|
Notation Conventions |
|
r |
interest rate |
|
fv |
future value |
|
pv |
present value |
|
fvif |
future value interest factor |
|
pvif |
present value interest factor |
|
t |
number of years |
|
pmt |
annuity payment deposited or received at end of each
year |
|
m |
number of periods per year |
|
pp |
constant dollar amount provided by the perpetuity |
|
EX |
expected cash flow |
|
xi |
ith possible cash flow |
|
p(xi ) |
Probability of receiving  |
|
ER |
expected rate of return |
|
ri |
ith possible rate of return |
|
p(ri ) |
probability of ith possible rate of return |
|
|
standard deviation |
|
|
required rate of return for jth security |
|
rf |
risk-free return |
|
b j |
investment’s non-diversifiable risk |
|
ERm |
expected return for the market |
|
DA |
duration of an annuity |
|
DB |
duration of bond B |
|
B |
coupon bearing bond value |
|
F |
zero coupon bond value |
|
A |
value of interest flow (annuity value) |
|
T |
maturity date (life of bond) |
|
B |
intrinsic/ present value of an asset |
|
ct |
cash flow to be received at time t |
|
FV |
bond’s maturity/ par value |
|
pp |
valuation of preferred stock |
|
d |
annual dividend |
|
pc |
valuation of common stock |
|
p1 |
anticipated market price at year end |
|
g |
dividend growth rate |
|
npv |
net present value |
|
ct |
annual after-tax cash flow |
|
I0 |
initial cash outlay |
|
pi |
profitability index |
|
eaa |
equivalent annual annuity |
|
ebit |
expected earnings before interest and taxes |
|
p |
unit sales price |
|
q |
number of units sold |
|
avc |
unit variable cost |
|
fc |
total fixed costs |
|
qb |
breakeven point quantity |
|
vc |
total variable cost |
|
s |
associated level of sales |
|
dol |
degree of operating leverage |
|
dfl |
degree of financial leverage |
|
dcl |
degree of combined leverage |
|
eps |
earnings per share |
|
Pj |
preferred dividend |
|
sf |
sinking fund payment |
