Summary Full Formula Sheet Corporate Valuations

Corporate Valuation for Finance — Complete Formula
Sheet
VU Amsterdam · Master Finance · All Lectures, Exercise Sets & Exams

1. TIME VALUE OF MONEY
FORMULA / CONCEPT EXPRESSION & NOTES

FV
PV =
Present Value
(1+r )t
FV = future value, r = discount rate, t = periods

t
Future Value FV =PV ×(1+r )

1−(1+r )−n
PV of Annuity PV =C ×
r
C = periodic cash flow, n = number of periods

C
Perpetuity PV =
r

C
Growing Perpetuity
PV =
r−g
g = constant growth rate; requires r > g

CF 1 CF 2 CF n
NPV
NPV =−CF 0 + 1
+ 2
+⋯+
(1+r ) (1+ r) (1+r )n
Accept if NPV > 0


FV 1n
CAGR CAGR= −1
PV
Compound annual growth rate over n years

P1−P 0+ ¿
Actual Stock Return
r=
P0
Total return including dividends

▸ Timeline rule: PV annuity formula gives value one period BEFORE the first payment. Adjust discounting accordingly.


2. VALUE CREATION & ROIC
FORMULA / CONCEPT EXPRESSION & NOTES


NOPAT NOPAT =EBIT ×(1−Tax Rate)
Net Operating Profit After Tax — tax on EBIT ignoring financing


NOPAT (bottom-up) NOPAT =Net Income+ Interest ×(1−t)

NOPAT
ROIC
ROIC=
Invested Capital
Return on all capital deployed

ROIC decomposition
NOPAT Revenue
ROIC= ×
Revenue Invested Capital