tailieunhanh - Simmon Beninga's Finance With Excel

This chapter deals with the most basic concepts in finance: future value, present value, and internal rate of return. These concepts tell you how much your money will grow if deposited in a bank (future value), how much promised future payments are worth today (present value), and what percentage rate of return you’re getting on your investments (internal rate of return). | Chapter 1 The time value of money minor bug fix September 9 2003 Chapter contents . Future . Present . Net present . The internal rate of return IRR .32 . What does IRR mean Loan tables and investment . Saving for the future buying a car for . Saving for the future more realistic . Computing annual flat payments on a loan Excel s PMT . How long will it take to pay off a loan .51 . An Excel note building good financial Summing up . 55 Appendix Algebraic Present Value Notice This is a preliminary draft of a chapter of Principles of Finance with Excel by Simon Benninga benninga@ . Check with the author before distributing this draft though you will probably get permission . Make sure the material is updated before distributing it. All the material is copyright and the rights belong to the author. PFE Chapter 1 Time value of money page 1 Overview This chapter deals with the most basic concepts in finance future value present value and internal rate of return. These concepts tell you how much your money will grow if deposited in a bank future value how much promised future payments are worth today present value and what percentage rate of return you re getting on your investments internal rate of return . Financial assets and financial planning always have a time dimension. Here are some simple examples You put 100 in the bank today in a savings account. How much will you have in 3 years You put 100 in the bank today in a savings account and plan to add 100 every year for the next 10 years. How much will you have in the account in 20 years XYZ Corporation just sold a bond to your mother for 860. The bond will pay her 20 per year for the next 5 years. In 6 years she gets a payment of 1020. Has she paid a fair price for the bond Your Aunt Sara is considering making an investment. The investment costs 1 .