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IM Chapter 5 Introduction to Valuation The Time Value of Money

# IM Chapter 5 Introduction to Valuation The Time Value of Money

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Chapter 5 INTRODUCTION TO VALUATION: THE TIME VALUE OF MONEY SLIDES 5.1 Key Concepts and Skills 5.2 Chapter Outline 5.3 Basic Definitions 5.4 Future Values 5.5 Future Values: General Formula 5.6 Effects of Compounding 5.7 Calculator Keys 5.8 Future Values – Example 2 5.9 Future Values – Example 3 5.10 Future Value as a General Growth Formula 5.11 Quick Quiz – Part I 5.12 Present Values 5.13 Present Value – One Period Example 5.14 Present Values – Example 2 5.15 Present Values – Example 3 5.16 Present Value – Important Relationship I 5.17 Present Value – Important Relationship II 5.18 Quick Quiz – Part II 5.19 The Basic PV Equation – Refresher 5.20 Discount Rate 5.21 Discount Rate – Example 1 5.22 Discount Rate – Example 2 5.23 Discount Rate – Example 3 5.24 Quick Quiz – Part III 5.25 Finding the Number of Periods 5.26 Number of Periods – Example 1 5.27 Number of Periods – Example 2 5.28 Number of Periods – Example 2 Continued 5.29 Quick Quiz – Part IV 5.30 Spreadsheet Example 5.31 Work the Web Example 5.32 Table 5.4

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A-56 CHAPTER 5 CHAPTER WEB SITES Section Web Address 5.1 www.financeprofessor.com www.teachmefinance.com 5.3 www.calculator.org www.datachimp.com www.about.com www.studyfinance.com www.investopedia.com End-of-chapter material www.mhhe.com/edumarketinsight www.dinkytown.net www.fincalc.com PowerPoint Note: There are two files for this chapter. The examples are identical. The only difference is that one file presents the solutions using a financial calculator with formulas in the notes section. The other file presents the solutions using formulas with information on using a financial calculator in the notes section. This way you can choose which presentation you would prefer. Also, there are several examples for each type of problem. You can hide some of the examples before you do the presentation and still have them available if the students are having difficulty with a specific concept. CHAPTER ORGANIZATION 5.1 Future Value And Compounding Investing for a Single Period Investing for More Than One Period A Note on Compound Growth 5.2 Present Value And Discounting The Single-Period Case Present Values for Multiple Periods 5.3 More On Present And Future Values Present versus Future Value Determining the Discount Rate Finding the Number of Periods 5.4 Summary and Conclusions ANNOTATED CHAPTER OUTLINE Slide 5.1 Key Concepts and Skills Slide 5.2 Chapter Outline
CHAPTER 5 A-57 Lecture Tip, page 124: Many students find the phrases “time value of money” and “a dollar today is worth more than a dollar later” a bit confusing. In some ways it might be better to say the “money value of time.” Indeed, much of the terminology surrounding exchanges of money now for money later is confusing to students. For example, present value as the name for money paid or received earlier in time and future value as the name for money paid or received later in time are a constant source of confusion. How, students ask, can money to be

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IM Chapter 5 Introduction to Valuation The Time Value of Money

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