270 views

Uploaded by VIKAS DOGRA

- Compound Time Rate
- Lec2 Valuation
- CS Practice Random Fn
- Investments Val & Capital
- Discounted Cash Flow Valuation Example
- chapter 5 solutions
- L09
- FIN 571 Final Exam Latest UOP Assignments
- Personal+Finance+Toolkit Awesome.xls
- Quantitative Methods for Finance
- solutions.pdf
- D 1705 PAPER II.doc
- Basic Concepts of Statistics
- MMSE Dan Pendidikan
- Ma Interest Theory 3 Post
- Statistical Signal Processing
- 2011 1B Wagner Whitin
- Edited Dataset for CB Analysis
- Document 1
- Take Home Test 2008

You are on page 1of 38

***Rashmi Chaudhary***

Which is more Valuable?

1000 $ now

1000 $ after 2 years

***Rashmi Chaudhary***

Money NOW

is worth more than

money LATER!

***Rashmi Chaudhary***

Future Value Versus Present Value

future value or present value

you will receive in hand today

at a future date

***Rashmi Chaudhary***

Time Line

zero appears at the left most

end and future periods are

marked from left to right

Used to depict investment cash

flows

***Rashmi Chaudhary***

Time Line

***Rashmi Chaudhary***

• Future value- value at future date of a

present amount deposited and earning

specified interest rate. (Compounding)

future amount. The amount that have to be

invested today at a given interest rate over

a specified period for a future amount.

(Discounting)

***Rashmi Chaudhary***

***Rashmi Chaudhary***

Types of

Cash Flows

Mixed Stream

Annuities

(a stream of

Single Amounts (a stream of equal

unequal cash

periodic cash flows)

flows )

***Rashmi Chaudhary***

Future value of Single Amount

The General equation for the future value at

end of period n is

FVn= PV X (1+i)n

Where,

FVn= Future value at the end of

period n

PV= Present Value

i= annual rate of interest paid

n= number of periods that money is left

for deposits

***Rashmi Chaudhary***

Example

Jane places $800 in a saving account

paying 6% interest compounded

annually. She wants to know how

much money will be in account at the

end of 5 years.

***Rashmi Chaudhary***

Now in this example

PV = $800, i = 0.06, n = 5

So,

FVn= PV X (1+i)n

FV5= $800 X (1+0.06)5=$1070.40

***Rashmi Chaudhary***

***Rashmi Chaudhary***

Future value Relationship

(Interest rates, time periods, and future value

of one dollar)

***Rashmi Chaudhary***

Present Value of a Single

Amount

value is often referred as

discounting cash flow

Inverse of compounding

***Rashmi Chaudhary***

Example

Pam wishes to find the present value of

$1700 that will be received 8 years from

now. Opportunity cost is 8%

We know,

FVn= PV X (1+i)n

so,

PV= FVn = $1700 = $918.42

(1+i)n (1+8)8

***Rashmi Chaudhary***

***Rashmi Chaudhary***

Comparing Present Value and

Future Value

***Rashmi Chaudhary***

***Rashmi Chaudhary***

***Rashmi Chaudhary***

Types of Annuities

• Ordinary Annuity - • Annuity Due- cash

cash flows occur at flows occur at the

the end of each beginning of each

period period.

***Rashmi Chaudhary***

***Rashmi Chaudhary***

Future Value of an Ordinary

Annuity

FVAn=PMT X (FVIAi,n)

***Rashmi Chaudhary***

Frank wishes to determine how much

money he will have at the end of 5

years if he chooses annuity A. i=7%

***Rashmi Chaudhary***

***Rashmi Chaudhary***

Present Value of an ordinary

annuity

PVAn= PMT X (PVIFAi,n)

***Rashmi Chaudhary***

Braden wants to know what

should it most pay to receive $700

at the end of each year

***Rashmi Chaudhary***

***Rashmi Chaudhary***

Annuity Due

of an value of an

annuity due annuity due

FVIAi,n(Annuity due)=

PVIFAi,n(annuity

FVIAi,n X (1+i)

due)= PVIFAi,n X

(1+i)

***Rashmi Chaudhary***

Future value of a Mixed Stream

Shrell expects a stream of mixed cash

flows over the next five years and

expects to earn 8%. What will be

earned after five years if cash flows

are immediately invested.

***Rashmi Chaudhary***

***Rashmi Chaudhary***

***Rashmi Chaudhary***

Present value of a mixed stream

Frey has an opportunity of receving

mixed stream cash flows over 5

years. If he must earn 9%, what is

the most he should pay.

***Rashmi Chaudhary***

***Rashmi Chaudhary***

***Rashmi Chaudhary***

Application of time Value

accumlate a future amount

Determination of equal periodic

loan payments

EMI’s

Finding interest rates

Finding an unknown number of

periods

***Rashmi Chaudhary***

Have a nice Day…………….

