tailieunhanh - Lecture Fundamentals of financial management: Chapter 3 - Gregory A. Kuhlemeyer, Carroll College, Waukesha

Chapter 3 - Time value of money. After studying chapter 3, you should be able to: Understand what is meant by “the time value of money"; understand the relationship between present and future value; describe how the interest rate can be used to adjust the value of cash flows – both forward and backward – to a single point in time;. | Chapter 3 Time Value of Money © 2001 Prentice-Hall, Inc. Fundamentals of Financial Management, 11/e Created by: Gregory A. Kuhlemeyer, . Carroll College, Waukesha, WI The Time Value of Money The Interest Rate Simple Interest Compound Interest Amortizing a Loan Obviously, $10,000 today. You already recognize that there is TIME VALUE TO MONEY!! The Interest Rate Which would you prefer -- $10,000 today or $10,000 in 5 years? TIME allows you the opportunity to postpone consumption and earn INTEREST. Why TIME? Why is TIME such an important element in your decision? Types of Interest Compound Interest Interest paid (earned) on any previous interest earned, as well as on the principal borrowed (lent). Simple Interest Interest paid (earned) on only the original amount, or principal borrowed (lent). Simple Interest Formula Formula SI = P0(i)(n) SI: Simple Interest P0: Deposit today (t=0) i: Interest Rate per Period n: Number of Time Periods SI = P0(i)(n) = $1,000(.07)(2) = $140 Simple Interest Example Assume that you deposit $1,000 in an account earning 7% simple interest for 2 years. What is the accumulated interest at the end of the 2nd year? FV = P0 + SI = $1,000 + $140 = $1,140 Future Value is the value at some future time of a present amount of money, or a series of payments, evaluated at a given interest rate. Simple Interest (FV) What is the Future Value (FV) of the deposit? The Present Value is simply the $1,000 you originally deposited. That is the value today! Present Value is the current value of a future amount of money, or a series of payments, evaluated at a given interest rate. Simple Interest (PV) What is the Present Value (PV) of the previous problem? Why Compound Interest? Future Value (. Dollars) Assume that you deposit $1,000 at a compound interest rate of 7% for 2 years. Future Value Single Deposit (Graphic) 0 1 2 $1,000 FV2 7% FV1 = P0 (1+i)1 = $1,000 () = $1,070 Compound Interest You earned $70 interest on your $1,000 deposit over the . | Chapter 3 Time Value of Money © 2001 Prentice-Hall, Inc. Fundamentals of Financial Management, 11/e Created by: Gregory A. Kuhlemeyer, . Carroll College, Waukesha, WI The Time Value of Money The Interest Rate Simple Interest Compound Interest Amortizing a Loan Obviously, $10,000 today. You already recognize that there is TIME VALUE TO MONEY!! The Interest Rate Which would you prefer -- $10,000 today or $10,000 in 5 years? TIME allows you the opportunity to postpone consumption and earn INTEREST. Why TIME? Why is TIME such an important element in your decision? Types of Interest Compound Interest Interest paid (earned) on any previous interest earned, as well as on the principal borrowed (lent). Simple Interest Interest paid (earned) on only the original amount, or principal borrowed (lent). Simple Interest Formula Formula SI = P0(i)(n) SI: Simple Interest P0: Deposit today (t=0) i: Interest Rate per Period n: Number of Time Periods SI = P0(i)(n) = $1,000(.07)(2) = $140 Simple .

• Tài chính doanh nghiệp
• Financial management
• Fundamentals of financial management
• Time value of money
• The interest rate
• Compound interest
• Amortizing a loan
• Financial statement
• International trade transactions
• Financial statement analysis
• International financial management
• Quản lý tài chính
• Multinational financial management
• Exchange rates
• Financial environments
• Overview of Financial Management and the Financial Environment
• The financial environment
• Forms of business organization
• Determinants of stock pricing
• Financial instruments
• Practical financial management
• Financial background
• Financial statements
• Financial planning
• Financial system
• Financial ratio
• IT financial management
• Setting the scene
• IT financial management maturity
• Parameters influencing IT financial management
• Costs of IT financial management
• More quantifiable benefits
• Overview of roles
• Hospitality financial management
• Hospitality industry management
• Analysis of financial reports
• Analyzing financial statements
• Management decision making
• Foundations of financial management
• Review of accounting
• Financial analysis
• Financial forecasting
• The financing decision
• Financial leverage
• Current asset management
• Paper F7
• Revision kit 2016
• Management Financial
• Financial Management Exam Review
• Review of Financial Management
• Study text 2016
• Lecture Multinational financial management
• International financial reporting standards
• Foreign exchange risk management
• Financing decisions
• Investment decisions
• Role of management
• International cash management
• Cash flow analysis
• Centralized cash management
• Intermediate financial management
• Financial options
• Corporate valuation
• Corporate governance
• Financial markets
• Cash flow
• Analysis of financial statements
• Ratio analysis
• Interest rates
• Financial institutions
• Forecasting sales
• Business environment
• Limited liability company
• Common size analysis
• Statement analysis
• Break even analysis
• Break even point