Present & Future Values: Lump Sums Chapter Five. Problem Set – Present & Future Values 1.The town of Banff has a population of 5,000. If Banff’s population.

Slides:

Advertisements

Similar presentations

Module 4: Investing Review

Advertisements

Sullivan PreCalculus Section 4.7 Compound Interest

FA2 Module 5. Interest concepts of future and present value 1.Time value of money 2.Basic interest concepts 3.Present and future values a.Single payment.

1 PRESENT VALUE AND THE OPPORTUNITY COST OF CAPITAL What is the NPV criterion? How do we use the time line and the basic equation to determine present.

Discounted Cash Flow Valuation

4 The Time Value Of Money.

5- 1 McGraw Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved Fundamentals of Corporate Finance Sixth Edition Richard.

© 2013 Pearson Education, Inc. All rights reserved.3-1 Chapter 3 Understanding and Appreciating the Time Value of Money.

Chapter 5 Mathematics of Finance

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A.,

Chapter McGraw-Hill Ryerson © 2013 McGraw-Hill Ryerson Limited 5 Prepared by Anne Inglis Introduction to Valuation: The Time Value of Money.

McGraw-Hill/Irwin ©2001 The McGraw-Hill Companies All Rights Reserved Chapter 4 Introduction to Valuation: The Time Value of Money.

© The McGraw-Hill Companies, Inc., Irwin/McGraw-Hill Chapter 3 Fundamentals of Corporate Finance Third Edition The Time Value of Money Brealey.

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. 5 5 Calculators Introduction to Valuation: The Time Value of.

© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Valuation: The Time Value of Money Chapter Five.

Chapter 4 The Time Value of Money!.

Chapter 2 Time Value of Money, Part 1  Learning Objectives  Calculate Future Value and Compounding of Interest  Calculate Present Value  Calculate.

Chapter McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. 5 Introduction to Valuation: The Time Value of Money.

Chapter 16 Retirement Planning Social Security Employer Plans Individual Plans Self Employed Plans.

Time Value of Money Problems

Chapter 2 Time Value of Money  Time Value of Money, Part 1  Topics  Future Value and Compounding of Interest  Present Value  Four Variables -- One.

GBUS502 Vicentiu Covrig 1 Time value of money (chapter 5)

Present & Future Values: Annuities & Perpetuities

McGraw-Hill/Irwin ©2001 The McGraw-Hill Companies All Rights Reserved 4.0 Chapter 12a Introduction to Valuation: The Time Value of Money.

© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Valuation: The Time Value of Money (Formulas) Chapter Five.

The McGraw-Hill Companies, Inc., 2000

Discrete Mathematics Chapter 10 Money. Percentage.

4.0 Chapter 4 Introduction to Valuation: The Time Value of Money.

Chapter 5 Time Value of Money. Time value What is the difference between simple interest and compound interest?

McGraw-Hill /Irwin© 2009 The McGraw-Hill Companies, Inc. TIME VALUE OF MONEY CONCEPTS Chapter 6.

Discounted Cash Flow Valuation.  Be able to compute the future value of multiple cash flows  Be able to compute the present value of multiple cash flows.

4-1 McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

Introduction to Valuation: The Time Value of Money.

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. 5 5 Calculators Introduction to Valuation: The Time Value of.

Mr. Stasa – Willoughby-Eastlake City Schools ©  If you put $100 under your mattress for one year, how much will you have?  $100  Will the $100 you.

Questions and Problems

McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 5.0 Future Values Suppose you invest $1000 for one year at 5%

© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Valuation: The Time Value of Money (Calculators) Chapter Five.

© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Introduction to Valuation: The Time Value of Money Chapter Five.

Finance 2009 Spring Chapter 4 Discounted Cash Flow Valuation.

© Family Economics & Financial Education – May 2012 – Time Value of Money Math – Slide 1 Funded by a grant from Take Charge America, Inc. to the Norton.

Topics Covered Future Values Present Values Multiple Cash Flows Perpetuities and Annuities Inflation & Time Value.

Exam 1 Review. Things You Should Know l Time Value of Money problems l All the readings including WSJ ‘little’ book n Stocks: trading, calculating returns.

© 2004 The McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter 6 Time Value of Money Concepts.

5 5 Formulas 0 Introduction to Valuation: The Time Value of Money.

How To Calculate Present Values Principles of Corporate Finance Sixth Edition Richard A. Brealey Stewart C. Myers Lu Yurong Chapter 3 McGraw Hill/Irwin.

Quantitative Finance Unit 1 Financial Mathematics.

CHAPTER 5 INTRODUCTION TO VALUATION: THE TIME VALUE OF MONEY.

