L_9_ - Lecture 9 Net Present Value and Other Investment...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Lecture 9 Net Present Value and Other Investment Criteria Lecture Organization Present Value and Discounting Annuity and perpetuity Net Present Value The Payback Rule The Discounted Payback Time value of money" and "the money value of time" A dollar today is worth more than a dollar later WHY? Every dollar generates interest every year and every time period Time Value Terminology PV is the Present Value, that is, the value today . FV is the Future Value, that is, the value at a future date . Future and Present Value Terminology Denotation: The number of years between the Present Value and the Future Value is represented by t . The rate of interest is represented by r . In general, the Future Value, FV t , of $X invested today at r% for t periods is FV t = $X (1 + r ) t The expression (1 + r ) t is the Future Value Interest Factor or compounding factor Time Value Terminology Quick Quiz - A. Multiply the $5000 by the (FVIF) Future Value Interest Factor: Q. Deposit $5,000 today in an account paying 12%. How much will you have in 6 years if the interest is compound? The PV of $X to be received in...
View Full Document

Page1 / 18

L_9_ - Lecture 9 Net Present Value and Other Investment...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online