FINC2012 Intermediate Corporate Finance
Sem II 2022
Mid-term Exam
Formula Sheet

This formula sheet will be provided in the mid-term exam. Not all formulas will be used in the
midterm test.
Real and Nominal Discount Rate
=
1+
1+
-1
Annuity Factor and EAC
= ×

1 − (1 + )−

Cost of Equity
= + β × ( − )
Weighted Average of Cost of Capital
= (


) + (


)
= (1 − ) × (


) + (


)
Operating Leverage and Asset Beta
= × [1 +
( )
()
]
Certainty Equivalent Formulas
=

(1 + )
=
×
(1 + )
=

(1 + )

=
(1+)

(1+)
×
=
(1 + )

(1 + )

Perpetual Cash Flow and Present Value
PV =
ℎ



Break Even (BE) point
0=BE units ×(Price – VC per unit) – (FC+Depr)
Operating Leverage
DOL = 1 +



Hedging Ratio
Option Delta =
spread of possible option prices
spread of possible share prices

Binomial Pricing
p =
a-d
u-d

a = erh ,
d = e-√h
u = e√h
Black Sholes Pricing Formula
   )(PV)()( 21 EXdNPdNOC −=
tv
tr
d
vP )()ln(
2EX
1
2
++
=

tvdd −= 12