1. EINFL = expected inflation
2. EGREPS = expected growth in real earnings per share
3. EGPE = expected growth in P/E
4. EINC = expected income component
5. Equity Risk Premium = {[(1 + EINFL)(1 + EGREPS)(1 + EGPE) – 1.0] + EINC} – Expected Risk-Free Rate
6. Implicit Inflation Forecast = ((1 + YTM 20Y T-Bonds)/(2 + YTM 20Y TIPS)) - 1

Equity Risk Premium = {[(1 + EINFL)(1 + EGREPS)(1 + EGPE) – 1.0] + EINC} – Expected Risk-Free Rate

Implicit Inflation Forecast = ((1 + YTM 20Y T-Bonds)/(2 + YTM 20Y TIPS)) - 1

R = (D1/P0) + ((P1 – P0)/P0) = Dividend Yield + Price Appreciation Return

Expected Alpha = Expected Return – Required Return

Realized Alpha = Actual Holding Period Return – Contemporaneous Required Return

Fair Price => Expected return = Required Return

Intrinsic Value = Year-ahead of Dividend / (Required Return – Expected Dividend Growth Rate)

Required Return Estimate = Year-ahead Dividend/Market Price + Expected Growth Rate

R = Rf + B(Rm – Rf)

Adjusted Beta = (2/3)Beta + (1/3)

WACC = [D * Rd * (1- Tax)] +[E * CAPM]

Unleveraging Beta = Bu = [1/(1+ (D + E)]Be

Beta = Be = [1 + (D’/E’)]Bu