BEC CPA Exam formulas (1)

BEC CPA Exam formulas
after-tax cost of debt - ANS-pretax cost of debt x (1-tax rate)

Cost of Preferred Stock - ANS-Dividend/net proceeds

Working Capital - ANS-current assets - current liabilities

WACC - ANS-L+PE+CE

CAPM (Capital Asset Pricing Model) - ANS-risk free rate + (beta x (market return - risk free
rate))

Discounted Cash Flow (DCF) - ANS-(D1/P0)+G

D0 to D1 - ANS-D0 x (1+g)

Profitability Index (PI) - ANS-PVCF/cost of investment

APR of payment discount - ANS-(360/pay period-discount period) x (Discount
%/100%-discount)

Reorder Point (ROP) - ANS-Safety stock + (Lead time x sales during lead time)

EOQ (Economic Order Quantity) - ANS-Sqrt 2SO/C

Days in Inventory/AR/AP - ANS-Ending/(COGS/365)

Inventory/AP/AR turnover - ANS-COGS/Average

Present Value (PV) - ANS-FV/(1+r)^n

tax savings from depreciation tax shield - ANS-tax rate x depreciation deduction

After Tax Cash Flow - ANS-Pretax CF x (1-tax rate)

Cash Conversion Cycle - ANS-days sales in AR + days in inventory - days of payables
outstanding

Gordon Growth Model - ANS-D1/(r-g)

Bond Yield Risk Premium - ANS-Pretax cost of debt + market risk premium