***Rashmi Chaudhary***

***Rashmi Chaudhary***

- Compound Time RateUploaded byJoshua Catalysto
- Lec2 ValuationUploaded bysamuelifamily
- CS Practice Random FnUploaded byNita Arora
- Investments Val & CapitalUploaded byShashank Varma
- Discounted Cash Flow Valuation ExampleUploaded byVanson Tan
- chapter 5 solutionsUploaded byatia
- L09Uploaded byHamis Rabiam Magunda
- FIN 571 Final Exam Latest UOP AssignmentsUploaded byaarenaddison
- Personal+Finance+Toolkit Awesome.xlsUploaded byLowell Harper
- Quantitative Methods for FinanceUploaded byfusion2000
- solutions.pdfUploaded byAbhishek Chainani
- D 1705 PAPER II.docUploaded bysaurav
- Basic Concepts of StatisticsUploaded byKNOWLEDGE CREATORS
- MMSE Dan PendidikanUploaded byFrans
- Ma Interest Theory 3 PostUploaded byMark Olivo
- Statistical Signal ProcessingUploaded byNeelkanth Kundu
- 2011 1B Wagner WhitinUploaded byArya Yudistira
- Edited Dataset for CB AnalysisUploaded bySneha
- Document 1Uploaded byJAYANTA ROY
- Take Home Test 2008Uploaded byChazz Lp
- L1. Conventional and DCF Methods.pdfUploaded byvidhi
- RetoSA - EmirUploaded byEdward Marcell Basia
- SSUET Course TitleUploaded bymfmalik86
- ProblemSet Cash Flow Estimation QA1Uploaded byIng Hong
- LE4Uploaded byTim Acosta
- 2009 Exam Without SolutionsUploaded byHarry Young
- Huawei CE Utilization GuidelineUploaded byrizal011188412
- LYGEN CONCEPTUploaded byidjey
- Salary Slip ( 30745197 January , 2019 )Uploaded bySajjad Ahmed
- Complete PracticalUploaded byshabbirjamali

- statergic management chapter 8Uploaded byVIKAS DOGRA
- Capital StructureUploaded byVIKAS DOGRA
- A Risk Management Plan is a Document PrepaUploaded byVIKAS DOGRA
- Cash BudgetUploaded byVIKAS DOGRA
- Cash Flow AnalysisUploaded byVIKAS DOGRA
- Agricultural Cooperatives and Risk ManagementUploaded byVIKAS DOGRA
- Rbi Credit PolicyUploaded byVIKAS DOGRA
- cash flpw analysisUploaded byVIKAS DOGRA
- cash flowUploaded byVIKAS DOGRA
- statergic management chapter 7Uploaded byVIKAS DOGRA
- Ratio AnalysisUploaded byVIKAS DOGRA
- Vikas ResumeUploaded byVIKAS DOGRA
- Game TheoryUploaded byconuncon
- The Balanced ScorecardUploaded byVIKAS DOGRA
- Ag. InsuranceUploaded byVIKAS DOGRA
- Four SquaresUploaded byVIKAS DOGRA
- statergic management chapter 4Uploaded byVIKAS DOGRA
- Statistical Outline of HPUploaded byVIKAS DOGRA
- statergic management chapter 3Uploaded byVIKAS DOGRA
- statergic management chapter 6Uploaded byVIKAS DOGRA
- MBA Syllabus dr ys p umiversityUploaded byVIKAS DOGRA
- statergic management chapter 5Uploaded byVIKAS DOGRA
- Mid Career satisfactionUploaded byVIKAS DOGRA
- Create Your Kml File by Kml Editor 18517Uploaded byVIKAS DOGRA
- Strategic ManagementUploaded byWaliyullah
- statergic management chapter 1Uploaded byVIKAS DOGRA
- Finance in Agriculture is as Important as Development of TechnologiesUploaded byVIKAS DOGRA
- Management Control SystemsUploaded byVIKAS DOGRA
- Stock MarketsUploaded byVIKAS DOGRA

- AUTO TAKAFUL AND AUTO INSURANCEUploaded bytarekmn1
- Credit Tightening in Retail - what does it mean to consumersUploaded byAaron Chio
- Function of BNMUploaded byCheong En Cheng
- Analysis -Mutual Fund-Portfolio Management-Mutual FundUploaded bypoonamkush
- Demat Scams - 12Uploaded bysubhojitpyne
- Ab Bank Performance EvaluationUploaded byDhoni Khan
- Roaming Current AccountUploaded bySumit Mewari
- Grants Interest Rate Observer 2009W-BreakUploaded byChris Becker
- Tutorial 1 Solutions.pdfUploaded byAnonymous pcanQ3
- S Open SeniorAssistant 5Uploaded bySaniSah
- BHARTI AXA LIFE INSURANCE PROJECTUploaded byTripti Srivastava
- Premium ReceiptsUploaded bymanojsh8887
- Capital Financing RegulationUploaded byimran sattar
- internshipUploaded byomi
- MicroFinance REportUploaded byn
- bcbs_wp16Uploaded byroutraykhushboo
- Indian Banking Industry.docUploaded bymeenakshi56
- DMat AccountUploaded byJasvinder Singh IT Trainer
- ArcelorMittal - Insurance Register (2015)Uploaded bymircearadu_1970
- 2. Lee vs. Court of AppealsUploaded byjolly verbatim
- AAOIFIUploaded byProf. Dr. Mohamed Noorullah
- Sterling Bank PLC Extra-Ordinary General Meeting Press Release - February 2, 2011Uploaded bySterling Bank PLC
- N.I. Act 1881 SummaryUploaded byAnanth Swamy
- Mutual Funds PPTUploaded byParshva Doshi
- Real Estate Appraisal FormulasUploaded byMichelleOgatis
- Monetary PolicyUploaded byMayank Chawla
- Kotak Mahindra BankUploaded byEr Dipankar Saikia
- Chapter 5Uploaded byHalwani Anuar
- Axis Bank Latest Inf1 (2)Uploaded byAshish Anil Matai
- LBBH_m2_1 EgySzámla _keretszerz déses 2017.03.14-EN.pdfUploaded byRavi