| Definitions
|
Value
of a Perpetuity |
| |
|
pow (x)
= to the power of x
|
PV = 1
/ r |
| |
|
Value
of a Growing Perpetuity
(“Gordon” model)
|
Annuity |
| |
|
| PV = 1
/ (r - g) |
PV = (1
/ r) - (1 / r (1 + r) pow
(t)) |
| |
|
Capital
Asset Pricing Model
|
Continuous
Compounding |
| |
|
r = rf
+ ß (r m - r f)
|
PV = 1
/ e pow (r t)
where: r = the continuously
compounded rate of interest |
| |
|
Retailing
|
|
| |
|
where GM
= gross margin on retail
price and MU =
mark-up on cost price
GM = MU / (1+MU)
MU = GM / (1-GM)
|
|
