ? 10 6.50% ? 15 ? 10 5.00% $1,000 $50 ? $850 $1,000 325,000.00 10,000 194,881 15 7.2