Lecture7 - CSA 273 Lecture: 1/30/08 1.Future Value of a...

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Unformatted text preview: CSA 273 Lecture: 1/30/08 1.Future Value of a Sequence of Deposits 2. Present Value of a Sequence of Deposits 3. Excel Financial Functions 4. Introduction to Financial Projects Expansion of a Model to a Sequence of Deposits Notation: Same as before except a= amount (in dollars) deposited at the end of each time period. For a period of n years, FV of an amount deposited at end of 1st period = a(1+i/m) mn-1 FV 2nd period =a (1+i/m) mn-2 . . FV mn period =a (1+i/m) mn-mn = a FV of a Sequence of Deposits Example m i 1 m i 1 a FV - + = mn FV of a Sequence of Deposits Example Find the value 6 years from now of a sequence of semi- annual deposits of $125.00 starting immediately which will accrue interest at a nominal interest of 11% per year posted every 6 months. Soln 1/2 1 3/2 11/2 6 Deposits-1/2 time horizon years m=2, n = 6 1/2, a = $125, and i =11%=.11 FV of a Sequence of Deposits Example 85 . 2285 $ 2 11 . 1 2 .11 1 $125 m i 1 m i 1 a FV ) 5 . 6 ( 2 = - + = - + = mn PV of a Sequence of Deposits Let a =deposit made at the end of each period. Remember PV = FV(1+i/m) -mn and m i 1 m i 1 a FV - + = mn PV of a Sequence of Deposits Let a =deposit made at the end of each period....
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This note was uploaded on 04/17/2008 for the course CSA 273 taught by Professor Patton during the Spring '08 term at Miami University.

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Lecture7 - CSA 273 Lecture: 1/30/08 1.Future Value of a...

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