# Week Compilation Equity Ratio Formula Dupont Cam Calculator Liabilities Assets Value Debt Total Calculation Profit And Loss Account Calculate Liquidity Analysis Capital Radio

Finance Formulas / July 13, 2018 / Luz Tyson

## Sales Formula

### Nominal Gdp Formula

#### Retail Margin Formula

##### Inflation Rate Formula Gdp
###### Principal Interest Formula

Discounted cash flow models are powerful, but they do have shortcomings. DCF is merely a mechanical valuation tool, which makes it subject to the axiom "garbage in, garbage out." Small changes in inputs can result in large changes in the value of a company. Instead of trying to project the cash flows to infinity, terminal value techniques are often used. A simple annuity is used to estimate the terminal value past 10 years, for example. This is done because it is harder to come to a realistic estimate of the cash flows as time goes on.

When you make a down payment on a purchase and use a loan to pay for the remainder, you instantly reduce the amount of interest you pay over the lifetime of the loan. For example, if you borrow \$100,000 on a loan with a 5% interest rate, you owe \$5,000 in interest in the first year of the loan alone. However, if you have a \$20,000 down payment, you only need to borrow \$80,000. As a result, during the first year, your interest is only \$4,000, saving you \$1,000 in the first year alone. Thus, it pays to have a sizable down payment on your mortgage as it will save you thousands of dollars in interest over the lifetime of the loan.

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