Chapter2-wk20

Chapter2-wk20 - Ch. 2 - Time Value of Money 1 Announcements...

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Ch. 2 - Time Value of Money 1
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Announcements 2 The tentative exam dates given in the syllabus have been confirmed. The regular exam will be from 6:30 to 8:30 PM on those dates and the conflict will be from 3 to 5 PM on the same dates. When you register your Iclicker please use your NetID for the Student ID.
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Topics Covered 3 Future Values Present Values Multiple Cash Flows Perpetuities and Annuities Non-annual interest compounding Effective Annual Interest Rate
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The Time Value of Money 4 Compounding and Discounting Single Sums
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Some Guy “who made it big in Physics” said this 5 “The greatest mathematical discovery of all time is compound interest.” Albert Einstein
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Future Values 6 Future Value - Amount to which an investment will grow after earning interest. Compound Interest - Interest earned on interest. Simple Interest - Interest earned only on the original investment.
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Example: Simple vs. Compound Interest 7 Compare $100 invested at 10% interest compound annually vs. 10% simple annual interest for 3 years.
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8
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Future Value of Single Cash Flow 9 n i PV FV ) 1 ( + × =
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Future Values of $100 with Compounding 10 0 1000 2000 3000 4000 5000 6000 7000 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Number of Years FV of $100 0% 5% 10% 15% Interest Rates
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Example: Futurama Value?
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Chapter2-wk20 - Ch. 2 - Time Value of Money 1 Announcements...

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