Lecture 4

Lecture 4 - FIN 311 Instructor Syed Walid Reza Lecture 4...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
FIN 311 Instructor: Syed Walid Reza Lecture 4 Spring 2016
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Today: Review and Chapter 5 Review of lectures Chapter 5: Time value of money 2
Image of page 2
Review Lecture 3: questions? Other questions? 3
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Time Value of Money You have $100 with two investment options: a. Keep it with a bank at 10% interest rate for 1 year b. Give it to me and I return $109 in 1 year Here, Present value (PV) = $100 Future value (FV) = $109 & … ? Formally, PV is the value of money at time 0 FV t is the value of money at time t 4
Image of page 4
Time Value of Money You have $100 with two investment options: a. Keep it with a bank at 10% interest rate for 2 years b. Give it to me and I return $118 in 2 years 5
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Time Value of Money t = 0 t = 1 -$100 a. $110 b. $109 t = 2 a. $121 b. $118 a. $10 b. $ 9 a. $21 b. $18 Principal + Interest Interest 6 Problem 1 Slide 4 Problem 2 Slide 5 x (1.1) x (1.1) FV 1 FV 2
Image of page 6
Time Value of Money You have $100 with two investment options: a. Keep it with a bank at 10% interest rate for 30 years b. Give it to me and I return $370 in 30 years With simple interest, calculation is easy How can we simplify the calculation for compound interest?
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern