Financial   Formulae:

 

Definitions

          pow(x) = to the power of x. 

Value of a Perpetuity

          PV = 1 / r

Value of a Growing Perpetuity (“Gordon” model)

          PV = 1 / (r - g)

Annuity

          PV = (1 / r) - (1 / r(1 + r)pow(t))

Continuos Compounding

          PV = 1 / e pow(rt)

where: r = the continuously compounded rate of interest

Capital Asset Pricing Model

          r = rf + ß (rm - rf)

Retailing

where 

GM = gross margin on retail price and 

MU = mark-up on cost price

GM = MU / (1+MU)
MU = GM / (1-GM)