1. Compound Interest (CI)

Formula:
A = P * (1 + r/n)^(nt)
- A: Final amount
- P: Principal amount
- r: Annual interest rate
- n: Number of times interest is compounded annually
- t: Time in years

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2. Post-Tax Return

Formula:
ROI - (ROI * Tax Rate)
- Example: 10% ROI, 30% Tax Rate 7% Effective Return

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3. Future Value with Inflation

Formula:
Future Value = Present Value * (1 + Inflation Rate)^n
- Example: ?10,000 @ 5% Inflation for 10 years16,289

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4. Purchasing Power

Formula:
Reduced Amount = Present Amount / (1 + Inflation Rate)^n
- Example: ?10,000 @ 5% Inflation for 10 years6,139

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5. Effective Annual Rate (EAR)

Formula:
EAR = (1 + r/n)^n - 1
- Converts nominal rate to effective rate when compounded.
- Example: 9% annual rate, quarterly compounding 9.3%

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6. Rule of 72

Formula:
Years to Double = 72 / Annual Return Rate
- Example: 12% ROI Double in 6 years

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7. Compounded Annual Growth Rate (CAGR)

Formula:
CAGR = ((FV/PV)^(1/n)) - 1
- Compare returns across periods or investments.
- Example: ?1,000 grows to5,000 in 10 years 17.4% CAGR

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8. Loan EMI

Formula:
EMI = (P * r * (1 + r)^n) / ((1 + r)^n - 1)
- P: Loan amount, r: Monthly interest rate, n: Number of EMIs.
- Example: ?10 Lakh @ 11% for 15 years11,361/month

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9. Future Value of SIP

Formula:
FV = R * [(1 + i)^n - 1] / i * (1 + i)
- R: Monthly investment, i: Monthly rate, n: Number of months.
- Example: ?1,000/month for 10 years @ 15%2,78,657

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10. Liquidity Ratio

Formula:
Liquidity Ratio = Liquid Assets / Current Debt
- Should ideally be >1 to indicate financial stability.

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11. Maturity Value (Fixed Deposits)

Formula:
MV = P * (1 + r/n)^(nt)
- Example:75,000 @ 9% for 10 years, compounded quarterly1,82,639.

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12. Real Rate of Return

Formula:
Real Return = ((1 + Nominal Return) / (1 + Inflation Rate)) - 1
- Example: 9% ROI, 11% Inflation -1.8% Real Return

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13. Discounted Rate of Interest

Formula:
Discounted Rate = (R/400) / ((1 + R/1200)^2 + (1 + R/1200) + 1)
- Adjusts for monthly income payout.

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14. Home Loan EMI Validation

Use the EMI formula to verify your bank’s calculations.

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15. Internal Rate of Return (IRR)

Formula:
Use Excel: =IRR(A1:A21) where values alternate between outflows and inflows.
- Example: A money-back policy IRR = 5.17%.

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16. XIRR (Uneven Flows)

Use Excel: =XIRR(values, dates) to calculate returns for irregular cash flows.
- Example: Buying/selling shares over time 70.66%.

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17. Pre-Tax Yield

Formula:
Pre-Tax Yield = ROI / (100 - Tax Rate) * 100
- Example: PPF @ 8% Pre-Tax Yield of 11.57%.

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18. Inflation-Adjusted Future Needs

• Example:50,000/month @ 5% inflation for 20 years1,32,665/month needed.

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19. Price/Earnings Ratio (P/E)

Formula:
P/E = Market Price of Stock / Earnings per Share
- Compare valuation across similar stocks in an industry.

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20. Return on Equity (ROE)

Formula:
ROE = Net Income / Shareholder Equity
- Higher ROE suggests better utilization of shareholder funds.

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21. Total Return

Formula:
Total Return = [(Ending Value - Starting Value) + Dividends] / Starting Value
- Example:7,500 to8,800 +350 dividends 22% Total Return.

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Summing it up

• Compounding is King: Longer durations amplify wealth growth.
• Factor Taxes & Inflation: Always adjust for these to know the real worth.
• Use Excel/Calculators: Streamline repetitive or complex calculations.

Master these formulas to take control of your financial decisions!

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