1. VALUATION OF FUTURE CASH FLOWS FUTURE VALUE WHAT WILL $$ GROW TO?? PRESENT VALUE WHAT ARE FUTURE $$ WORTH TODAY?? WOULD YOU RATHER HAVE $10,000 TODAY OR $100,000 IN 20 YEARS???

2. Calculating Future and Present Values of Cash Flows  Formulas  Tables  Financial Calculators  Microsoft Excel

3. FUTURE VALUE FUTURE VALUE OF $1 FV = PV(1 + I) T FV OF $1 table

4. What Table Do I Use?  FV of $1 How much will $1 grow to in the future?  How much will I have in 30 years if I invest $1,000 now at 6% ? How much will something cost in the future?  How much will a double cheeseburger in 40 years if the $1.00 cost increases by four percent per year?

5. What Table Do I Use?  FV of Annuity How much will $1 every year grow to in the future?  How much will I have in 30 years if I invest $2,000 every year at 9% ?

6. What Table Do I Use?  PV of $1 What is $1 in the future worth today? How much is $1,000 received in 30 years worth today?  Must be less than $1,000 !!!

7. PRESENT VALUE HOW MUCH IS $100,000 RECEIVED IN 20 YEARS WORTH TODAY IF YOU CAN INVEST AT 12% INTEREST COMPOUNDED ANNUALLY?? PV = $100,000 / (1.12) 20 = $10,567

8. PRESENT VALUE PRESENT VALUE OF $1 PV = FV / (1 + I) T PV OF $1 table

9. What Table Do I Use?  PV of Annuity How much will $1 received every year in the future worth today? How much is it worth today to receive $80 per year for 30 years if I want a 9% rate of return?