FINM2412 Financial Management for Business - Lecture 2: Present Value Mechanics

This flashcard set covers the key concepts and formulas related to present value mechanics, cash flows, annuities, perpetuities, and future value calculations, as presented in the FINM2412 Financial Management lecture.

How is the present value of a growing perpetuity calculated?

PV = C / (r - g), where g is the growth rate.

What must be true for the future value of cashflows to be realized in the future?

Cashflows must be compounded forward to a future date.

What is the expected return on a stock related to?

It is positively related to the dividend yield and earnings growth.

What is the present value of a growing annuity formula?

PV = C × [1 - (1 + g)ⁿ / (1 + r)ⁿ] / (r - g)