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1
Solving For
k
Or
n
Example: Assume you have $1,200 to invest and
want to know how long it will take for that
sum to grow to $3,000 if invested in a CD at
7%:
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Solving For
k
Or
n
Example: Assume you have $1,200 to invest and
want to know how long it will take for that sum
to grow to $3,000 if invested in a CD at 7%:
3
Example: Assume that you have $1,200 and want to
know what the interest rate would have to be in order
for you to have $3,000 in 10 years.
Solving For
k
Or
n
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Example: Assume that you have $1,200 to invest and
want to know what the interest rate would have to be
in order for you to have $3,000 in 10 years.
Solving For
k
Or
n
5
Value Additivity:
The PV (FV) of a stream of cash flows
is the sum of the PV (FV) of individual cash flow.
Example: You have told your sister, a highschool senior, to
budget $400, $500, $600, $400 for books and educational
supplies for her four years at college.
What is the PV of
these future cash flows if the appropriate interest rate is 7%?
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This note was uploaded on 02/14/2011 for the course FINA 363 taught by Professor Masoudie during the Fall '10 term at South Carolina.
 Fall '10
 Masoudie
 Finance

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