PPT-Chapter 2 Interest and Future Value

The objectives of this chapter are to enable you to Understand the relationship between interest and future value Calculate future values based on single investments . Nineteen. Compound Interest and Present Value. Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.. McGraw-Hill/Irwin. Compare simple interest with compound interest.. Calculate the compound amount and interest manually, using algebraic formulas and with a financial calculator.. Time Value of Money. © Pearson Education Limited . 2008. Fundamentals of Financial Management, . 13/e. Created by: Gregory A. . Kuhlemeyer. , Ph.D.. Carroll . University. After studying Chapter 3, you should be able to:. Annuities (Future value; different compounding periods). A series of payments of investments made at regular intervals. A simple annuity is an annuity in which the payments coincide with the compounding period, or conversion period. An ordinary annuity is an annuity in which the payments are made at the end of each interval. Unless otherwise stated, each annuity in this chapter is a simple, ordinary annuity.. Compound Interest and Present Value. Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.. McGraw-Hill/Irwin. Compare simple interest with compound interest.. Calculate the compound amount and interest manually and by table lookup.. Week . 16. Shane Murphy. s.murphy5@lancaster.ac.uk. Office Hours: Monday 3:00-4:00 – LUMS C85. Outline. Roll Call. Problems. Game. Chapter . 24: . Problem 3. Declines in share prices are sometimes viewed as harbingers of future declines in real GDP. Why do you suppose that might be true?. Introduction to Valuation: The Time Value of Money. Key Concepts and Skills. Be able to compute the . future value . of an investment made today. Be able to compute the . present value . of cash to be received at some future date. Time value of money. Basic interest concepts. Present and future values. Single payment. Annuity (ordinary and due). Applications. 1. Time value of money. Investors expect that money invested should grow, i. e., earn a return, over time. The . The time value of money. CH 5. I. ntroduction. One of the basic problems faced by the financial manager is how to determine the value . today. of cash flow expected in the . future. .. Time value of money: is refer to the fact that a dollar in hand today is worth more than a dollar promised at some time in the future. The reason for this is that you could earn interest while you waited; so a dollar today would grow to more than a dollar later.. The time value of money. CH 5. I. ntroduction. One of the basic problems faced by the financial manager is how to determine the value . today. of cash flow expected in the . future. .. Time value of money: is refer to the fact that a dollar in hand today is worth more than a dollar promised at some time in the future. The reason for this is that you could earn interest while you waited; so a dollar today would grow to more than a dollar later.. Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.. McGraw-Hill/Irwin. Compare simple interest with compound interest.. Calculate the compound amount and interest manually, using algebraic formulas and with a financial calculator.. Interest Rate. principle. interest payment. interest rate = payment/principle. (these days often daily, but expressed as a yearly equivalent). Future Value: The future value of 100 at r% for t years is the amnt of money you will have in t years if invested at r%: principle*(1 r)^t. Chapter 3 Understanding and Appreciating the Time Value of Money Professor Payne, Finance 4100 Learning Objectives Explain the mechanics of compounding. Understand the power of time and the importance of the interest rate in compounding. Chapter 5 Formulas Introduction to Valuation: The Time Value of Money McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Key Concepts and Skills Be able to compute the future value of an investment made today Chapter 6 - Time Value of Money Time Value of Money A sum of money in hand today is worth more than the same sum promised with certainty in the future. Think in terms of money in the bank The value today of a sum promised in a year is the amount