KIN356Exam2 - Bigger annuity better than a big interest...

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The Time Value of Money -involves: investment, retirement, setting $ aside for edu, mortgage, financing projects -money for today invested for tomorrow & $ invested for tomorrow affecting today -future value of a set amount -present value of a set amount -future value of an annuity -present value of an annuity - does NOT involve purchasing power Future value of set amt -present value (PV) -years (n) -interest (i) -FV = PV (1+i)^n Present value -if I receive 200k in 5 years, how much is that worth today? -from future today = discount rate -PV = FV (1/(1+i)^n)
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Unformatted text preview: Bigger annuity better than a big interest rate Long term, short term, bank manager = what ratios they are interested in Pro-forma: how we create one/why we do it and how we do it RnF/Time Value/Ratios are very impt Common stock/retained earnings not in formula Positive RNF means you need more money, negative means you’re good Assets/sales (change in sales) – current liabilities/sales (change in sales) – profitmargin (sales + change in sales)(1-dividend payout ration) Profit margin & dividend payout ratio affect RNF...
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