MS. MAH PLANNING 10: FINANCES Saving Your Money. By identifying your needs vs. wants you can potentially save your hard earned money by not spending it.

Chapter 4 Introduction to Valuation: The Time Value of Money 0.

Chapter 5 Time Value of Money. Learning Objectives Describe the basic mechanics of the time value of money Perform calculations related to discounting.

Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 0 Chapter 4 Introduction to Valuation: The Time Value of Money.

Save One Million by Age HOW?? $2.30 a day at 10% compounded monthly or $78.01 per month. This is close to the cost of a large coffee, or soda and.

Chapter 5 The Time Value of Money Topics Covered 5.1 Future Values and Compound Interest 5.2 Present Values 5.3 Multiple Cash Flows 5.4 Level Cash Flows.

10/25 More work with annuities, mortgages, etc Simple interest Compound interest Present value effective rate Annuity Present value of annuity.

Objectives: Determine the Future Value of a Lump Sum of Money Determine the Present Value of a Lump Sum of Money Determine the Time required to Double.

1 Time is Money: Personal Finance Applications of the Time Value of Money.

Chapter 5 Formulas Introduction to Valuation: The Time Value of Money McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights.

Contemporary Engineering Economics, 6 th edition Park Copyright © 2016 by Pearson Education, Inc. All Rights Reserved Economic Equivalence Lecture No.

McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Introduction to Valuation: The Time Value of Money Chapter 4.

Aim: Money Matters – Future Value of Annuities Course: Math Literacy Aim: How does money matter? Annuities – a savings plan for the future. Do Now: At.

CHAPTER 5 INTRODUCTION TO VALUATION: TIME VALUE OF MONEY (CALCULATOR) Copyright © 2016 by McGraw-Hill Global Education LLC. All rights reserved.

Chapter 4 Fundamentals of Corporate Finance Fifth Edition Slides by Matthew Will McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc.

Mathematics of Finance

The Secrets of Saving. Congratulations! You have two job offers! POD…which option would you choose? Option 1: For the first twenty days of work, you will.

TVM Review. What would your future value be if you invested $8,000 at 3% interest compounded quarterly for 15 years?

The Time Value of Money Topics Covered Future Values Present Values Multiple Cash Flows Perpetuities and Annuities Inflation & Time Value Effective Annual.

Present Value and Future Value

Present Value and Future Value

Introduction to Valuation: The Time Value of Money

Presentation transcript:

Present & Future Values: Lump Sums Chapter Five

Problem Set – Present & Future Values 1.The town of Banff has a population of 5,000. If Banff’s population is growing at 2.5% per year, what will it’s population be in 20 years? ($8,193) 2.Your father has agreed to help you purchase a new car, contingent upon your finishing your degree and finding a job. If you believe your new car will cost $25,000 when you purchase it 2 years from today, how much must your dad set aside today, if you can earn 7% on your funds? ($21,836) 3.You are named as the beneficiary of a trust fund established by a wealthy relative. If the fund will pay you $50,000 on your 30 th birthday and you are 22 today, what is the value of the fund today, given a discount rate of 10%. ($23,325) 4.You purchased Nortel at $3.10 two years ago. Today, Nortel is trading at $3.80. What is your annually compounded rate of return on your Nortel investment? (10.72%)

Problem Set – Present & Future Values 5.You have invested $5,000 at 8%. How long will it take for your money to double? (9.01 years) 6.Last summer you started a lawn maintenance company. Sales were $100,000 for the year. If you believe you can grow your sales by 25% per year, what would your sales be after three years in business? ($195,312) 7.You have a choice between investing in Asset A, which pays 6% simple interest or Asset B, which pays 5.75% compounded annually. If you intend to keep the investment for 10 years, should you invest in Asset A or Asset B? (A - $1,600; B - $1,749. Choose B) 8.Your company has been named as a defendant in a lawsuit. The potential damages are $100,000, but it will take three years before payment is required. How much should you set aside today to cover the potential liability, given an 8% discount rate? ($79,383) 9.Today, you set aside $5,000 to fund your dream vacation, which you intend to take 6 years from now. If the vacation will cost $10,000, what interest rate must you earn to make it possible? (12.25%)

Problem Set – Present & Future Values 10.You have invested $10,000 at 6%, compounded quarterly. How much money will you have after 10 years? ($18,140.18) 11.Jack began saving for retirement at age 20 by putting aside $5,000. Joe also set aside $5,000 but he waited until he turned 30. Both Jack and Joe want to retire at age 65. If both are able to earn 10% on their funds, how much more money will Jack have on their retirement date? (Jack: $364,452; Joe: $140,512; Difference = $223,940)