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time+value+of+money+checkpoint

# time+value+of+money+checkpoint - 3 i equals the interest...

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Present Value is the current worth of a future sum of money given a specified rate of return. Future cash flows are discounted at the discount rate, higher the discount rate, lower the present value. Figuring out the right discount rate is the key to valuing future cash flows, no matter if it is earnings or obligations. 1. PV is the value at time=0 2. FV is the value at time=n 3. i is the rate at which the amount will be compounded each period 4. n is the number of periods (not necessarily an integer) Present Value of an Annuity is a number of equal payments which take place at even intervals. Examples: (leases and rental payments). Payments or receipts are at the end of each period for an ordinary annuity while they occur at the beginning of each period for an annuity due. 1. PV(A) is the value of the annuity at time=0 2. A is the value of the individual payments in each compounding period

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Unformatted text preview: 3. i equals the interest rate that would be compounded for each period of time 4. n is the number of payment periods The value of an asset or cash at a paticulair date in the future that is equivalent in value to a specified sum today is future value. The future value of a stream of payments (annuity), assuming the payments are invested at a given rate of interest is future value of an annuity (FVA) 1. FV ( A ) is the value of the annuity at time = n 2. A is the value of the individual payments in each compounding period 3. i is the interest rate that would be compounded for each period of time 4. n is the number of payment periods Reference: http://en.wikipedia.org/wiki/Time_value_of_money#Future_value_of_an_annuity http://www.college-cram.com/study/finance/presentations/1116...
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time+value+of+money+checkpoint - 3 i equals the interest...

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