AEM
MaterialRvwS8Oct24

MaterialRvwS8Oct24 - Section 8 Review of Material Present...

Info icon This preview shows pages 1–2. Sign up to view the full content.

Section 8 Review of Material Present and Future Value Calculations are include four variables o a present value (how much an amount is worth today) o a future value (how much an amount is worth in the future) o the interest rate (denoted by an “ i” or “ r ”) o the time period (typically denoted by an “ N ”) Present Value of a single amount: how much a future amount is worth today o Present Value problems: a future value, interest rate and time period are given; you must find present value o Present Value (single amount) Equation: PV=Future Value (1+ i ) N o Example: You want to invest money in a fund today that will generate $30,000 in five years. The interest rate is 10% and is compounded annually. How much do you have to invest today? N=5, i=0.10, FV=$30,000 Answer (using factor): PV=30,000 x .620921 = $18,627.64 Answer (using PV equation): PV= 30,000 =$18,627.64 (1+.10) 5 Future Value of a single amount: how must an amount today is worth at a future date o Future Value problems: a present payment or deposit amount, interest rate and time period are given; you must find future value
Image of page 1

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

Image of page 2
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